On June 5, 2009, the Internal Revenue Service (“IRS”) released Notice 2009-52 (the “Notice”), which describes the procedures a taxpayer must follow to make the election to claim the federal investment tax credit (the “ITC”) in lieu of claiming the federal production tax credit (the “PTC”). In general, the ITC may be claimed in the year the facility is placed in service. The election to claim the ITC in lieu of the PTC was provided as part of the American Recovery and Reinvestment Act of 2009, and applies to wind, biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy, and marine renewable facilities.
To claim the ITC, a taxpayer must complete IRS Form 3468 and file the form with its income tax return for the year in which the facility becomes operational. The taxpayer is required to make a separate election for each facility. Additionally, the taxpayer will be required to attach a statement to IRS Form 3468 that includes the following information:
- Name, address, taxpayer identification number, and telephone number of the taxpayer.
- For each facility that qualifies for the ITC:
i. A detailed technical description of the facility, including generating capacity.
ii. A detailed technical description of the energy property placed in service during the taxable year as an integral part of the facility, including a statement that the property is an integral part of such facility.
iii. The date that the energy property was placed in service.
iv. An accounting of the taxpayer’s tax basis in the energy property.
v. A depreciation schedule reflecting the taxpayer’s remaining tax basis in the energy property after the energy credit is claimed.
- A statement that the taxpayer has not and will not claim the U.S. Treasury Grant in lieu of the ITC for property for which the taxpayer is claiming the ITC.
This statement to IRS Form 3468 must be signed under penalties of perjury. Additionally, the taxpayer must retain adequate books and records to support the election.
The Notice does not explain how to claim the U.S. Treasury Grant in lieu of the ITC. Information regarding the grant is expected to be issued shortly.
Pursuant to the rules of professional conduct set forth in Treasury Department Circular 230, this communication was not written or intended to be used, and it cannot be used for the purpose of avoiding federal tax penalties.