Client Alert

Treasury Releases Renewable Energy Guidance Regarding the Election of the Investment Tax Credit in Lieu of the Production Tax Credit

June 10, 2009

Michael D. Haun and Sean C. Honeywill

On June 5, 2009, the Treasury Department released much anticipated guidance in the form of Notice 2009-52 describing the procedures that taxpayers will be required to follow to make the irrevocable election to take the investment tax credit (ITC) determined under Section 48 of the Internal Revenue Code (the Code) in lieu of the production tax credit (PTC) under Code Section 45. The election was created by the American Recovery and Reinvestment Tax Act of 2009 (the Act), which was enacted on February 17, 2009.

While it was hoped that this notice would also provide greater detail about Section 1603 of the Act, which authorizes the Treasury to provide cash grants in lieu of both the PTC and ITC, the notice simply states that a taxpayer cannot claim any PTC or ITC with respect to any property for which a cash grant has been made. Further guidance on the details and operation of the cash grant program is anticipated to be released later this summer.

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