Claim Your Cash Instead of Tax Credits for Energy Investments
July 15, 2009 by Taxcut Editor
Filed under IRS News Items
What’s the deal?
Section 1603 of the most recent economic stimulus act, the American Recovery and Reinvestment Tax Act of 2009, provides for cash payments, instead of tax credits, for certain eligible property used in a trade or business or for the production of income. The cash payments don’t apply to nonbusiness energy property and to residential energy efficient property as set forth in Sections 25 C and 25 D of the Internal Revenue Code. The payments can’t be claimed by governments, charitable organizations, and certain other entities. The payments generally apply to certain property placed in service during 2009 or 2010. The payments are equal to either 10% or 30% of the tax basis of the property, depending on the type of property.
Payments will be made within 60 days of the later of the date the property is placed in service or a complete application claiming the payment is filed.
This program is intended to fill the gap temporarily created by diminished investor demand for tax credits in an effort to stimulate the economy.
What Property Qualifies for Upfront Cash?
The property must be placed in service between January 1, 2009 and December 31, 2010, or alternatively before a credit termination date (either January 1 of 2013, 2014 or 2017). Thirty percent payments apply to large wind, biomass facility, geothermal under IRC sec. 45, landfill gas, trash facility, hydropower facility, marine & hydrokinetic facility, solar facility, fuel cells and small wind projects. Ten percent payments apply to geothermal under IRS sec. 48, microturbine, combined heat & power and geothermal heat pump projects.
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