Tax News

CCH (cch.taxgroup.com) reports:

The IRS has issued revised interim guidance on the credit for electricity produced from certain renewable resources. The new guidance revises and supersedes Notice 2006-88 to reflect recent legislative changes and omits the guidance in that notice relating to the simultaneous sale and purchase of electricity. It can be relied upon until final regulations are issued. The IRS will continue its policy of not issuing private letter rulings regarding Code Sec. 45 as it pertains to open-loop biomass or regarding Subchapter K rules for partnerships claiming the credit.
A renewable electricity production credit is allowed for electricity produced by a taxpayer from qualified energy resources at a qualified facility, including open-loop biomass produced at an open loop biomass facility placed in service by a statutorily defined deadline. Section 201 of the Tax Relief and Health Care Act of 2006 (2006 Extenders Act) (P.L. 109-432) extended that deadline to December 31, 2008. Section 7(b)(1) of the Tax Technical Corrections Act of 2007 (2007 Technical Corrections Act) (P.L. 110-172) eliminated the requirement that open-loop biomass be segregated from other waste materials.
Accordingly, the new notice makes various changes to the rules regarding claiming the credit for producing energy from open-loop biomass. The placed-in-service deadline has changed to reflect the change made in the 2006 Extenders Act. Moreover, the guidance in the old notice pertaining to simultaneous sale and purchase of electricity from an unrelated person has been eliminated.
Finally, a new section has been added clarifying the rules limiting the credit to electricity, refined coal or Indian coal produced and sold to an unrelated person. Electricity or coal will be treated as sold to an unrelated person if the ultimate purchaser of the electricity or coal is not related to the person that produces the electricity or coal. The sale requirement will be treated as satisfied if the producer sells the electricity or coal to a related person for resale to a person not related to the producer within the meaning of Code Sec. 45(e)(4). Notice 2006-88 is superseded.
Notice 2008-60, 2008FED ¶46,486
Other References:
Code Sec. 45
CCH Reference - 2008FED ¶4415.27
CCH Reference - 2008FED ¶4415.30
Tax Research Consultant
CCH Reference - TRC BUSEXP: 54,550