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2010
December 2010 |
U.S. Treasury gives details on "Begin Construction" rule for tax credit reimbursement program
The U.S. Treasury Department has posted several documents on its web site providing additional details on meeting the under-construction requirement for the tax credit reimbursement, also known as the 1603 program, which has sparked development of a large number of renewable energy projects.
To qualify for the reimbursement, projects must have begun construction by the end of this year; Treasury has been working to provide details on what qualifies as being under construction. The documents include a sample application for filing with Treasury to get a determination on whether projects meet the requirements. Treasury also posted a checklist for developers seeking begun-construction status.
One way to meet the under-construction requirement-other than physically starting construction-is for a developer to show that it has incurred five percent of eligible project costs. Treasury indicated that projects relying on the five percent safe harbor, and having an estimated eligible cost basis of $1 million or more, require a report from an independent accountant on the eligible costs of the specified energy property paid or incurred by December 31, 2010.
