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IRS Releases Guidance Documents on Section 45Q Tax Credit

February 19, 2020

Today, the Internal Revenue Service released two long-await non-regulatory guidance documents for the implementation of the Section 45Q tax credit for carbon dioxide sequestration:

In Notice 2020-12, the IRS provides guidance to help businesses determine when construction has begun on a qualified facility or on carbon capture equipment that may be eligible for the carbon capture credit. This notice provides broad guidance in lieu of taxpayers requesting private letter rulings in this area.

In Revenue Procedure 2020-12, the IRS creates a safe harbor for the allocation rules for carbon capture partnerships similar to the safe harbors developed for partnerships receiving the wind energy production tax credit and the rehabilitation credit. The safe harbor simplifies the application of carbon capture credit rules to partnerships able to claim the credit.

CURC is reviewing these guidance documents and will provide members with additional details and analysis shortly.

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