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Renewable Energy Law Alert: IRS Guidance on Electing ITC

Jun 5, 2009 - Stoel Rives, LLP

On Friday, June 5, the Internal Revenue Service issued Notice 2009-52, which provides guidance informing taxpayers how to elect to claim the Investment Tax Credit ("ITC") under IRC § 48 in lieu of the Production Tax Credit ("PTC") under IRC § 45 with respect to qualifying projects. This election was provided for as part of the federal economic stimulus bill, the American Recovery and Reinvestment Act of 2009 ("ARRA"). The election to claim the ITC in lieu of the PTC applies to the following types of renewable energy facilities:

1. Wind;
2. Biomass (both closed- and open-loop);
3. Geothermal;
4. Landfill gas;
5. Trash facilities;
6. Qualified hydropower; and
7. Marine and hydrokinetic.

Notice 2009-52 appears to provide the exclusive means by which taxpayers may make the election. To qualify, a taxpayer must claim the ITC with respect to qualified property that is an integral part of the facility on a completed Form 3468. Form 3468 must be filed with the taxpayer's income tax return for the year in which the property is placed in service.

A separate election must be made for each qualifying facility.

Observation: This requirement may be very important if the IRS defines "qualifying facility" very narrowly. For example, if the qualifying facility for a wind farm is each turbine, the election procedure will be extremely onerous. There is no indication in Notice 2009-52 of how the IRS will define a facility for this purpose.

The following information must be provided with each election:


Name, address, taxpayer ID number, and telephone number of the taxpayer.


For each qualified investment credit facility:


A detailed technical description of the facility, including generating capacity.


A detailed technical description of the energy property placed in service during the taxable year as an integral part of the facility, including a statement that the property is an integral part of such facility.


The date that the energy property was placed in service.


An accounting of the taxpayer's basis in the energy property.


A depreciation schedule reflecting the taxpayer's remaining basis in the energy property after the energy credit is claimed.


A statement that the taxpayer has not and will not claim a grant under Section 1603 of ARRA for property for which the taxpayer is claiming the energy credit.


A declaration, applicable to the statement and any accompanying documents, signed by the taxpayer or by a person currently authorized to bind the taxpayer in such matters, in the following form:

"Under penalties of perjury, I declare that I have examined this statement, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of this statement are true, correct, and complete."

Observation: Notice 2009-52 does not address what constitutes what property will be considered "integral" to a qualified facility. Presumably, this will be addressed in subsequent guidance.

Finally, Notice 2009-52 requires that the taxpayer making the election retain adequate books and records, including the information required to be provided by Notice 2009-52 and all supporting documentation.

Observation: Notice 2009-52 focuses on the procedural aspects of the PTC to ITC election. It provides virtually no guidance on grants in lieu of the ITC under Section 1603 of ARRA, and offers little in the way of substantive guidance. The Treasury is expected to issue such substantive guidance on these and other issues in the coming months.

For additional information about IRS Notice 2009-52, electing Investment Tax Credit or aspects of the American Recovery and Reinvestment Act, please contact:

Portland, Oregon
Pat Boylston at (503) 294-9116 or
Ed Einowski at (503) 294-9235 or
Chris Heuer at (503) 294-9206 or
Bill Holmes at (503) 294-9207 or
Jennifer Martin at (503) 294-9852 or
Kevin Pearson at (503) 294-9622 or
Dina Dubson at (503) 294-9675 or
Adam Kobos at (503) 294-9246 or
Eric Kodesch at (503) 294-9684 or

Minneapolis, Minnesota
John Eustermann at (612) 373-4218 or
Mark Hanson at (612) 373-8823 or
Greg Jenner at (612) 373-8857 or
Kevin Johnson at (612) 373-8803 or
Joe Thompson at (612) 373-8822 or
Mary Sennes at (612) 373-8814 or

Seattle, Washington
David Benson at (206) 386-7584 or
Janet F. Jacobs at (206) 386-7582 or
Carl Lewis at (206) 386-7688 or
Graham Noyes at (206) 386-7615 or
Erin Toland at 206-386-7563 or

Salt Lake City, Utah
Julia Pettit at (801) 578-6958 or

IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.


Updated: 2003/07/28