WSGR ALERT

Tax Extenders Signed into Law;
Production Tax Credit Extended for Facilities Beginning Construction in 2014

December 19, 2014

Earlier today, President Obama signed the Tax Increase Prevention Act of 2014 (H.R. 5771) into law, following its passage through Congress on Tuesday. Among other things, the act will provide a one-year retroactive extension of certain expired tax incentives for businesses and individuals.

The act includes the extension of numerous energy tax provisions. Notably, it will revise the Section 45 production tax credit (PTC) such that facilities for which construction has begun prior to January 1, 2015, will be eligible for the PTC, including wind facilities, closed biomass facilities, open-loop biomass facilities, geothermal or solar energy facilities, landfill gas facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic renewable energy facilities. If construction of these facilities begins prior to January 1, 2015, taxpayers may alternatively elect to claim the investment tax credit (ITC).1

The act also provides for the extension of the following:

  • Section 25C Credit for Nonbusiness Energy Property
  • Section 40 Second Generation Biofuel Producer Credit
  • Section 40A Incentives for Biodiesel and Renewable Diesel
  • Section 45 Production Credit for Indian Coal Facilities
  • Section 45L Credit for Energy-Efficient Homes
  • Section 168 Deprecation Allowance for Second Generation Biofuel Plant Property
  • Section 179D Deduction for Energy Efficient Commercial Buildings
  • Section 451 Rules for Sales or Dispositions to Implement FERC or State Electric Restructuring Policy for Qualified Electric Utilities
  • Section 6462 Excise Tax Credits for Certain Fuels

Other key business tax provisions that will be extended through December 31, 2014, include the research tax credit, the new markets tax credit, 50 percent bonus depreciation, the look-through treatment for controlled foreign corporations, a Subpart F exception for active financing income, and empowerment zone tax incentives.

In addition, the act includes the extension of individual tax provisions and various technical corrections.

For further information, please contact Sean Moran (smoran@wsgr.com; 323-210-2916), Greg Broome (gbroome@wsgr.com; 415-947-2139), Nicole Gambino (ngambino@wsgr.com; 415-947-2117), Lauren Chase (lchase@wsgr.com; 323-210-2913), or another member of the firm's tax or energy and infrastructure finance practice.


1 Additional clarification may be needed from the Internal Revenue Service with respect to rules requiring that once construction has begun, continuous efforts or a program of construction are maintained to place these facilities in service.

Please click here for a printable version of this WSGR Alert.