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Treatment of Payments for Specified energy Property in Lieu of Tax Credits under ARRA of 2009

Renee Anderon's Profile

Under section 1603 of the American recovery and Reinvestment Tax Act of 2009, the US Treasury makes payments to persons  who place in service specified energy property.  Per the guidance, 50% of the grant is to be used to reduce the depreciable asset value, how is the remaining 50% to be recorded?

Answers

Mark Woollgar
Title: Partner
Company: Adams Woollgar Financial Services LLC
(Partner, Adams Woollgar Financial Services LLC) |

That gets treated as a normal depreciable asset in its appropriate class. This rule just prevents double-dipping i.e. placing 100% into depreciable assets plus getting a 50% grant. In this case 50% gets depreciated over time and you get 50% supposedly within 90 days.

Remember of course that often not all the assets qualify for the refundable credit so the maths above is the best case.

Don Ford
Title: Partner
Company: Ernst & Young
(Partner, Ernst & Young) |

Rather than reducing the asset basis by the grant you just reduce the basis by 50% of the grant

Renee Anderon
Title: V.P., Controller
Company: Carbon Vision
(V.P., Controller, Carbon Vision) |

If the asset is only reduced by 50% of the grant, how is the remainging 50% handled?

Ross Fuller
Title: Chief Financial Officer
Company: Ross DS Fuller CFO Services, LLC.
LinkedIn Profile
(Chief Financial Officer, Ross DS Fuller CFO Services, LLC.) |

What is the basis under S48 if a solar voltaic project is financed by a lease/loan in conjunction with state rebates and the Federal ITC credit? Is the basis reduced by the value of the state rebate or no?

Ross Fuller
Title: Chief Financial Officer
Company: Ross DS Fuller CFO Services, LLC.
LinkedIn Profile
(Chief Financial Officer, Ross DS Fuller CFO Services, LLC.) |

What is the basis under S48 if a solar voltaic project is financed by a lease/loan in conjunction with state rebates and the Federal ITC credit? Is the basis reduced by the value of the state rebate or no?

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