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Energy Incentives for Businesses

Temporary Increase in Credit for Alternative Fuel Vehicle Refueling Property: The new law modifies the credit rate and limit amounts for property placed in service in 2009 and 2010.

Author: Sandi Lattin
Date: Nov 22, 2010 - 11:34:28 AM

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What is the American Recovery & Reinvestment Act (ARRA) of 2009?

The American Recovery & Reinvestment Act (ARRA) of 2009 was signed into law by President Obama on February 17, 2009. The bill is intended to provide a stimulus to the U.S. Economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions. Including domestic spending in education, health care, and infrastructure, including the energy sector.

Temporary Increase in Credit for Alternative Fuel Vehicle Refueling Property: The new law modifies the credit rate and limit amounts for property placed in service in 2009 and 2010. Qualified property (other than property relating to hydrogen) is now eligible for a 50 percent credit, and the per-location limit increases to $50,000 for business property (increases to $2,000 for other/residential locations). Property relating to hydrogen keeps the 30 percent rate as before, but the per-business location limit rises to $200,000.

Coordination With Renewable Energy Grants: Business taxpayers also can apply for a grant instead of claiming either the energy investment tax credit or the renewable energy production tax credit for property placed in service in 2009 or 2010. In some cases, if construction begins in 2009 or 2010, the grant can be claimed for energy investment credit property placed in service through 2016, and for qualified renewable energy facilities, the grant is 30 percent of the investment in the facility and the property must be placed in service before 2014 (2013 for wind facilities).

Repeal of Certain Limits on Business Credits for Renewable Energy Property: The new law repeals the $4,000 limit on the 30% tax credit for small wind energy property and the limitation on property financed by subsidized energy financing. The repeal applies to property placed in service after December 31, 2008.

Election of Investment Credit in Lieu of Production Credit: Businesses who place in service facilities that produce electricity from wind and some other renewable resources after December 31, 2008 can choose either the energy investment tax credit, which generally provides a 30% tax credit for investments in energy projects or the production tax credit, which can provide a credit of up to 2.1 cents per kilowatt-hour for electricity produced from renewable sources. A business may not claim both credits for the same facility.

Extension of Renewable Energy Products Tax Credit: The new law generally extends the “eligibility dates” of a tax credit for facilities producing electricity from win, closed-loop biomass, open-loop biomass, geothermal energy, municipal solid waste, qualified hydro-power and marine and hydrokinetic renewable energy. The new law extends the “placed in service date” for wind facilities to December 31, 2012. For the other facilities, the placed-in-service date was extended from December 31, 2010 (December 31, 2011 in the case of marine and hydrokinetic renewable energy facilities) to December 31, 2013.

Qualified Energy Conservation Bonds: The new law increases the amount of funds available to issue qualified energy conservation bonds from the one-time national limit of $800 million to $3.2 billion. These qualified tax credit bonds can be issued to finance governmental programs to reduce greenhouse gas emissions and other conservation purposes.

New Clean Renewable Energy Bonds: The new law increases the amount of funds available to issue new clean renewable energy bonds from the on-time national limit of $800 million to $2.4 billion. The qualified tax credit bonds can be issued to finance certain types of facilities that generate electricity from renewable sources (for example, wind and solar).

Sandi Lattin
Free 1040
Russellville, Arkansas
http://free1040.com

View all articles by Sandi Lattin

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