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Doug Jones

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A recognized tax attorney and advisor, Doug counsels businesses on complex tax structures and guides nonprofits on tax exemption. Doug’s deep experience in tax law includes practical strategies for clients regarding mergers, acquisitions, joint ventures, workouts (in and out of bankruptcy), recapitalizations, divestitures, spin-offs, entity formations as well as all forms of capital-raising activities. He assists corporations, partnerships and limited liability companies, ranging in size from startups to multinational public corporations. Additionally, Doug is known as a leader in matters of qualified opportunity funds and their tax benefits, counseling funds, their managers and investors on the planning, structuring and implementation of qualified opportunity funds.

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On April 30, 2024, the Department of the Treasury issued final regulations on tax credit transfers that allow hydrogen producers to sell tax credits earned under § 45V of the Inflation Reduction Act (IRA). Section 6418 of the Internal Revenue Code and the final regulation issued thereunder allow credit purchasers to use purchased credits to offset their tax liability. Credit sellers will be able to sell credits that they would not otherwise be able to use due to insufficient tax liability. Given such powerful incentives, many energy producers are wondering how to add “green” hydrogen (discussed below) to their portfolios by powering hydrogen facilities with wind turbines and solar panels. Here, we discuss what wind and solar producers should keep in mind as they plan, negotiate, and begin developing hydrogen plants powered by renewable energy, with a particular focus on site control.

IRS Internal Revenue Service documents and folder.

The Inflation Reduction Act (the “IRA”) provides funding for several tax credit incentives related to significant investments in energy projects.  One of these credits is the section 48C investment tax credit (“48C Credit”), which was originally offered through the American Recovery and Reinvestment Act of 2009.  The IRA includes a $10 billion allocation to the 48C Credit and also broadens the scope of eligible property a company can invest in to be eligible for the credit.  If selected, the 48C Credit provides a credit equal to 30% of the project’s capital investment that is deemed to be “eligible energy property.”

On May 12, 2023, in Notice 2023-38 (the “Notice”), the IRS published rules intended for inclusion in forthcoming regulations regarding domestic content bonus credit amounts.

The Inflation Reduction Act of 2022 amended §§ 45 and 48 of the Internal Revenue Code (the “Code”) to provide a domestic content bonus credit amount for certain qualified facilities or energy projects placed in service after December 31, 2022, and added new Code §§ 45Y and 48E, which include a domestic content bonus credit amount for certain investments in qualified facilities or energy storage technologies placed in service after December 31, 2023.

To claim a domestic content bonus credit amount, a taxpayer must establish that the “Domestic Content Requirement” is satisfied with respect to an “Applicable Project” by certifying to the Secretary of the Treasury that any steel, iron, or manufactured product which is a component of the Applicable Project (upon completion of construction) was produced in the United States. The Notice provides guidance on what is required to meet the Domestic Content Requirement and the procedures for reporting and claiming domestic content bonus credit amounts.