SECTION 3. CONTINUOUS

CONSTRUCTION/CONTINUOUS EFFORTS TESTS

.01 In general . Section 4.01 of Notice 2013–29, setting forth the Physical Work Test, provides:

The Internal Revenue Service will closely scrutinize, and may determine that construction has not begun on a facility before January 1, 2014, if a taxpayer does not maintain a continuous program of construction as determined under section 4.06. Section 4.06(1) provides that whether a taxpayer maintains a continuous program of construction will be determined by the relevant facts and circumstances. Section 4.06(2) provides that certain disruptions in the taxpayer’s construction of a facility that are beyond the taxpayer’s control will not be considered to indicate that a taxpayer has failed to maintain a continuous program of construction, and sets forth a non-exclusive list of examples of such disruptions.

Section 5.01 of Notice 2013–29, setting forth the Safe Harbor, provides:

Construction of a facility will be considered as having begun before January 1, 2014, if (1) a taxpayer pays or incurs (within the meaning of Treas. Reg. § 1.461–1(a)(1) and (2)) five percent or

more of the total cost of the facility, except as provided in section 5.01(2), before January 1, 2014, and (2) thereafter, the taxpayer maintains continuous efforts to advance towards completion of the facility (as determined under section 5.02). The exception in section 5.01(2) deals with costs incurred by a person other than the taxpayer under a binding written contract with the taxpayer. Section 5.02(1) provides that whether a taxpayer maintains continuous efforts to advance towards completion of the facility will be determined by the relevant facts and circumstances. Section 5.02(2) provides that certain disruptions in the taxpayer’s continuous efforts to advance towards completion of the facility that are beyond the taxpayer’s control will not be considered as indicating that a taxpayer has failed to maintain continuous efforts to advance towards completion of the facility, and sets forth a non-exclusive list of examples of such disruptions.

.02 Deemed satisfaction of Continuous Construction/Continuous Efforts Tests. If a facility is placed in service before January 1, 2016, the facility will be considered to satisfy the Continuous Construction Test (for purposes of satisfying the Physical Work Test) or the Continuous Efforts Test (for purposes of satisfying the Safe Harbor). If a facility is not placed in service before January 1, 2016, whether the facility satisfies the Continuous Construction or Continuous Efforts Tests will be determined by the relevant facts and circumstances, as described in section 4.06 and section 5.02 in Notice 2013–29.