SECTION 1. PURPOSE

This Notice sets forth guidance relating to the credit under § 45J of the Internal Revenue Code for production of electricity at advanced nuclear power facilities. On May 1, 2006, the Internal Revenue Service (Service) and the Treasury Department published Notice 2006–40, 2006–1 C.B. 855, which specifies the method that will be used to allocate the national megawatt capacity limitation on the allowable credit and prescribes the application process by which taxpayers may request an allocation of the national megawatt capacity limitation. Notice 2006–40 also provides guidance on the requirement that the electricity be sold to an unrelated person and on the effect of grants, tax-exempt bonds, subsidized energy financing, and other credits. This Notice supersedes Notice 2006–40 by republishing the guidance contained in that notice with the following modifications: (1) the application process is streamlined so that the applicant submits the application only to the Service and the Service will obtain necessary certification from the U.S. Department of Energy (DOE); (2) the guidance is modified to provide allocation rules for facilities that are directly or indirectly owned by more than one person; and (3) additional guidance is provided concerning the time for filing an application with the Nuclear Regulatory Commission.