SECTION 3. METHODS FOR

ESTABLISHING BEGINNING OF CONSTRUCTION

.01 In general . This notice provides two methods for a taxpayer to establish that construction of energy property has begun for purposes of the ITC under § 48. A taxpayer may establish the beginning of construction by starting physical work of a significant nature as set forth in section 4 of this notice (Physical Work Test). Alternatively, a taxpayer may establish the beginning of construction by meeting a safe harbor based on having paid or incurred five percent or more of the total cost of the energy property as set forth in section 5 of this notice (Five Percent Safe Harbor).

Both methods require that a taxpayer make continuous progress towards completion once construction has begun (Continuity Requirement). Section 6 of this notice discusses the Continuity Requirement and provides a safe harbor for satisfying this requirement (Continuity Safe Harbor).

.02 Combination of methods . Although a taxpayer may satisfy both methods of establishing the beginning of construction, construction will be deemed to have begun on the date the taxpayer first satisfies one of the two methods. For example, if a taxpayer performs physical work of a significant nature on energy property in 2019, and then pays or incurs five percent or more of the total cost of the energy property in 2020, construction will be deemed to begin in 2019 under the Physical Work Test, not in 2020 under the Five Percent Safe Harbor. Thus, the Continuity

Safe Harbor will be applied beginning in 2019, not in 2020. This section 3.02 applies to energy property the construction of which begins, as determined under the earlier of either the Physical Work Test or the Five Percent Safe Harbor, after December 31, 2018.