SECTION 4. METHODS FOR

ESTABLISHING BEGINNING OF CONSTRUCTION

.01 In general . This notice provides two methods for a taxpayer to establish that construction of a qualified facility or carbon capture equipment has begun for purposes of the Section 45Q Credit. A taxpayer may establish the beginning of construction by starting physical work of a significant nature as set forth in section 5 of this notice (Physical Work Test). A taxpayer may also 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 qualified facility or carbon capture equipment as set forth in section 6 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 7 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 a qualified facility or carbon capture equipment in 2020, and then pays or incurs five percent or more of the total cost of the qualified facility or carbon capture equipment in 2021, construction will be deemed to begin in 2020 under the Physical Work Test, not in 2021 under the Five Percent Safe Harbor. Thus, the Continuity Safe Harbor will be applied beginning in 2020, not in 2021. For this purpose, a taxpayer that fails to satisfy the Five Percent Safe Harbor in one year due to cost overruns (see section 6.03 of this notice) will not be prevented from using the Physical Work test in a later year to establish beginning of construction, provided that occurs before January 1, 2024.