INCOME TAX

T.D. 10015, page 1355. Section 48 provides an investment tax credit for energy property (energy credit). These final regulations update the regulations under section 48 to reflect changes to that section since 1987, mostly notably changes made by the Inflation Reduction Act of 2022 (IRA). Generally, in connection with the IRA, the final regulations update the types of energy property eligible for the energy credit, including additional types of energy property added by the IRA; clarify the application of new credit transfer rules to recapture due to failure to satisfy the prevailing wage requirements, including notification requirements for eligible taxpayers; and include quali

fied interconnection costs in the basis of certain lower-output energy properties. The final regulations also provide rules generally applicable to energy property, such as rules regarding: functionally interdependent components; property that is an integral part of an energy property; application of the “80/20 Rule” to retrofitted energy property; dual use property; ownership of components of an energy property; energy property that may be eligible for multiple Federal income tax credits; and the election to treat qualified facilities eligible for the renewable electricity production credit under section 45 instead as property eligible for the energy credit.