On January 1, 2013, Congress passed the American Taxpayer
Relief Act of 2012 (the “Act”). President Obama signed the Act into
law on January 2, 2013. The Act contains multiple business tax
provisions. The following is a summary of certain tax provisions
relevant to renewable energy projects.
The Act extends the production tax credit (“PTC”) for wind
facilities under Section 45 for one year. PTC for wind facilities had
been set to expire at the end of 2012. Under the Act, qualifying wind
facilities are eligible for PTC so long as the construction of such
facility has begun before January 1, 2014. The Act also modifies
Section 45 to allow certain other renewable energy facilities (including
certain biomass, geothermal, solid waste, hydroelectric, and marine energy
facilities) to qualify for PTC so long as construction begins before
January 1, 2014. Prior to the Act, such facilities qualified for PTC
only if the facility was placed in service before January 1, 2014.
The Act allows taxpayers to elect, in lieu of PTC, the 30% investment tax
credit (“ITC”) under Section 48 for facilities qualifying for the PTC if
construction of such facility begins before January 1, 2014.
The Act does not modify the availability of PTC and ITC with
respect to solar facilities. Qualified solar facilities are eligible
for a 30% ITC if placed in service before the end of 2016 and for a 10% ITC
if placed in service in 2017 or later. PTC is unavailable for any
solar facility placed in service after 2005.
The Act extends “bonus” depreciation under Section 168(k) for
one year. Bonus depreciation had been set to expire at the end of
2012. Under the Act, taxpayers may take bonus depreciation for
qualifying property placed in service before January 1, 2014 (or before
January 1, 2015 for certain assets). The bonus depreciation allowance
is the same for 2013 as it was for 2012 – a first year deduction equal to
50% of the tax basis of the qualifying property.
The Act contains
several other energy-related provisions, including extensions of tax
credits relating to biofuels and energy efficient homes.