Tax

Read about pending cases docketed in the US Tax Court that are considering the application of the limited partner exclusion from self-employment tax when the limited partners in a state law limited partnership actively participate in the partnership’s business.

Read about a recent US Tax Court decision confirming that taxpayers can benefit from the “profits interest” safe harbor, set forth in Revenue Procedures 93-27 and 2001-43, which holds that the issuance of such an interest in exchange for services that benefit a lower-tier entity that is or would become a partnership is not a taxable event. 

Read about an IRS private letter ruling, which held that success-based fees in an M&A transaction were incurred by a private equity sponsor rather than by the target. The decision denied the target’s late request for a Safe Harbor Election, which permits a tax deduction of 70% of the success-based fees.

Read about IRS Notice 2023-44, which clarifies the 48C program application process and timeline following amendments to the program under the Inflation Reduction Act and an earlier notice providing application guidelines.

Read about Department of Treasury and IRS guidance regarding qualification for the 10% domestic content tax credit available to certain renewable energy projects under the Inflation Reduction Act of 2022 (IRA).

IRA Update Section 45X & Section 48C

Read about guidance released by the IRS on the Low-Income Community Adder and the newly established allocation program to make the adder available.

Read about a new IRS reference standard for energy efficient commercial building property for purposes of the deduction under Section 179D of the Internal Revenue Code, which takes effect on January 1.

Read about new IRS reporting requirements, issued in Revenue Procedure 2022-42, for manufacturers and sellers of new or previously owned clean vehicles or qualified new commercial clean vehicles eligible for tax credits under Internal Revenue Code Sections 30D, 25E, or 45W, respectively.

On November 3, 2022, the U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) released three Notices requesting public comments by December 3, 2022, on certain additional aspects of the clean energy tax incentives included in the Inflation Reduction Act of 2022 (IRA). Treasury and the IRS previously released six Notices, on October 5, 2022, requesting public comments by November 4 on certain other aspects of the energy tax incentives, which are described in our alert. The Treasury and the IRS will consider written comments submitted after December 3 if such consideration will not delay the issuance of guidance. 

On October, 5, 2022, the U.S. Department of Treasury and Internal Revenue Service published six Notices requesting public comments by November 4, 2022 on certain of the clean energy tax incentives included in the Inflation Reduction Act of 2022.  However, the IRS and Treasury will consider written comments received after November 4 that do not delay the relevant guidance.  Input from industry stakeholders is important to help inform next steps for the IRS and Treasury and shape how these clean energy tax incentives are accessed in practice.

Read about new guidance from the IRS, Revenue Procedure 2022-19, which describes simplified procedures that allow S corporations to resolve frequently encountered missteps, often without requesting a time-consuming and costly private letter ruling.

Read about the Biden-Harris administration’s announcement of $7 billion in funding to create regional clean hydrogen hubs (“H2Hubs”)

In this webinar, Anne Levin-Nussbaum, a Member in our Energy & Sustainability and Tax Practices and her colleagues at ML Strategies discuss the energy tax provisions, review the Act’s new direct funding opportunities and offer insights regarding the implementation of such funding programs.

When President Biden’s signature Build Back Better Act faltered last year, many viewed the effort to be a failure. However, negotiations continued before Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) announced the package in late July. Nearly half of the $737 billion in revenue will be invested in clean energy and includes many direct funding opportunities in the form of grants, loans, and rebates focused on climate, energy, and energy efficiency. 

Read about the Inflation Reduction Act of 2022 enacted August 16, 2022, which extends and expands existing tax credits and adds several new energy tax credits to encourage the production of electricity using clean energy and the reduction of carbon emissions.

Read Mintz’s summary of important tax provisions included in the recently announced Inflation Reduction Act of 2022. If it is signed into law, the Act will establish a 15% corporate minimum tax; modify the carried interest rule; and expand, extend, and add new energy tax credits.

Read about the U.S. House Ways and Means Committee’s proposed tax legislation intended to partially fund the $3.5 trillion Build Back Better Act to fund Democratic priorities.