Renewable Energy and Tax Reform: Updates to the Code

The United States government has introduced several changes to its tax code aimed at promoting renewable energy and encouraging sustainable development.

Increased Incentives for Renewable Energy

• Section 4: Increasing the Type of Buildings Eligible for Rehabilitation
• The section 47(c)(1)(B)(i)(I) of the Internal Revenue Code of 1986 has been amended to increase the percentage of the adjusted basis that can be financed through a rehabilitated building loan.

Eliminating Rehabilitation Credit Basis Adjustment

Section 5: Elimination of Rehabilitation Credit Basis Adjustment

1. The section 50(c) of the Internal Revenue Code of 1986 has been amended to eliminate the basis adjustment for rehabilitation credits.
2. In the case of a rehabilitation credit, paragraph (1) of section 48(d) does not apply.

Modifications Regarding Certain Tax-Exempt Use Property

Section 6: Modifications Regarding Certain Tax-Exempt Use Property

• The section 47(c)(2)(B)(v) of the Internal Revenue Code of 1986 has been amended to clarify the rules for determining whether property is tax-exempt use property.
• For purposes of subclause (I), except in the case of a tax-exempt entity described in section 168(h)(2)(A)(i), the determination of whether property is tax-exempt use property shall be made under section 168(h) without regard to whether the property is leased in a disqualified lease.

These changes aim to provide additional incentives for renewable energy and sustainable development, while also clarifying certain aspects of tax-exempt use property. The updates take effect immediately upon enactment and apply to all relevant tax returns filed after the date of enactment.