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The second quarter of 2023 saw continued developments as a result of the enactment of the Inflation Reduction Act of 2022 (IRA), court activity and announcements from federal agencies. Below, we summarize the updates you need to know.

IRS Rulings and Guidance

Following the enactment of the IRA, a plethora of related guidance continued to be released by U.S. Department of the Treasury and IRS.

Key Cases

  • In a precedential opinion filed on May 16, 2023, in Growmark, Inc. & Subsidiaries v. Commissioner, 160 T.C. No. 11 (2023), the U.S. Tax Court held that the petitioner was required to reduce the amount of fuel excise tax included in its cost of goods sold by the amount of excise tax credits claimed and received under Section 6426(b) and (c). The Tax Court has not ruled on the entire dispute; its opinions in this case are appealable to the U.S. Court of Appeals for the Seventh Circuit.
  • In an opinion and order filed on June 20, 2023, in Alta Wind I Owner-Lessor C, et al. v. U.S. (Nos. 13-402, 13-917, 13-935, 13-972, 14-47, 14-93, 14-174, 14-175, 17-997), the U.S. Court of Federal Claims denied the plaintiff's motion for summary judgment regarding whether Section 1603 cash grants (and the indemnities associated with them) are separate grant-ineligible assets to which purchase price should be allocated pursuant to Section 1060. The court held that the "incremental cash consideration paid for the anticipated Section 1603 cash grants is not basis allocable to Class V tangible property" and that "the purchase price pertaining to consideration for the anticipated Section 1603 cash grants is grant-ineligible intangible property under Class VI (contract rights) or Class VI (goodwill or going concern value)." The court also reserved decision for trial on the factual questions underlying the question of "whether the indemnities associated with the Section 1603 cash grants are part of the grant-eligible basis." These holdings will ultimately be appealable to the U.S. Court of Appeals for the Federal Circuit.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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