Energy Credit 'Chaining' Carveout May Be Needed for Gov'ts
Tax attorney Amish Shah was interviewed by Law360 about the chaining of clean energy tax credits, where an entity purchases credits from a clean energy developer for a fraction of the price and later selects a direct cash payment from the government equal to the total value of the credits. The Internal Revenue Service and the U.S. Department of Treasury have said they usually do not allow chaining, but they may consider exceptions. Mr. Shah said there will be scenarios where an entity owns the project that functions as an alter ego for an entity entitled to direct pay but is not eligible for direct payment under the proposed regulations.
"There are enough situations where states need to set up separate entities," said Mr. Shah.
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