Here Comes the Sun: Solar Investment Tax Credit Considerations

As the Biden administration and Congress look to advance an environmentally focused agenda, taxpayers engaged in the development of solar energy technology and systems may benefit from a new tax credit. Under I.R.C. § 48 a solar investment tax credit is included as one of the categories of investment credits under I.R.C. § 46 and is eligible for investment in solar illumination and solar energy property. The amount of the credit depends on the type of property developed, and the credit calculation is subject to the usual limitations of I.R.C. § 38.

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Practical Guidance Updates

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• Business Entities: IRS issues a legal memorandum stating that swapping certain cryptocurrencies for others cannot qualify for gain deferral on the basis that they are not like-kind to one another. IRS Legal Memo (ILM) 202124008.
• Employee Benefits: IRS provides a 12-month extension of the relief provided in Notice 2020-42, as extended by Notice 2021-3. For the period from July 1, 2021 through June 30, 2022, this notice extends two types of relief from the physical presence requirement in Section 1.401(a)-21(d)(6)(i) for participant elections required to be witnessed by a plan representative or a notary public: (1) temporary relief from the physical presence requirement for any participant election witnessed by a notary public in a state that permits remote notarization (either by law or through an executive order), and (2) temporary relief from the physical presence requirement for any participant election witnessed by a plan representative. R.S. Notice 2021-40.
• Employee Benefits: Supreme Court rejects challenge to the ACA by states asserting the law could not stand after Congress eliminated the individual mandate penalty, holding that the plaintiffs lacked standing as they had not suffered a redressable harm. California v. Texas, 2021 U.S. LEXIS 3119 (June 17, 2021).
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