The Treasury Department and Internal Revenue Service (IRS)
issued Proposed Regulations for carbon sequestration tax
credits—under Section 45Q—addressing recapture risk and
the availability of the credit when carbon is converted into
products.
Importantly, while the proposed rules are not yet final, they
allow a taxpayer to rely on them for taxable years beginning after
February 9, 2018, so long as the taxpayer relies on the rules in
their entirety and in a consistent manner.
This alert helps tax investors and sponsors determine how to
meaningfully move carbon capture, use and sequestration (CCUS)
projects forward. We also cover certain lender focused issues, such
as items that could materially affect a CCUS project's cash
flows, thereby enabling more precise risk analysis for underwriting
purposes.
