IRS Confirms That Flip Partnership Guidelines Do Not Apply To Solar Projects

The IRS has advised that the flip partnership guidelines under Rev. Proc. 2007-65, 2007-2 C.B. 967, do not apply to solar facilities or other projects claiming the Section 48 investment tax credit (ITC). The statement, made in recently released CCA 201524024, was not surprising to practitioners in the solar arena as the revenue procedure expressly does not apply to ITC transactions.

Flip Partnership Structures in Renewable Projects

Taxpayers owning renewable energy projects through a joint venture structure must have a true partnership in order to take the ITC or the Section 45 production tax credit (PTC). Released in 2007, Rev. Proc. 2007-65 issued safe harbor guidelines for determining whether a partnership's tax allocations to an investor would be respected under the partnership tax rules. Last week, the IRS released internal memorandum CCA 201524024, in which it said that the revenue procedure guidelines are inapplicable to partners or partnerships taking the