The IRS has issued final regulations (TD 9944
) providing guidance on claiming carbon capture credits under Section 45Q. The final regulations retain the basic approach of proposed regulations issued in June but make several modifications.
The Bipartisan Budget Act significantly enhanced the credit for carbon captured using equipment placed into served on or after Feb. 9, 2018. It broadened the definition of carbon eligible and increased the maximum credit to $50 per metric ton for permanent sequestration and $35 per metric ton for Enhanced Oil Recovery purposes with no limit.
The IRS issued long-awaited proposed regulations in June addressing a broad array of questions related the credit. The final regulations follow the structure of the proposed regulations but revise and clarify several aspects of the credit in response to taxpayer comments.
The final regulations apply to tax years beginning on or after their publication in the Federal Register
, but taxpayers may rely on them for tax years beginning on or after Jan. 1, 2018, so long as they do so entirely and consistently.
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