Tax Incentives

Tax Codes

Under section 179 amendments, eligible property placed in service after September 8, 2010 and before January 1, 2012 qualifies for up to 100% first year bonus depreciation. For 2012, bonus depreciation is still available, but the allowed deduction reverts from up to 100% to 50% of the eligible basis. Depreciable property that is not eligible for a section 179 deduction is still deductible over a number of years through MACRS depreciation according to sections 167 and 168. The 179 election is NOT mandatory, and the eligible property may be depreciated according to section 167 and 168 if preferable for tax reasons. MACRS stands for Modified Accelerated Cost-Recovery System; it was established in 1986 for businesses to recover investments in certain property through depreciation deductions. The MACRS specifies a number of renewable technologies that qualify for a 5 year depreciation schedule. These technologies include but are not limited to solar-electric and solar-thermal technologies, fuel cells and microturbines, geothermal electric, and combined heat and power.

Section 179

Section 179 is named for its relevant section of the Internal Revenue Service code. It allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. This section was created as an incentive by the U.S. Government to encourage businesses to buy equipment and invest in themselves.

Section 179 passed in December 2010, in this section the provision for bonus depreciation was amended and extended yet again by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation act of 2010 (H.R. 4853).

Investment Tax Credit (ITC)

In addition to the discussed tax deductions above, E&E investors may have the opportunity to take advantage
of Investment Tax Credits (ITC).

The Investment Tax Credit (ITC) Section 48 allows project owners or investors to be eligible for Federal business energy investment tax credits for installing designated renewable energy generation equipment placed in service during the period of 2006 through 2016.

More Information

For more information on the tax incentives & benefits please visit www.irs.gov. Please be sure to consult with your tax professional to see how these tax incentives may apply. The information above are based on commercial guidelines because of changes in Tax Laws; always consult with your tax specialist.