IRS Extends "Begun Construction" Guidance (WSGR)
Earlier today, the IRS released Notice 2015-25, 2015-13 IRB 1, which updates the guidance provided in Notice 2013-29, 2013-1 C.B. 1085, Notice 2013-60, 2013-2 C.B. 431, and Notice 2014-46, 2014-36 I.R.B. 520 (collectively, the "Begun Construction Guidance").
In order to reflect the one-year extension of when construction must begin for purposes of the renewable electricity production tax credit under section 45, or the energy investment tax credit under section 48, Notice 2015-25 provides that all references to January 1, 2014 in the Begun Construction Guidance are replaced with January 1, 2015. Accordingly, if a taxpayer can establish that it meets either the significant physical work test or the 5 percent safe harbor found in the Begun Construction Guidance prior to January 1, 2015, the taxpayer can establish the beginning of construction.
Similarly, Notice 2015-25 provides that the continuous construction/continuous efforts safe harbor found in the Begun Construction Guidance is updated such that if a qualifying facility is placed in service prior to January 1, 2017, the facility will be considered as having satisfied the continuous construction test or the continuous efforts test.
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