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Dec 15 -- The Internal Revenue Service (IRS), Treasury, invites public comments by February 13, 2024 regarding the Section 45X Advanced Manufacturing Production Credit proposed rule.

This document contains proposed regulations to implement the advanced manufacturing production credit established by the Inflation Reduction Act of 2022 to incentivize the production of eligible components within the United States. Eligible components include certain solar energy components, wind energy components, inverters, qualifying battery components, and applicable critical minerals. The proposed regulations would affect eligible taxpayers who produce and sell eligible components and intend to claim the benefit of an advanced manufacturing production credit, including by making elective payment or credit transfer elections. This document also provides notice of a public hearing on the proposed regulations. Written or electronic comments must be received by February 13, 2024. A public hearing on this proposed regulation has been scheduled for February 22, 2024, at 10 a.m. ET.

On October 24, 2022, the Treasury Department and the IRS published Notice 2022–47, 2022–43 I.R.B. 312. The notice requested general comments on issues arising under section 45X, as well as specific comments concerning: (1) definitions (including the definitions of eligible components); (2) the Related Person Election; (3) capacity-to-power ratios for battery cells or battery modules; (4) credit amount for components used in systems of varying capacity; (5) offshore wind vessels; (6) applicable critical minerals; and (7) apportionment and pass-thru of credit amounts to beneficiaries of estates or trusts. The Treasury Department and the IRS received over 300 comments from industry participants and other stakeholders. The Treasury Department and the IRS appreciate the commenters' interest and engagement on these issues. These comments have been carefully considered in the preparation of these proposed regulations.

On March 6, 2023, the Treasury Department and the IRS published Notice 2023–18, 2023–10 I.R.B. 508, to establish the qualifying advanced energy projects program (section 48C(e) program). On June 20, 2023, the Treasury Department and the IRS published Notice 2023–44, 2023–25 I.R.B. 924, to provide additional guidance on the section 48C(e) program, including rules for the interaction between sections 45X and 48C. The rules regarding the interaction between sections 45X and 48C provided in Notices 2023–18 and 2023–44 have been incorporated into these proposed regulations and upon finalization of this rulemaking, section 5.05 of Notice 2023–18 and section 3 of Notice 2023–44 will be superseded.

Consistent with section 45X(a)(1), these proposed regulations would provide that for purposes of section 38, the section 45X credit for any taxable year is an amount equal to the sum of the credit amounts determined under section 45X(b) with respect to each eligible component, as defined in section 45X(c), produced by the taxpayer, and, during the taxable year, sold by that taxpayer to an unrelated person. Consistent with section 45X(a)(2), only eligible components that are produced and sold in a trade or business of the taxpayer are taken into account for purposes of the section 45X credit.

These proposed regulations are organized into four sections, proposed §§ 1.45X–1 through 1.45X–4.

-- Proposed § 1.45X–1 would provide general rules applicable to the section 45X credit, including the definition of the term “produced by the taxpayer” for both primary and secondary production. Primary production involves producing an eligible component using non-recycled materials while secondary production involves producing an eligible component using recycled materials.
-- Proposed § 1.45X–2 would provide rules for sales to unrelated persons through a person related to the taxpayer, including the rules for a taxpayer to make an election to treat sales of eligible components to related persons (Related Person Election) as if made to unrelated persons.
-- Proposed § 1.45X–3 would provide definitions and credit amounts for certain eligible components, including solar energy components, wind energy components, inverters, and qualifying battery components, and phase-out rules.
-- Proposed § 1.45X–4 would provide definitions and credit amounts for applicable critical minerals that are eligible components. . . .

FRN: https://www.federalregister.gov/d/2023-27498 [25 pages]
Press release: https://home.treasury.gov/news/press-releases/jy1989

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