Internal Revenue Bulletin 2024-52 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2024–52
December 23, 2024
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
AOD 2024-1, page 1354.
Acquiescence to the holding that notices that identify certain
arrangements as reportable transactions, issued without fol-
lowing notice-and-comment rulemaking procedures after the
American Jobs Creation Act of 2004, are invalid under the
Administrative Procedure Act.
ADMINISTRATIVE, INCOME TAX
Rev. Proc. 2024-44, page 1438.
This proposed revenue procedure specifies when information
shown on a return in accordance with the applicable forms
and instructions will be an adequate disclosure for purposes
of reducing an understatement of income tax under section
6662(d) and for purposes of avoiding the section 6694(a)
preparer penalty. This revenue procedure updates Rev. Proc.
2023-40, 2023-51 I.R.B. 1553, and applies to any income
tax return filed on 2024 tax forms for a taxable year begin-
ning in 2024, and to any income tax return filed in 2025 on
2024 tax forms for short taxable years beginning in 2025.
EMPLOYEE PLANS
Notice 2024-82, page 1425.
This notice sets forth the 2024 Required Amendments List
(2024 RA List). The 2024 RA List applies to individually
designed plans qualified under section 401(a) of the Internal
Revenue Code and individually designed plans that satisfy
the requirements of section 403(b). The 2024 RA List also
applies to pre-approved plans with respect to interim amend-
ments.
Notice 2024-86, page 1429.
In order to ensure that plans, participants, beneficiaries, qual-
ified beneficiaries, and claimants in disaster areas are not fur-
ther adversely affected by Hurricane Helene, Tropical Storm
Helene, and Hurricane Milton with respect to their employee
benefit plans, certain timeframes are extended during the
Relief Period established by this document. This document
is jointly issued by the Departments of Labor and the Trea-
sury, through the Employee Benefits Security Administration
and the Internal Revenue Service, respectively, under section
518 of ERISA and section 7508A(b) of the Code.
EMPLOYMENT TAX
REG-106595-22, page 1444.
These proposed regulations relate to the definition of qual-
ified nonpersonal use vehicles. Qualified nonpersonal use
vehicles are excepted from the substantiation requirements
that apply to certain listed property. These proposed regu-
lations add unmarked vehicles used by firefighters or mem-
bers of a rescue squad or ambulance crew as a new type of
qualified nonpersonal use vehicle. These regulations affect
governmental units that provide firefighter or rescue squad
or ambulance crew member employees with unmarked qual-
ified nonpersonal use vehicles and the employees who use
those vehicles.
INCOME TAX
T.D. 10015, page 1355.
Section 48 provides an investment tax credit for energy prop-
erty (energy credit). These final regulations update the reg-
ulations under section 48 to reflect changes to that section
since 1987, mostly notably changes made by the Inflation
Reduction Act of 2022 (IRA). Generally, in connection with
the IRA, the final regulations update the types of energy prop-
erty eligible for the energy credit, including additional types
of energy property added by the IRA; clarify the application
of new credit transfer rules to recapture due to failure to
satisfy the prevailing wage requirements, including notifica-
tion requirements for eligible taxpayers; and include quali-
Finding Lists begin on page ii.

fied interconnection costs in the basis of certain lower-out-
put energy properties. The final regulations also provide
rules generally applicable to energy property, such as rules
regarding: functionally interdependent components; property
that is an integral part of an energy property; application
of the “80/20 Rule” to retrofitted energy property; dual use
property; ownership of components of an energy property;
energy property that may be eligible for multiple Federal
income tax credits; and the election to treat qualified facil-
ities eligible for the renewable electricity production credit
under section 45 instead as property eligible for the energy
credit.
INCOME TAX, TAX CONVENTIONS
Rev. Proc. 2024-42, page 1433.
This revenue procedure updates and supersedes the lists
of countries in Rev. Proc. 2023-36. Armenia and Uruguay
are added to the list of jurisdictions with which the United
States has in effect a relevant information exchange agree-
ment. Costa Rica and Thailand are added to the list of coun-
tries with which Treasury and the IRS have determined it is
appropriate to have an automatic exchange relationship with
respect to the information collected under Treas. Reg. §§
1.6049-4(b)(5) and 1.6049-8(a).
TAX CONVENTIONS
Announcement 2024-42, page 1443.
The competent authorities of the United States and the King-
dom of Norway have entered a Competent Authority Arrange-
ment under paragraph 2 of Article 27 (Mutual Agreement
Procedure) of the Convention between the United States of
America and the Kingdom of Norway for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Property in which the com-
petent authorities confirm that Article 20 (Investment or
Holding Companies) is not applicable to a U.S. investment
company that qualifies as a Regulated Investment Company
pursuant to sections 851 (Definition of regulated investment
company) and 852 (Taxation of regulated investment com-
panies and their shareholders) of the Internal Revenue Code.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
December 23, 2024 Bulletin No. 2024–52

Actions Relating to Court
Decisions
It is the policy of the Internal Reve­
nue Service to announce at an early date
whether it will follow the holdings in cer­
tain cases. An Action on Decision is the
document making such an announcement.
An Action on Decision will be issued
at the discretion of the Service only on
un appealed issues decided adverse to the
government. Generally, an Action on De­
cision is issued where its guidance would
be helpful to Service personnel working
with the same or similar issues. Unlike a
Treasury Regulation or a Revenue Ruling,
an Action on Decision is not an affirma­
tive statement of Service position. It is not
intended to serve as public guidance and
may not be cited as precedent.
Actions on Decisions shall be relied
upon within the Service only as conclu­
sions applying the law to the facts in the
particular case at the time the Action on
Decision was issued. Caution should be
exercised in extending the recommenda­
tion of the Action on Decision to similar
cases where the facts are different. More­
over, the recommendation in the Action
on Decision may be superseded by new
legislation, regulations, rulings, cases, or
Actions on Decisions.
Prior to 1991, the Service published
acquiescence or nonacquiescence only in
certain regular Tax Court opinions. The
Service has expanded its acquiescence
program to include other civil tax cases
where guidance is determined to be help­
ful. Accordingly, the Service now may
acquiesce or nonacquiesce in the holdings
of memorandum Tax Court opinions, as
well as those of the United States District
Courts, Claims Court, and Circuit Courts
of Appeal. Regardless of the court decid­
ing the case, the recommendation of any
Action on Decision will be published in
the Internal Revenue Bulletin.
The recommendation in every Action
on Decision will be summarized as ac­
quiescence, acquiescence in result only,
or nonacquiescence. Both “acquiescence”
and “acquiescence in result only” mean
that the Service accepts the holding of the
court in a case and that the Service will
follow it in disposing of cases with the
same controlling facts. However, “acqui­
escence” indicates neither approval nor
disapproval of the reasons assigned by the
court for its conclusions; whereas, “acqui­
escence in result only” indicates disagree­
ment or concern with some or all of those
reasons. “Nonacquiescence” signifies that,
although no further review was sought,
the Service does not agree with the hold­
ing of the court and, generally, will not
follow the decision in disposing of cases
involving other taxpayers. In reference to
an opinion of a circuit court of appeals, a
“nonacquiescence” indicates that the Ser­
vice will not follow the holding on a na­
tionwide basis. However, the Service will
recognize the precedential impact of the
opinion on cases arising within the venue
of the deciding circuit.
The Commissioner DOES ACQUI­
ESCE in the following decision:
Green Rock LLC v. Internal Rev-
enue Serv., 104 F.4th 220 (11th Cir.
2024).
1

1
Acquiescence to the holding that notices that identify certain arrangements as reportable transactions, issued without following notice­and­comment rulemaking procedures after the Amer­
ican Jobs Creation Act of 2004, are invalid under the Administrative Procedure Act.
December 23, 2024 1354 Bulletin No. 2024–52

Part I
26 CFR 1.48-9, 1.48-13, 1.48-14, and 1.6418-5
T.D. 10015
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Definition of Energy
Property and Rules
Applicable to the Energy
Credit
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document sets forth
final rules relating to the energy credit,
including rules for determining whether
investments in energy property are eligi­
ble for the energy credit and for imple­
menting certain amendments made by the
Inflation Reduction Act of 2022. The final
regulations impact taxpayers who invest
in energy property eligible for the energy
credit.
DATES: Effective date: These regulations
are effective on December 12, 2024.
Applicability dates: For dates of applica­
bility, see §§1.48­9(g), 1.48­13(f), 1.48­
14(j), and 1.6418­5(j).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
the IRS Office of the Associate Chief
Counsel (Passthroughs and Special Indus­
tries) at (202) 317­6853 (not a toll­free
number).
SUPPLEMENTARY INFORMATION:
Authority
This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under sections 48 and 6418 of the
Internal Revenue Code (Code) issued by
the Secretary of the Treasury or her dele­
gate (Secretary) pursuant to the authority
granted under sections 45(b)(12), 48(a)
(3)(D), and (a)(16), 6418(g) and (h), and
7805(a) of the Code (final regulations).
Section 48(a)(3)(D) provides a specific
delegation of authority for the Secretary to
prescribe by regulations performance and
quality standards for energy property after
consulting with the Secretary of Energy.
Sections 45(b)(12) and 48(a)(16) pro­
vide specific delegations of authority with
respect to the requirements of section
45(b), including the prevailing wage and
apprenticeship (PWA) requirements of
section 45(b)(7) and (8), as incorporated
by section 48(a)(10) and (11), with each
stating, “[t]he Secretary shall issue such
regulations or other guidance as the Sec­
retary determines necessary to carry out
the purposes of this subsection, including
regulations or other guidance which pro­
vides for requirements for recordkeeping
or information reporting for purposes of
administering the requirements of this
subsection.” Section 48(a)(10)(C) grants
authority for the Secretary to provide,
by regulations or other guidance, for
recapturing the benefit of any increase
in the credit allowed under section 48(a)
allowed to an energy project that initially
satisfies the PWA requirements if such
energy project should later fail to satisfy
such requirements during the recapture
period by applying rules similar to the
rules of section 50(a) of the Code. Sec­
tion 48(a)(16) provides a general grant of
regulatory authority for section 48(a), by
stating: “The Secretary shall issue such
regulations or other guidance as the Sec­
retary determines necessary to carry out
the purposes of this subsection, including
regulations or other guidance which pro­
vides for requirements for recordkeeping
or information reporting for purposes of
administering the requirements of this
subsection.”
Section 6418(g) provides several spe­
cific delegations of authority to the Sec­
retary with regard to enforcing require­
ments for valid transfers of certain Federal
income tax credits under section 6418 and
recapturing excessive credit transfers.
Section 6418(h) provides a specific del­
egation of authority with respect to the
transfer of credits under section 6418,
stating, in part, that “[t]he Secretary shall
issue such regulations or other guidance
as may be necessary to carry out the pur­
poses of this section.”
Finally, section 7805(a) authorizes the
Secretary to “prescribe all needful rules
and regulations for the enforcement of
[the Code], including all rules and regu­
lations as may be necessary by reason of
any alteration of law in relation to internal
revenue.”
Background
I. Overview
Section 38 of the Code allows cer­
tain business credits against the Federal
income tax imposed by chapter 1 of the
Code (chapter 1). Among the credits
allowed by section 38 is the investment
credit determined under section 46 of the
Code, which includes the energy credit
determined under section 48 (section 48
credit). See sections 38(b)(1) and 46(2).
Section 48(a)(1) generally provides that
the section 48 credit for any taxable year
is the energy percentage of the basis of
each energy property placed in service
during such taxable year. For most types
of energy property, eligibility for the
section 48 credit and, in some cases, the
amount of the section 48 credit depend
upon meeting certain deadlines for begin­
ning construction of the energy property
or for placing the energy property in ser­
vice.
Section 48 originally was enacted by
section 2 of the Revenue Act of 1962, Pub­
lic Law 87­834, 76 Stat. 960, 963 (Octo­
ber 16, 1962), to spur economic growth by
encouraging investments in various capital
projects across many industries including
energy, transportation, and communica­
tions. Section 48 has been amended many
times since its enactment, most recently by
section 13102 of Public Law 117­169, 136
Stat. 1818 (August 16, 2022), commonly
known as the Inflation Reduction Act of
2022 (IRA). The IRA amended section
48 in several ways, including by making
additional types of energy property eligi­
ble for the section 48 credit, providing a
special rule to allow certain lower­output
Bulletin No. 2024–52 1355 December 23, 2024

December 23, 2024 1356 Bulletin No. 2024–52
energy properties to include amounts paid
for qualified interconnection property in
connection with the installation of energy
property, and providing an increased
credit amount for energy projects that sat­
isfy prevailing wage and apprenticeship
requirements, a domestic content bonus
credit amount, and an increase in credit
rate for energy communities.
The Income Tax Regulations at §1.48­9
in effect prior to December 12, 2024 (for­
mer §1.48­9), which provide definitions
and rules for determining whether prop­
erty is energy property eligible for the sec­
tion 48 credit, originally were published
on January 23, 1981 (T.D. 7765, 46 FR
7287). Those regulations were amended on
July 21, 1987 (T.D. 8147, 52 FR 27336) to
provide rules for dual use property. Thus,
former §1.48­9 has not been updated since
1987, which is before many of the current
types of energy property became eligible
for the section 48 credit.
II. Prior Guidance
Prior to proposing the amendments
to the regulations under section 48
being finalized by this treasury decision,
the Department of the Treasury (Trea­
sury Department) and the IRS twice
requested comments on issues to be
addressed in these regulations. On Octo­
ber 26, 2015, the Treasury Department
and the IRS published Notice 2015­70,
2015­43 I.R.B. 604, requesting com­
ments regarding statutory updates to
section 48 preceding those made by the
IRA. On October 24, 2022, in response
to the passage of the IRA, the Trea­
sury Department and the IRS published
Notice 2022­49, 2022­43 I.R.B. 321,
requesting general as well as specific
comments on issues arising under sec­
tion 48, among other sections, that were
amended or added by the IRA.
On August 30, 2023, the Treasury
Department and the IRS published a
notice of proposed rulemaking (REG­
100908­23) in the Federal Register (88
FR 60018), corrected in 88 FR 73807
(Oct. 27, 2023), corrected in 89 FR 25550
(April 11, 2024), proposing rules regard­
ing the increased credit amounts available
for taxpayers satisfying PWA require­
ments established by the IRA (PWA
Proposed Regulations). Comments were
requested and a public hearing was held
November 21, 2023.
On November 22, 2023, after consid­
eration of all the comments submitted in
response to Notice 2015­70 and Notice
2022­49, and after consultation with the
Department of Energy (DOE), the Trea­
sury Department and the IRS published
a notice of proposed rulemaking and a
notice of public hearing (REG­132569­
17) in the Federal Register (88 FR
82188), corrected in 89 FR 2182 (January
12, 2024), proposing rules that would pro­
vide guidance under section 48 (Proposed
Regulations). On February 22, 2024, the
Treasury Department and the IRS pub­
lished a second correction to the Proposed
Regulations in the Federal Register (89
FR 13293) that re­opened the comment
period through March 25, 2024 (Correc­
tion). The Proposed Regulations withdrew
certain portions of the PWA Proposed
Regulations and re­proposed regulations
that would provide additional guidance
on the PWA requirements under section
48, including the statutory exception for
energy projects with a maximum output
of less than one megawatt (MW) and the
recapture rules under section 48(a)(10)(C)
related to the PWA requirements.
Although the Proposed Regulations
withdrew certain portions of the PWA
Proposed Regulations, the Explanation
of Provisions section in the preamble to
the PWA Proposed Regulations gener­
ally remained relevant. Therefore, to the
extent consistent with the preamble to the
Proposed Regulations, the Explanation of
Provisions section of the PWA Proposed
Regulations was incorporated in the pre­
amble to the Proposed Regulations.
The preamble to the Proposed Regu­
lations did not address written comments
that were submitted in response to the
PWA Proposed Regulations. Any com­
ments received in response to the Pro­
posed Regulations, including comments
on the re­proposed regulations addressing
the PWA requirements specific to sec­
tion 48, are addressed in the Summary of
Comments and Explanation of Revisions
section of this preamble. The Proposed
Regulations did not extend the comment
period or affect the scheduled hearing for
the PWA Proposed Regulations. The PWA
Proposed Regulations, other than the por­
tions that were withdrawn, were adopted
as final regulations by Treasury Decision
(T.D. 9998), which was published in the
Federal Register (89 FR 53184) on June
25, 2024 (PWA Final Regulations).
On June 21, 2023, the Treasury Depart­
ment and the IRS published a notice of
proposed rulemaking (REG­101610­23)
in the Federal Register (88 FR 40496)
proposing rules concerning the election
under section 6418 to transfer certain
Federal income tax credits, including the
section 48 credit (6418 Proposed Regu­
lations). Proposed §1.6418­5 of the 6418
Proposed Regulations included proposed
rules addressing notification requirements
and the impact of the credit recapture rules
under sections 50(a), 49(b), and 45Q(f)
(4) on the transfer of Federal income tax
credits. Comments were requested and a
public hearing on the 6418 Proposed Reg­
ulations was held on August 23, 2023.
The Proposed Regulations would
supplement the 6418 Proposed Reg­
ulations by adding provisions to pro­
posed §1.6418­5 addressing notification
requirements and the impact of the recap­
ture rules for failing to satisfy the PWA
requirements under section 48(a)(10) if
an election under §1.6418­2 or §1.6418­3
has been made. The preamble to the Pro­
posed Regulations did not address written
comments that were submitted in response
to the regulations proposed in the 6418
Proposed Regulations. Any comments
received in response to the Proposed
Regulations, including the additions to
proposed §1.6418­5 described in the Pro­
posed Regulations, are addressed in the
Summary of Comments and Explanation
of Revisions section of this preamble. The
Proposed Regulations did not otherwise
extend the comment period for the 6418
Proposed Regulations. On April 30, 2024,
a Treasury Decision (T.D. 9993) adopting
the 6418 Proposed Regulations as final
regulations (6418 Final Regulations) was
published in the Federal Register (89
FR 34770). The 6418 Final Regulations
did not finalize the portion of proposed
§1.6418­5 that was included in the Pro­
posed Regulations.
Summary of Comments and
Explanation of Revisions
The Treasury Department and the
IRS received 350 written comments in

Bulletin No. 2024–52 1357 December 23, 2024
response to the Proposed Regulations.
The comments are available for public
inspection at https://www.regulations.gov
or upon request. After full consideration
of the comments received in response to
the Proposed Regulations, these final reg­
ulations adopt the Proposed Regulations
with modifications as described in this
Summary of Comments and Explanation
of Revisions.
Comments addressing the require­
ments for energy property are described
in part I of this Summary of Comments
and Explanation of Revisions. Comments
addressing the PWA requirements are
described in part II of this Summary of
Comments and Explanation of Revisions.
Comments addressing rules applicable to
energy property are described in part III of
this Summary of Comments and Explana­
tion of Revisions.
Comments summarizing the statute or
the Proposed Regulations, recommending
statutory revisions, or addressing issues
that are outside the scope of this rulemak­
ing (such as revising other Federal regula­
tions and recommending changes to IRS
forms) generally are not addressed in this
Summary of Comments and Explanation
of Revisions or adopted in these final
regulations. In addition to modifications
described in this Summary of Comments
and Explanation of Revisions, the final
regulations also include non­substantive
grammatical or stylistic changes to the
Proposed Regulations. Unless otherwise
indicated in this Summary of Comments
and Explanation of Revisions, provisions
of the Proposed Regulations with respect
to which no comments were received are
adopted without substantive change.
I. Requirements for Energy Property
For purposes of the section 48 credit,
energy property consists of all the compo­
nents of property that meet the statutory
requirements for an energy property as
defined by section 48(a)(3) and (c).
Section 48(a)(3)(B) through (D) pro­
vide general requirements for all types
of energy property. Section 48(a)(3)(B)
limits energy property to property that is
constructed, reconstructed, or erected by
the taxpayer or that the taxpayer acquires
if the original use of such property com­
mences with the taxpayer. Section 48(a)(3)
(C) provides that to be eligible as energy
property, depreciation (or amortization in
lieu of depreciation) must be allowable for
the property. Section 48(a)(3)(D) provides
that to be eligible as energy property, the
property must also meet any performance
and quality standards that have been pre­
scribed by the Secretary, after consulta­
tion with the Secretary of Energy, and
are in effect at the time of the taxpayer’s
acquisition of the property. Under section
48(a)(3), energy property does not include
property that is part of a qualified facility
the production from which is allowed a
renewable electricity production credit
determined under section 45 (section 45
credit) for the taxable year or any prior
taxable year. Lastly, if the statutory text of
section 48 provides dates by which con­
struction of energy property must begin or
when energy property must be placed in
service, such energy property must meet
those deadlines to be eligible for the sec­
tion 48 credit at specified energy percent­
ages.
A. Definitions related to requirements for
energy property
Before 1990, section 48 defined the
term “section 38 property” to include,
among other types of property, energy
property eligible for the section 48 credit.
The Revenue Reconciliation Act of 1990,
Public Law 101­508, 104 Stat. 1388
(November 5, 1990) removed the term
“section 38 property” in amending section
48. However, section 48 is one of the cred­
its that comprise the investment credit for
any taxable year determined under section
46, which is included in section 38(b)(1)
and remains subject to the general busi­
ness credit rules under section 38. As a
result, rules related to “section 38 prop­
erty” remain generally applicable to the
section 48 credit.
Sections 1.48­1 and 1.48­2 provide
guidance with respect to section 38 prop­
erty. Section 1.48­1 was last substan­
tially revised on October 11, 1988 (T.D.
8233, 53 FR 39592) and §1.48­2 was last
revised on June 28, 1985 (T.D. 8031, 50
FR 26698). Although subsequent amend­
ments to section 48 have made some of the
rules provided by these regulations inap­
plicable, those rules continue to provide
useful definitions related to requirements
for energy property, some of which would
be adopted under proposed §1.48­9.
1. Performance and Quality Standards for
Energy Property
Section 48(a)(3)(D) provides that
energy property is property that meets the
performance and quality standards (if any)
that have been prescribed by the Secretary
by regulations (after consultation with the
Secretary of Energy) and are in effect at
the time of the acquisition of the prop­
erty. Former §1.48­9(m)(1) provided that
“energy property must meet quality and
performance standards, if any, that have
been prescribed by the Secretary (after
consultation with the Secretary of Energy)
and are in effect at the time of acquisition.”
Generally, proposed §1.48­9(c)(2)(i)
would adopt this rule for performance and
quality standards for energy property from
former §1.48­9(m)(1) by providing that
energy property must meet performance
and quality standards, if any, which have
been prescribed by the Secretary (after
consultation with the Secretary of Energy)
and are in effect at the time of acquisition
of the energy property. The final regula­
tions adopt this rule as proposed.
2. Performance and Quality Standards for
Electrochromic Glass Property
Proposed §1.48­9(c)(2)(ii)(B) would
provide rules for performance and qual­
ity standards for electrochromic glass
property by stating that to be eligible for
the section 48 credit, electrochromic win­
dows must be rated in accordance with
the National Fenestration Rating Coun­
cil (NFRC) and secondary glazing sys­
tems must be rated in accordance with
the Attachments Energy Rating Council
(AERC) Rating and Certification Process,
or subsequent revisions.
A few commenters addressed the per­
formance and quality standards for elec­
trochromic glass provided in the Proposed
Regulations. Generally, these commenters
suggested methods to satisfy the NFRC
rating requirement and were particularly
interested in a simulation­based process.
For example, a commenter advocated for a
process that emphasizes simulation­based
validation to expedite compliance and
reduce barriers to implementation, partic­

December 23, 2024 1358 Bulletin No. 2024–52
ularly given the lengthy delays associated
with physical testing. This commenter
stated that simulations, supported by
advanced and reliable modeling software,
have become a standard practice within
the industry. Another commenter also
emphasized the need to use simulations to
satisfy the NFRC rating requirement.
In response to these comments, the
Treasury Department and the IRS con­
sulted with the DOE and learned that the
existing NRFC and the AERC ratings sys­
tems incorporate simulation methodolo­
gies that should address the commenters’
concerns. Accordingly, the final regula­
tions adopt this rule as proposed.
3. Placed in Service
a. General rules
Section 48(a) provides that the sec­
tion 48 credit for any taxable year is the
energy percentage of the basis of each
energy property placed in service during
such taxable year. As part of the regula­
tions under section 46 for the investment
credit, §1.46­3(d)(1) provides general
rules for determining when a taxpayer has
placed a property in service for purposes
of the section 48 credit. Under §1.46­
3(d)(1), property is considered placed in
service in the earlier of the taxable year
in which, under the taxpayer’s deprecia­
tion practice, the period for depreciation
with respect to such property begins; or
the taxable year in which the property is
placed in a condition or state of readiness
and availability for a specifically assigned
function, whether in a trade or business, in
the production of income, in a tax­exempt
activity, or in a personal activity.
Proposed §1.48­9(b)(5) largely pro­
posed to adopt the general rules of §1.46­
3(d)(1) for determining when a taxpayer
has placed an energy property in service.
However, to be eligible for the section 48
credit, energy property must be property
with respect to which depreciation (or
amortization in lieu of depreciation) is
allowable. Accordingly, proposed §1.48­
9(b)(5)(i) would provide that the taxable
year in which energy property is placed in
service is the earlier of the taxable year in
which, under the taxpayer’s depreciation
practice, the period for depreciation of
such property begins, or the taxable year
in which the energy property is placed in
a condition or state of readiness and avail­
ability for a specifically assigned function
in either a trade or business or in the pro­
duction of income.
A commenter requested that the final
regulations provide a different placed in
service rule for energy storage technology.
Because energy storage technology may
charge and discharge prior to commer­
cial readiness, the commenter suggested
that energy storage technology should
be treated as placed in service when: (i)
such property has all licenses, permits,
and approvals required to store and dis­
patch power; (ii) pre­operational testing is
complete; (iii) the taxpayer has title to the
property; and (iv) the property is available
to store and discharge power on a regular,
commercial basis.
Proposed §1.48­9(b)(5) would adopt
the general placed in service rules of
§1.46­3(d)(1), which have applied to
the section 48 credit since its enactment,
with a modification to reflect the require­
ment that the property be eligible for
depreciation or amortization. Until the
IRA amended section 48, energy storage
property (referred to as “energy storage
technology” after the IRA amendments)
was considered a component of energy
property. Without providing specific
indicia that an energy property is placed
in service, the rule provided at proposed
§1.48­9(b)(5) would provide general prin­
ciples for a taxpayer to determine when an
energy property has been placed in service
that are broadly applicable to all types of
energy property, well­understood, and
widely relied upon by industry. The gen­
eral principles provided by the final rule
are sufficiently broad to address the com­
menter’s concerns. Therefore, the final
regulations do not adopt these comments
and instead adopt the placed in service
rules as proposed.
b. Lease­passthrough election
Section 1.46­3(d)(3) provides that,
notwithstanding the provisions of §1.46­
3(d)(1), property with respect to which an
election is made under §1.48­4 to treat the
lessee as having purchased such property
is considered placed in service by the les­
sor in the taxable year in which possession
is transferred to such lessee. Proposed
§1.48­9(b)(5)(ii) would adopt the special
rule from §1.46­3(d)(3) for determining
when a leased property has been placed
in service. Several commenters provided
comments relating to the rule for leased
property in the context of qualified biogas
property.
A commenter requested clarification on
the application of the lease passthrough
election under §1.48­4 to treat a lessee as
having purchased such energy property
from the lessor with respect to any prop­
erty comprising a qualified biogas prop­
erty, including both component properties
considered functionally interdependent as
a single unit of energy property and prop­
erty treated as an integral part of energy
property. This commenter asked for illus­
trative examples of the application of the
lease passthrough election in the context
of a renewable natural gas (RNG) qual­
ified biogas property if the equipment
comprising the qualifying biogas produc­
tion property, including equipment treated
as an integral part of the qualifying biogas
property, is owned by multiple taxpayers.
Another commenter suggested allow­
ing a single taxpayer to consolidate
deemed ownership of an entire qualified
biogas property to permit a more efficient
use and/or transfer of the section 48 credit
under the section 6418 credit transfer rules
by relying on existing lease passthrough
rules that apply to energy property. The
commenter asserted that this would per­
mit greater qualified investment and use
of the section 48 credit if, for regulatory or
environmental permitting reasons, some
portion of the section 48 credit­eligible
qualified biogas property simply cannot
be owned by a single or related taxpayers.
The commenter acknowledged that under
the 6418 Proposed Regulations, the trans­
fer of the tax credits to a lessee under a
lease passthrough election will preclude
further transfers under section 6418.
Guidance on eligibility for the lease
passthrough election is beyond the scope
of the Proposed Regulations because pro­
posed §1.48­9(b)(5)(ii) merely proposed a
rule for determining when property with
respect to which a lease passthrough elec­
tion is made under §1.48­4 is placed in
service. Guidance on eligibility for the
lease passthrough election is addressed
elsewhere, such as in §1.48­4 and the
6418 Final Regulations. Accordingly,

Bulletin No. 2024–52 1359 December 23, 2024
these final regulations do not adopt these
comments.
4. Acquisition of energy property
Proposed §1.48­9(b)(2) would provide
that the term acquisition of energy prop­
erty means a transaction by which a tax­
payer obtains rights and obligations with
respect to energy property, including title
to the energy property under the law of the
jurisdiction in which the energy property
is placed in service, unless the property is
possessed or controlled by the taxpayer as
a lessee, and physical possession or con­
trol of the energy property. This definition
was intended to require that the taxpayer
establish tax ownership of the energy
property for Federal income tax purposes.
The final regulations modify the definition
in proposed §1.48­9(b)(2) to make this
requirement explicit.
B. Types of energy property
Proposed §1.48­9(e) would expand the
definitions of energy property provided
in former §1.48­9 to account for new
technologies that were added by amend­
ments to section 48, including by the IRA.
Generally, the definitions of the types of
energy property provided in the Proposed
Regulations incorporate the definitions
provided in section 48(a)(3) and (c) but
do not provide specific beginning of con­
struction or placed in service deadlines.
Taxpayers should refer to the current defi­
nitions of energy property provided by
section 48 for specific requirements appli­
cable to each type of energy property. The
definitions of the types of energy property
provided in proposed §1.48­9(e) were
developed by the Treasury Department
and the IRS in consultation with the DOE.
Some commenters requested clarifica­
tion concerning whether a particular type
of technology would fall into one of the
categories of energy property. For exam­
ple, a commenter requested guidance
concerning what type of energy property
would include sewage energy recovery
property and provided three options: geo­
thermal heat pump (GHP) property by
reference to “underground fluids,” energy
storage technology, or waste energy
recovery property (WERP). A definitive
response to such comments would require
the Treasury Department and the IRS to
conduct a complete factual analysis of the
property in question, which may include
information that was not provided by the
commenters. Because more information
is needed to make the determinations
requested by the commenters, these final
regulations do not address the requested
clarifications concerning the categoriza­
tion of specific technologies.
1. Combined Heat and Power System
Property
Section 48(a)(3)(A)(v) includes com­
bined heat and power system (CHP) prop­
erty as a type of energy property. Section
48(c)(3)(A) defines CHP property as
property comprising a system that, among
other requirements, uses the same energy
source for the simultaneous or sequential
generation of electrical power, mechanical
shaft power, or both, in combination with
the generation of steam or other forms of
useful thermal energy (including heating
and cooling applications). Section 48(c)
(3)(A) further provides, in part, that a
CHP property must produce at least 20
percent of its total useful energy in the
form of thermal energy that is not used to
produce electrical or mechanical power
(or combination thereof), and at least 20
percent of its total useful energy in the
form of electrical or mechanical power (or
combination thereof), and that the energy
efficiency percentage of the system must
exceed 60 percent.
Section 48(c)(3)(B) provides that
the amount of the section 48 credit with
respect to CHP property is reduced to the
extent that a CHP property has an electri­
cal or mechanical capacity in excess of
applicable limits. Subject to the exception
for CHP property that uses closed or open­
loop biomass as feedstock, CHP property
with capacity in excess of the applicable
capacity limit (15 MW or a mechanical
capacity of more than 20,000 horsepower
or an equivalent combination of electrical
and mechanical energy capacities) is eli­
gible for only a fraction of the otherwise
allowable section 48 credit. This frac­
tion is equal to the applicable capacity
limit divided by the capacity of the CHP
property. However, CHP property with a
capacity in excess of 50 MW or a mechan­
ical energy capacity in excess of 67,000
horsepower or an equivalent combina­
tion of electrical and mechanical energy
capacities does not qualify for the section
48 credit.
Section 48(c)(3)(C) provides that the
energy efficiency percentage of a CHP
property is the fraction (i) the numera­
tor of which is the total useful electrical,
thermal, and mechanical power produced
by the system at normal operating rates,
and expected to be consumed in its nor­
mal application, and (ii) the denomina­
tor of which is the lower heating value
of the fuel sources for the system. The
energy efficiency percentage and the per­
centages under section 48(c)(3)(A)(ii)
are determined on a British thermal unit
(Btu) basis. Section 48(c)(3)(C)(iii) spe­
cifically provides that the term “combined
heat and power system property” does
not include property used to transport an
energy source to the facility or to distrib­
ute energy produced by the facility.
Additionally, section 48(c)(3)(D) pro­
vides that a CHP property with a fuel
source that is at least 90 percent from
closed or open­loop biomass that would
otherwise qualify for the section 48 credit
but for the failure to meet the efficiency
standard is eligible for a credit reduced in
proportion to the degree to which the sys­
tem fails to meet the efficiency standard.
For example, a system that would other­
wise be required to meet the 60­percent
efficiency standard, but that only achieves
30­percent efficiency, would be permitted
to claim a credit equal to one­half of the
otherwise allowable credit.
Proposed §1.48­9(e)(6)(i) would pro­
vide generally that CHP property is prop­
erty comprising a system that uses the
same energy source for the simultane­
ous or sequential generation of electrical
power, mechanical shaft power, or both, in
combination with the generation of steam
or other forms of useful thermal energy
(including heating and cooling applica­
tions). Proposed §1.48­9(e)(6)(i) would
also provide that CHP property must pro­
duce at least 20 percent of its total useful
energy in the form of thermal energy that is
not used to produce electrical or mechani­
cal power (or combination thereof), and at
least 20 percent of its total useful energy
in the form of electrical or mechanical
power (or combination thereof). Further,
proposed §1.48­9(e)(6)(i) would provide

December 23, 2024 1360 Bulletin No. 2024–52
that the energy efficiency percentage of
CHP property must exceed 60 percent
(except in the case of CHP systems that
use biomass within the meaning of sec­
tion 45). Proposed §1.48­9(e)(6)(i) would
also provide that CHP property does not
include any property comprising a system
if such system has a capacity in excess of
50 MW or a mechanical energy capac­
ity in excess of 67,000 horsepower or an
equivalent combination of electrical and
mechanical energy capacities. Proposed
§1.48­9(e)(6)(ii) would provide that CHP
property does not include property used to
transport the energy source to the gener­
ating facility or to distribute energy pro­
duced by the facility.
A commenter requested that the final
regulations clarify whether a CHP prop­
erty would be eligible for the section 48
credit, assuming all other criteria are met,
if the fuel source is exclusively non­re­
newable natural gas. There is no require­
ment that a CHP property use a specific
fuel or feedstock. The Treasury Depart­
ment and the IRS emphasize that all CHP
property must meet the requirements of
section 48(c)(3) and those provided in
proposed §1.48­9(e)(6)(i), which the final
regulations adopt as proposed.
2. Geothermal Heat Pump Property
Section 48(a)(3)(A)(vii) provides, in
part, that energy property includes equip­
ment that uses the ground or ground water
as a thermal energy source to heat a struc­
ture or as a thermal energy sink to cool a
structure (geothermal heat pump or GHP
property). Proposed §1.48­9(e)(8) would
adopt the statutory definition of GHP
property while providing the modification
that in addition to the ground and ground
water, other underground working fluids
may be used as a thermal energy source
or as a thermal energy sink. Accordingly,
proposed §1.48­9(e)(8) would provide
that GHP property is equipment that uses
the ground, ground water, or other under­
ground fluids as a thermal energy source
to heat a structure or as a thermal energy
sink to cool a structure.
Several commenters requested revi­
sions to the definition of GHP property to
include recovered heat as a thermal energy
source. For example, representative of
these comments, a commenter requested
clarification that equipment used to cir­
culate recovered heat qualifies as GHP
property. This commenter asserted that
the same GHP property that uses a ground
heat exchanger as a source or sink can
be designed to operate in a heat recov­
ery mode, simply recycling heat around
a building if the potential exists. Another
commenter noted that the use of GHP
property in heat recovery mode should be
considered a qualified energy source for
purposes of the calculation to determine
whether the GHP property qualifies as
dual use property.
As defined in proposed §1.48­14(b)(1),
the term “dual use property” would mean
property that uses energy derived from
both a qualifying source (that is, from
an energy property including a qualified
facility for which a section 48(a)(5) elec­
tion has been made) and from a non­qual­
ifying source (that is, sources other than
an energy property including a qualified
facility for which a section 48(a)(5) elec­
tion has been made). As proposed §1.48­
14(b)(2) would further provide, if dual use
property uses energy derived from both
a qualifying source and a non­qualifying
source it will qualify as energy property
if its use of energy from non­qualifying
sources does not exceed 50 percent of its
total energy input during an annual mea­
suring period (Dual Use Rule). Further, if
the energy used from qualifying sources is
between 50 percent and 100 percent, only
a proportionate amount of the basis of the
energy property will be taken into account
in computing the amount of the section 48
credit. For example, if 80 percent of the
energy used by a dual use property is from
qualifying sources, 80 percent of the basis
of the dual use property will be taken into
account in computing the amount of the
section 48 credit.
The Treasury Department and the IRS
decline to adopt these suggested revisions
because they would conflict with the stat­
utory definition of GHP property. Section
48(a)(3)(A)(vii) specifically provides that
GHP property includes equipment that
uses the ground or ground water as a ther­
mal energy source. While the Proposed
Regulations would provide that under­
ground fluids may be included, this is a
clarification that underground fluids other
than water may offer another medium that
contains thermal energy from the ground
or ground water. The statute does not
include any other thermal energy sources.
For further discussion of the Dual Use
Rule see part III.B. of this Summary of
Comments and Explanation of Revisions.
Additionally, a few commenters sug­
gested expanding the definition to allow
GHP property to be used to heat domestic
hot water in addition to a structure. For
example, a commenter requested that the
final rule clarify that domestic hot water
generation by GHP property is included
in the definition of GHP property. Another
commenter asserted that GHP property
eligible for the section 48 credit should
also be permitted to provide hot water
generation because it would be counter­
intuitive if heating hot water for space
conditioning is included in the definitions,
but heating of domestic hot water is not.
The statute requires GHP property heat a
structure or cool a structure; therefore, the
suggestion to expand the definition is not
authorized by the statute. The Treasury
Department and the IRS decline to adopt
these suggested revisions. The final regu­
lations adopt this rule as proposed.
A commenter mentioned that the
energy property definition in proposed
§1.48­9(e)(3) concerning geothermal
energy property includes clarifying lan­
guage on the scope of included property,
specifically addressing production and
distribution equipment. The commenter
recommended including similar language
for GHP property described in section
48(a)(3)(A)(vii). The Treasury Depart­
ment and the IRS declined to adopt this
suggestion in the Proposed Regulations,
and explained in the preamble to the
Proposed Regulations that, while section
48(a)(3)(A)(vii) does not specify energy
distribution equipment and components
of a building’s heating and/or cooling sys­
tem as components of GHP property, such
equipment may be integral to the func­
tion of the GHP property to heat or cool a
structure. Thus, energy distribution equip­
ment may be considered GHP property for
the reasons stated in the preamble to the
Proposed Regulations.
3. Waste Energy Recovery Property
Section 48(a)(3)(A)(viii) provides that
energy property includes waste energy
recovery property (WERP). Section 48(c)

Bulletin No. 2024–52 1361 December 23, 2024
(5) defines WERP as property (with a
capacity not in excess of 50 MW) that
generates electricity solely from heat from
buildings or equipment if the primary pur­
pose of such building or equipment is not
the generation of electricity. Additionally,
section 48(c)(5)(C) prevents taxpayers
from claiming a double benefit by provid­
ing that any property that could be treated
as WERP (determined without regard to
section 48(c)(5)(C)) and is part of a CHP
property is not treated as WERP for pur­
poses of section 48 unless the taxpayer
elects not to treat such system as a CHP
property for purposes of section 48.
Proposed §1.48­9(e)(9)(i) would pro­
vide that WERP is property that generates
electricity solely from heat from build­
ings or equipment if the primary purpose
of such building or equipment is not the
generation of electricity. Proposed §1.48­
9(e)(9)(i) would also provide examples
of buildings or equipment the primary
purpose of which is not the generation of
electricity including, but not limited to,
manufacturing plants, medical care facil­
ities, facilities on college campuses, pipe­
line compressor stations, and associated
equipment. Further, proposed §1.48­9(e)
(9)(i) would provide that WERP does not
include any property that has a capacity in
excess of 50 MW. Proposed §1.48­9(e)(9)
(ii) would provide that any WERP that is
part of a system that is a CHP property is
not treated as WERP for purposes of sec­
tion 48 unless the taxpayer elects to not
treat such system as a CHP property for
purposes of section 48.
Several commenters requested that
specific technologies, including “pres­
sure reduction” equipment or “pressure
letdown” equipment, sometimes referred
to as “turboexpanders,” which generally
allow high pressure gas to expand and
produce heat, be added to the examples of
WERP that would be provided in proposed
§1.48­9(e)(9)(i). Another commenter
requested that “pressure reduction” equip­
ment be included as an example of WERP
because pipeline transmissions (regard­
less of geographic distance) require high
pressure, but at pressure letdown stations
and within industrial facilities where the
pressure is reduced, pressure reduction
affords an opportunity for energy collec­
tion. A commenter requested that district
energy systems paired with WERP be
added to the examples of WERP, while
another commenter suggested adding

car­
bon dioxide power system technology to
the examples of WERP.
In response to these requests, the Trea­
sury Department and the IRS highlight
that proposed §1.48­9(e)(9) would provide
non­exhaustive examples of buildings and
facilities at which WERP may function
rather than examples of technology that
may qualify as WERP. This approach
provides a function­oriented approach to
determine whether a technology is WERP
that is broad enough to encompass nascent
technologies without rendering the regula­
tions quickly obsolete. Therefore, the final
regulations do not adopt the requested
revisions to the definition of WERP, and
the final regulations adopt this rule as pro­
posed.
4. Energy Storage Technology
Section 48(a)(3)(A)(ix), which was
added by the IRA, provides that energy
property includes energy storage technol­
ogy. Section 48(c)(6)(A)(i) defines energy
storage technology to mean property
(other than property primarily used in the
transportation of goods or individuals and
not for the production of electricity) that
receives, stores, and delivers energy for
conversion to electricity (or, in the case
of hydrogen, that stores energy), and has a
nameplate capacity of not less than 5 kilo­
watt­hours (kWh). Section 48(c)(6)(A)(ii)
provides that thermal energy storage prop­
erty is also energy storage technology.
Section 48(c)(6)(B) provides a rule for
modifications of energy storage technol­
ogy. In the case of any property that either
was placed in service before August 16,
2022, and would be described in section
48(c)(6)(A)(i), except that such property
has a capacity of less than 5 kWh and is
modified in a manner that such property
(after such modification) has a nameplate
capacity of not less than 5 kWh, or is
energy storage technology (as described
in section 48(c)(6)(A)(i)) and is modified
in a manner that such property (after such
modification) has an increase in name­
plate capacity of not less than 5 kWh, such
property is treated as energy storage tech­
nology (as described in section 48(c)(6)
(A)(i)) except that the basis of any exist­
ing property prior to such modification is
not taken into account for purposes of the
section 48 credit.
Section 48(c)(6)(C) defines thermal
energy storage property, for purposes of
section 48(c)(6), as property comprising
a system that: is directly connected to a
heating, ventilation, or air conditioning
system; removes heat from, or adds heat
to, a storage medium for subsequent use;
and provides energy for the heating or
cooling of the interior of a residential or
commercial building. Section 48(c)(6)(C)
(ii) provides that thermal energy storage
property does not include a swimming
pool, a CHP property, or a building or its
structural components.
Commenters requested clarifications
regarding the treatment of energy stor­
age technology co­located with, an inte­
gral part of, or shared with a facility that
is otherwise eligible for certain Federal
tax credits. For example, a commenter
requested clarification concerning bound­
aries between energy storage technology
eligible for the section 48 credit and qual­
ified clean hydrogen production facilities
eligible for the credit under section 45V.
Another commenter requested confir­
mation that energy storage technology,
including a hydrogen energy storage prop­
erty, separately qualifies for the section 48
credit regardless of whether it is part of a
facility for which a credit under section
45, 45V, or 48 is or has been allowed. A
commenter also requested confirmation
that energy storage technology will be
treated as separate property for section
48 and other Code provisions. The Trea­
sury Department and the IRS confirm
that energy storage technology is eligi­
ble for the section 48 credit if it satisfies
the requirements of section 48 even if the
energy storage technology is co­located
with or shared by a facility that is other­
wise eligible for the section 45, 45V, or 48
credits.
a. Hydrogen energy storage property
Proposed §1.48­9(e)(10)(iv) would
provide that hydrogen energy storage
property is property (other than property
primarily used in the transportation of
goods or individuals and not for the pro­
duction of electricity) that stores hydro­
gen and has a nameplate capacity of not
less than 5 kWh, equivalent to 0.127 kg of

December 23, 2024 1362 Bulletin No. 2024–52
hydrogen or 52.7 standard cubic feet (scf)
of hydrogen. Proposed §1.48­9(e)(10)
(iv) would also require hydrogen energy
storage property to store hydrogen that is
solely used for the production of energy
and not for other purposes such as for the
production of end products such as fertil­
izer. Proposed §1.48­9(e)(10)(iv) would
also provide a non­exhaustive list of
components of hydrogen energy storage
property that would include, but would
not be limited to, a hydrogen compressor
and associated storage tank and an under­
ground storage facility and associated
compressors.
In the preamble to the Proposed Regu­
lations, the Treasury Department and the
IRS requested comments on alternative
approaches to assessing limitations on the
use of hydrogen energy storage property,
including whether additional clarifica­
tion is needed regarding the production
of energy from hydrogen, and what type
of documentation would be needed to
demonstrate that a hydrogen energy stor­
age property was used to store hydrogen
that is solely used for the production of
energy.
A commenter particularly endorsed
the approach taken in the Proposed Reg­
ulations by providing that the nameplate
capacity requirement for hydrogen is
0.127 kilograms for 5 kWh. The com­
menter suggested this rule be retained in
the final regulations.
Generally, commenters disagreed with
the requirement that hydrogen energy
storage property must store hydrogen
that is solely used for the production of
energy and not for other purposes, which
the commenters referred to as the “end use
requirement.” For example, a commenter
stated that the final regulations should be
revised to align with the statutory language
and asserted that the end use requirement
is not in accord with legislative intent,
would cause delays, is unworkable, and
misaligns with the Biden Administration’s
U.S. National Clean Hydrogen Strategy
and Roadmap. Some commenters asserted
that the end use requirement is simply
unworkable due to lack of tracing mecha­
nisms once hydrogen enters the stream of
commerce.
Multiple commenters also asserted
that imposing an end use requirement
on hydrogen energy storage property is
unsupported by the statute and would
be impossible to administer. Comment­
ers expressed concerns that the end use
requirement would render the credit use­
less, impact markets inappropriately,
and lead to confusion. Commenters
also asserted that section 48(c)(6)(A)(i)
requires only that hydrogen energy stor­
age property “store energy” and does not
require that it actually be used for the pro­
duction of energy. Another commenter
noted that because hydrogen is a form of
energy, that hydrogen storage is per se
energy use.
With respect to administrability, com­
menters explained the difficulties of both
requiring exclusive energy use and obtain­
ing the information to make this determi­
nation. For example, a commenter stated
that it is too difficult for the storage owner
to predict how hydrogen will be used and
another asserted that requiring stored
hydrogen to be used solely for the pro­
duction of energy would, in cases of bulk
storage, be nearly impossible. Another
commenter likewise stated that taxpay­
ers do not have full control of, or even
information regarding, the use of hydro­
gen once it leaves their storage facilities
and will be unable to have the certainty
needed regarding end use to obtain proj­
ect financing. This commenter, along with
others, also noted the significant burden
of documenting the end use of the stored
hydrogen. This commenter explained that
currently there are no recordkeeping or
documentation precedents available for
a taxpayer to efficiently demonstrate the
end­use of hydrogen, a fungible molecule,
stored in a taxpayer’s hydrogen energy
storage property. The commenter asserted
that because there is no available docu­
mentation pathway for tracking hydro­
gen molecules through to their end use,
it would be both impractical and prohibi­
tively costly for a taxpayer to develop and
implement such recordkeeping practices.
Another commenter requested that the end
use requirement conclude with the recap­
ture period.
Lastly, commenters explained how the
end use requirement would limit the use­
fulness of the credit. For example, a com­
menter asserted that the end use require­
ment would render the section 48 credit
largely useless as a means of encouraging
the development of the large­scale hydro­
gen storage capability that will be essential
to the establishment of a robust hydrogen
ecosystem in the United States. Addition­
ally, a commenter stated that an end use
requirement would cause several prob­
lems, including deterring the provision of
hydrogen storage services to a significant
portion of the hydrogen market sector (for
example, for ammonia production). This
commenter also requested clarification
regarding the appropriate treatment in a
case in which hydrogen is another step
removed from ammonia production with
electricity production as an interim step.
Generally, under the Proposed Regula­
tions, this scenario satisfies the end use
requirement.
A commenter noted that the end use
requirement would lead to a risk of cre­
ating two separate markets for hydrogen:
those that are able to use the section 48
credit and those that are not. Emphasiz­
ing the same points, another commenter
stated that restricting the end­use of the
clean hydrogen to “energy” may mate­
rially impact the ability of producers to
secure offtake agreements and/or restrict
the usage of hydrogen storage and trans­
portation networks to only certain types of
hydrogen end­uses.
Another commenter noted that energy
storage technology neutrality is very
important. This commenter stated that it
believes that the “energy only” end use
requirement would make hydrogen stor­
age a second (or even third) class tech­
nology if compared to battery energy stor­
age for purposes of the section 48 credit.
The commenter added that one way of
reading the positioning of hydrogen and
battery storage within the same statutory
provision is that this reflects the intent of
Congress to not favor one form of energy
storage over the other. This commenter
further asserts that the absence of an
end use requirement imposed on battery
storage property indicates that no such
requirement should be imposed on hydro­
gen energy storage property.
While the majority of commenters
objected to including the end use require­
ment, several commenters provided sug­
gestions if the end use requirement is
adopted. Several of these commenters
suggested the use of an allocation rule sim­
ilar to the Dual Use Rule under proposed
§1.48­14(b)(2) and discussed in part III.B.

Bulletin No. 2024–52 1363 December 23, 2024
of this Summary of Comments and Expla­
nation of Revisions. A commenter sug­
gested revising the Proposed Regulations
to require a reasonable allocation between
qualifying energy uses and nonqualifying
non­energy uses of stored hydrogen simi­
lar to the requirements found in the Dual
Use Rule. Another commenter stated that
the final regulations should provide flexi­
bility and permit any reasonable method
to establish the annual use of the stored
hydrogen similar to proposed §1.48­14(b)
(2)(ii). A commenter proposed that the
final regulations provide a Dual Use safe
harbor for a portion of a hydrogen energy
storage property.
Alternatively, several commenters sug­
gested linking the end use requirement to
the rules for the credit for production of
clean hydrogen under section 45V of the
Code. These commenters proposed that
hydrogen energy storage be eligible for
the section 48 credit regardless of end use,
if the hydrogen stored is at least 50 per­
cent qualified clean hydrogen under sec­
tion 45V(c)(2).
Commenters also requested clarifica­
tions regarding what would be consid­
ered energy use for purposes of applying
the end use requirement. For example, a
commenter requested a clarification that
the definition of energy use is inclusive
of an application in which hydrogen is
fully consumed in the manufacturing of
a downstream molecule, which is in turn
clearly used in an energy application for
which hydrogen would be qualified if used
directly. Another commenter noted that
the examples provided in the preamble to
the Proposed Regulations are too narrow
and should be expanded to reflect vari­
ous uses of hydrogen as energy, including
ammonia as a feedstock for fuel. A com­
menter asked for clarification that storage
of hydrogen that is solely used as energy
includes hydrogen used as energy for
mobility purposes. Finally, a commenter
requested that the final regulations allow
for the storage of hydrogen whose end use
is fertilizer for food production, because
prohibiting hydrogen storage used in this
way may encourage the parallel develop­
ment of hydrogen storage and transporta­
tion infrastructure that could otherwise be
shared.
Several commenters also requested
clarification regarding substantiation of
the end use requirement. A commenter
suggested that taxpayers be permitted to
rely on the use described in commercial
sales contracts without the need to track
the ultimate end use of hydrogen by third­
party users. Another commenter asked
that taxpayers be required only to main­
tain documentation, such as an agreement
between the two parties or a certification,
that the immediate purchaser of the stored
hydrogen intends to use it for energy. This
commenter stated that tracking use past
the point of immediate purchaser to the
end use of the molecule is impossible and
as a result may make the credit unavail­
able to a variety of hydrogen storage
projects. Another commenter noted that
operators of clean hydrogen transport and
storage systems will need to know what
sort of assurances are needed from off­tak­
ers at the limits of their system to satisfy
credit eligibility and ensure limited recap­
ture risk.
Several commenters suggested that the
final regulations provide a method for a
taxpayer to demonstrate that a hydrogen
energy storage property was used to store
hydrogen solely used for the production
of energy. A commenter recommended
that taxpayers be able to meet this require­
ment through (i) an affirmative attestation
of intent by the taxpayer that owns the
storage property and (ii) a five­year look­
back process, with reasonable threshold
tests, to determine whether a recapture has
occurred and what percentage of the credit
should be recaptured. Another commenter
recommended that the final regulations
create a rebuttable presumption of energy
use allowing taxpayers to demonstrate
energy end use requirements under the
relevant facts and circumstances.
The Proposed Regulations would
require that the hydrogen energy storage
property store hydrogen solely use for the
production of energy and not for other
purposes such as for the production of end
products such as fertilizer. After consider­
ation of comments received, the Treasury
Department and the IRS agree that section
48(c)(6)(A)(i) does not require that hydro­
gen energy storage property store hydro­
gen that will be used for the production
of energy. The Treasury Department and
the IRS also understand commenters’ con­
cerns regarding the administrative chal­
lenges the end use requirement presents
for taxpayers and agree that the final regu­
lations require modification. Accordingly,
the final regulations do not adopt the
requirement that hydrogen energy storage
property store hydrogen that is solely used
for the production of energy and not for
other purposes such as for the production
of end products such as fertilizer.
Some commenters asserted that the
preamble to the Proposed Regulations
indicated that hydrogen energy storage
property is not limited to hydrogen. Since
hydrogen may be stored within ammonia
or methanol, commenters requested that
the final regulations state that hydrogen
storage property that stores hydrogen
in the form of ammonia, methanol, or
another stable medium qualifies as energy
storage technology if such product is pro­
duced directly from hydrogen and subject
to any use limitation provided in the regu­
lations. Another commenter requested that
the final regulations clarify that equipment
used to process hydrogen into ammonia,
methanol, and other carriers, as well as
storage for such hydrogen carriers, is
hydrogen energy storage property.
The Treasury Department and the IRS
decline to adopt the comments request­
ing that the final regulations provide that
chemical storage, that is, equipment used
to store hydrogen carriers (such as ammo­
nia and methanol), is hydrogen energy
storage property. Section 48(c)(6)(A)(i)
specifically references only hydrogen, not
compounds containing hydrogen. While
most vessels designed for hydrogen stor­
age (both above and below ground) may
be capable of storing other gases, they are
usually dedicated to a single gas (and not
repurposed) to avoid contamination and
mixing of gases.
Many commenters also provided feed­
back on the non­exhaustive list of compo­
nents of property that may be considered
part of hydrogen energy storage property
as would be provided in proposed §1.48­
9(e)(10)(iv). A commenter endorsed the
inclusion of “compressor and storage
tank” as a component of hydrogen energy
storage property. Several commenters
requested that additional components of
property be added to this list, some by
asserting that the components should be
eligible under rules for functionally inter­
dependent or integral property. Other
commenters requested that the final reg­

December 23, 2024 1364 Bulletin No. 2024–52
ulations expand the examples of integral
and functionally interdependent equip­
ment to be more inclusive of existing and
future hydrogen energy storage property
technologies.
Specifically, commenters requested
that hydrogen energy storage property
include hydrogen liquefaction and related
equipment, equipment required to operate
underground hydrogen storage property,
as well as dedicated hydrogen distribution
equipment such as pipelines located on
the storage side of custody meters, hydro­
gen trailers (for example, cryogenic liquid
tankers, or cylinders hauled by modules
or chassis) and railcars. Another com­
menter proposed that the final regulations
treat hydrogen liquefaction equipment
and related equipment in the same man­
ner as power conditioning and transfer
equipment may be treated with respect
to certain energy property that generates
electricity.
The Treasury Department and IRS
agree that additional clarity on the defini­
tion of hydrogen energy storage property
is warranted. The Treasury Department
and IRS understand that hydrogen lique­
faction equipment may prepare hydrogen
for storage in the hydrogen energy storage
property, making such property an integral
part of hydrogen energy storage property.
Section 48(c)(6)(A)(i) provides that
energy storage technology does not
include property primarily used in the
transportation of goods or individuals
and not for the production of electricity.
Pipelines, trailers, and railcars are prop­
erty primarily used in the transportation
of goods or individuals not for the pro­
duction of electricity. However, hydrogen
energy storage property may have gath­
ering and distribution lines to transport
hydrogen within the hydrogen energy
storage property, making such property an
integral part of the hydrogen energy stor­
age property. Therefore, the gathering and
distribution lines used within a hydrogen
energy storage property are not pipelines
used to transport hydrogen outside of the
hydrogen energy storage property. The
final regulations provide that property that
is an integral part of hydrogen energy stor­
age property includes, but is not limited
to, hydrogen liquefaction equipment and
gathering and distribution lines within a
hydrogen energy storage property.
Several commenters requested clari­
fication regarding the costs included in
hydrogen energy storage property. In
the context of salt caverns, a commenter
asserted that the final regulations should
confirm that eligible costs for a salt cavern
include not only the costs to acquire and
construct the eligible property but also all
direct and indirect costs associated with
the development and construction of the
salt cavern and referenced rules under
section 263A of the Code. Another com­
menter requested clarification regarding
what equipment from an operational stor­
age facility would be includible in basis
for purposes of the section 48 credit. A
commenter requested that power­to­gas
methanation facility qualify as hydrogen
energy storage.
As stated for other energy properties,
the Treasury Department and the IRS
emphasize that the rule for determining
what constitutes a unit of energy property
is function­based. Because more informa­
tion is needed to make the determinations
requested by the commenters, the final
regulations do not adopt these comments.
b. Electrical energy storage property
Proposed §1.48­9(e)(10)(ii) would pro­
vide that electrical energy storage prop­
erty is property (other than property pri­
marily used in the transportation of goods
or individuals and not for the production
of electricity) that receives, stores, and
delivers energy for conversion to electric­
ity, and has a nameplate capacity of not
less than 5 kWh. For example, subject to
the exclusion for property primarily used
in the transportation of goods or individ­
uals, electrical energy storage property
includes, but is not limited to, recharge­
able electrochemical batteries of all types
(such as lithium ion, vanadium flow,
sodium sulfur, and lead­acid); ultracapac­
itors; physical storage such as pumped
storage hydropower, compressed air stor­
age, flywheels; and reversible fuel cells.
Multiple commenters requested clari­
fication concerning specific technologies
that may be electrical energy storage prop­
erty. A commenter requested that the defi­
nition be expanded to include compressed
fluid storage in addition to compressed
air storage so as to include liquid and gas
applications. Because these applications
generally are used by pipelines, which are
property primarily used in the transporta­
tion of goods or individuals and not for
the production of electricity, the Treasury
Department and the IRS decline to adopt
these revisions.
Multiple commenters requested that
load controllers be described as an inte­
gral part of electrical energy storage tech­
nology while other commenters requested
that bidirectional chargers be eligible as
energy storage technology. Another com­
menter requested that the final regulations
explicitly include thermal batteries capa­
ble of storing energy for conversion to
electricity in its non­exhaustive list of eli­
gible “electrical energy storage property”
due to confusion related to thermal energy
storage (TES) being a separate category.
As has been noted previously, the Pro­
posed Regulations are intended to provide
a function­oriented method to determine
whether a technology is energy storage
technology that is broad enough to encom­
pass nascent technologies without render­
ing the regulations quickly obsolete. It
is impossible to enumerate every single
technology that may be eligible for the
section 48 credit given the ever­changing
nature of the industry and technological
development. Although these regulations
do not list all technologies that may qual­
ify for the section 48 credit, the Proposed
Regulations provide adequate guidance
and examples to illustrate the application
of the rules for taxpayers to analyze a par­
ticular technology. The Treasury Depart­
ment and the IRS, therefore, do not adopt
commenters’ requests concerning specific
technologies.
Multiple commenters questioned what
primarily used in the transportation in
section 48(c)(6)(A)(i) means in the case
of electrical energy storage property. A
commenter explained that pipeline sys­
tems can be multi­tasked with a section
of the pipe to act as energy storage and
requested that the phrase “primarily used
in the transportation of goods” specifi­
cally exclude equipment that is mobile
but include stationary property such as
pipelines. Another commenter requested
a bright line rule for technologies that are
not primarily used in transportation of
goods or individuals to qualify for the sec­
tion 48 credit. This commenter suggested
that property, including school buses,

Bulletin No. 2024–52 1365 December 23, 2024
that receives, stores, and delivers energy
for conversion to electricity and that is
used less than 35 percent of the hours in
a calendar year for transporting goods or
individuals is not primarily used for trans­
portation. In response to these comments,
the Treasury Department and the IRS note
that pipelines and school buses are both
primarily used in transportation. In addi­
tion, there are other IRA tax incentives
intended to benefit some technologies for
which commenters seek section 48 credit
eligibility. For instance, section 45W
provides a tax credit for electric school
buses. Furthermore, a notice of proposed
rulemaking (REG­118269­23) published
in the Federal Register (89 FR 76759) on
September 19, 2024, regarding the sec­
tion 30C alternative fuel vehicle refueling
property credit (30C Proposed Regula­
tions) proposed a definition for property
primarily used in the transportation of
goods or individuals and not for the pro­
duction of electricity for purposes of sec­
tions 48 and 48E. In particular, proposed
§1.48­9(e)(10)(vi) of the 30C Proposed
Regulations would provide that energy
storage property is primarily used in the
transportation of goods or individuals
and not for the production of electricity,
and therefore is not energy storage tech­
nology eligible for the section 48 credit,
if a credit is claimed under section 30C
for such property. Accordingly, comments
regarding this proposed definition will be
addressed when the 30C Proposed Regu­
lations are finalized.
In the context of a pumped storage
hydropower facility, a commenter sug­
gested that the scope of eligible electrical
energy storage technology be defined to
include all property necessary to receive,
store, and deliver energy for conversion
to electricity, consistent with the defini­
tion in section 48(c)(6)(A)(i), and include
all tangible personal property and other
tangible property up to and including the
step­up transformer at the substation prior
to transmission to the grid. This com­
menter also suggested that an example
be included to illustrate these concepts.
Another commenter stated that the final
regulations should confirm that the term
“energy storage technology” includes all
the qualified property up to and including
the step­up transformer at the substation
prior to transmission to the grid, and that
this property would include the two reser­
voirs, the powerhouse (including the gen­
erators, turbines, and associated electrical
equipment), the piping and pumps, the
tunnel, substation equipment, and other
integral property.
A definitive response to such comments
would require the Treasury Department
and the IRS to conduct a complete fac­
tual analysis of the property in question,
which may include information beyond
that which was provided by the comment­
ers. Because more information is needed
to make the determinations requested by
the commenters, the requested clarifica­
tions are not addressed in these final reg­
ulations.
c. Thermal energy storage property
Proposed §1.48­9(e)(10)(iii) would
provide that thermal energy storage prop­
erty is property comprising a system that
is directly connected to a heating, venti­
lation, or air conditioning (HVAC) sys­
tem; removes heat from, or adds heat to,
a storage medium for subsequent use; and
provides energy for the heating or cool­
ing of the interior of a residential or com­
mercial building. Thermal energy storage
property includes equipment and materi­
als, and parts related to the functioning of
such equipment, to store thermal energy
for later use to heat or cool, or to provide
hot water for use in heating a residential or
commercial building. It does not include a
swimming pool, CHP property, or a build­
ing or its structural components. The Pro­
posed Regulations included a non­exhaus­
tive list of examples of thermal energy
storage property.
Commenters requested clarifications
on what constitutes thermal energy stor­
age property. A commenter requested clar­
ification that thermal energy storage prop­
erty includes all air­source heat pumps,
electric boilers, and hot water heat pumps,
but does not include fossil­fuel­pow­
ered water boilers. The commenter also
requested that the final regulations clar­
ify that ground and air source heat pumps
qualify as energy storage technology
and suggested that thermal energy stored
in one medium may be transferred and
stored in a second medium for subsequent
use. The commenter also requested that
the use of the term “subsequent” in the
definition of thermal energy storage prop­
erty under section 48(c)(6)(C)(i)(II) not
require a specific interval of time between
storage and use for a process to qualify.
Another commenter stated that the point
at which the scope of thermal energy
storage property ends is unclear and
requested clarification regarding whether
“equipment” extends to the thermal
energy source for thermal energy storage
property. This commenter also requested
clarity on whether the thermal energy
source equipment (for example, chiller,
heat pump, or furnace) may be used for
multiple purposes or if the thermal energy
source equipment must be dedicated to the
thermal energy storage property. Another
commenter asked whether equipment
that uses thermal energy to heat or cool
a structure is also thermal energy storage
property. Some commenters endorsed the
proposed examples of thermal energy
storage property, while other comment­
ers requested additions, such as including
“chilled water” to ice and electric boilers
that use electricity to heat water and later
use this stored energy to heat a building
through the HVAC system.
The Treasury Department and IRS agree
that the definition of thermal energy stor­
age property requires clarification. Ther­
mal energy storage property is defined,
in part, as a system which “removes heat
from, or adds heat to, a storage medium
for subsequent use.” The Treasury Depart­
ment and IRS, in consultation with DOE,
understand the phrase “adds heat to” as
including equipment that is involved in
adding, or transferring, already­exist­
ing heat from one medium to the storage
medium, but not equipment involved
in transforming other forms of energy
into heat in the first instance. Equipment
that just adds (or removes) heat includes
technologies, like heat pumps, that draw
heat from the ambient air or other stores
of heat, and add that heat to a storage
medium. By contrast, equipment that
transforms other forms of energy into heat
in the first instance, for example, through
combustion or electric resistance, is not
property that “removes heat from, or adds
heat to” a storage medium and is therefore
not an eligible component of a thermal
energy storage property. For example, a
conventional gas boiler with an integrated
storage tank would not generally be ther­

December 23, 2024 1366 Bulletin No. 2024–52
mal energy storage property. While the
gas boiler elements would not be part of
such property, the integrated storage tank,
however, may be thermal energy storage
property if it otherwise meets the ther­
mal energy storage property definition.
Further, an air­to­water heat pump with a
thermal storage tank, for example, would
generally be thermal energy storage prop­
erty provided that it otherwise meets the
thermal energy storage definition. This
could be the case even if the heat pump
also serves a purpose in the connected
HVAC system’s real­time heating or cool­
ing of a building. In that case, the thermal
storage tank would be thermal energy stor­
age property and the heat pump may also
qualify as part of that eligible property to
the extent the taxpayer’s costs exceed the
cost of an HVAC system without thermal
storage capacity that would meet the same
functional heating or cooling needs as the
heat pump system with a storage medium,
other than time shifting of heating or cool­
ing.
The Proposed Regulations included an
example of electric furnaces that use elec­
tricity to heat bricks to high temperatures
and later use this stored energy to heat a
building through the HVAC system. The
Treasury Department and IRS acknowl­
edge that this example needs to be refined
to more precisely delineate the scope of
eligible thermal energy storage property.
Whereas the heated bricks and equipment
that adds heat generated by the furnace
to those bricks, or removes heat from the
bricks, are eligible thermal energy storage
property, the electric furnace equipment
that transforms energy into the thermal
energy in the first instance is not. The final
regulations clarify that thermal energy
storage property does not include property
that transforms other forms of energy into
heat in the first instance and this example
has been revised accordingly in the final
regulations.
With respect to the requirement for
subsequent use, the Treasury Department
and IRS also agree that additional clarity
is warranted. The statute requires that ther­
mal energy storage property must be able
to perform certain functions, not simply
performing heat transfer. Any heat trans­
fer may take some amount of time and
heat does not immediately dissipate even
if no effort is made to store it. While some
may assert that such heat transfer is sub­
sequent use, the Treasury Department and
IRS disagree. A plain reading of the stat­
ute indicates that thermal energy storage
property does not include property that
simply engages in heat transfer. The ther­
mal energy storage property must be able
to store the heat. The Treasury Depart­
ment and IRS, in consultation with DOE,
find that a minimum time interval for sub­
sequent use provides certainty for taxpay­
ers and sound tax administration. Accord­
ingly, the final regulations clarify that
property that “removes heat from, or adds
heat to, a storage medium for subsequent
use” is property that is designed with the
particular purpose of substantially altering
the time profile of when heat added to or
removed from the thermal storage medium
can be used to heat or cool the interior of
a residential or commercial building. The
final regulations also provide a safe harbor
for thermal energy storage property. If the
thermal energy storage property can store
energy that is sufficient to provide heating
or cooling of the interior of a residential or
commercial building for the minimum of
one hour, it is deemed to have the purpose
of substantially altering the time profile of
when heat added to or removed from the
thermal storage medium can be used to
heat or cool the interior of a residential or
commercial building.
The Treasury Department and IRS
have revised the definition of thermal
energy storage property and the exam­
ples in the final regulations to illustrate
what constitutes thermal energy storage
property. These final regulations also add
that thermal energy storage property may
store thermal energy in an artificial pit, an
aqueous solution, or a solid­liquid phase
change material, in addition to the under­
ground tank or a borehole field already
included in the Proposed Regulations, in
order to be extracted for later use for heat­
ing and/or cooling. The final regulations
clarify that a heat pump system that trans­
fers heat into and out of a storage medium
is thermal energy storage property. How­
ever, consistent with §1.48­14(d), if ther­
mal energy storage property, such as a heat
pump system, includes equipment, such
as a heat pump, that also serves a purpose
in an HVAC system that is installed in
connection with the thermal energy stor­
age property, the taxpayer’s basis in the
thermal energy storage property includes
the total cost of the thermal energy stor­
age property and HVAC system less the
cost of an HVAC system without thermal
storage capacity that would meet the same
functional heating or cooling needs as the
heat pump system with a storage medium,
other than time shifting heating or cool­
ing.
Commenters also requested clarifi­
cations regarding whether specific com­
ponents may be part of thermal energy
storage. A commenter requested that pipes
to distribute stored thermal energy to and
within buildings (including for multiple
residential or commercial buildings such
as through a district heating system) and
equipment in building heating and/or
cooling systems — such as coils, radia­
tors, and other end­use equipment — nec­
essary to convey stored thermal energy to
building space or domestic hot water sup­
ply be included in thermal energy storage
property.
With respect to the request to include
pipes and equipment in building heating
and/or cooling systems, the statutory defi­
nition of thermal energy storage property
provides, in part, that it is directly con­
nected to an HVAC system, not that it is an
HVAC system. The Proposed Regulations
would provide a function­oriented method
to evaluate whether property is a func­
tionally interdependent or an integral part
of thermal energy storage property. With
respect to the request to include equipment
necessary to convey domestic hot water
supply, the statutory definition further pro­
vides, in part, that thermal energy storage
property provides energy for the heating
or cooling of the interior of a residential
or commercial building. The statute does
not provide for stored energy for domes­
tic hot water supply for consumptive use.
Therefore, property that provides energy
for domestic hot water supply exclusively
for consumptive use and not for heating or
cooling of the interior of such a building
is not eligible under the statute. The final
regulations do not adopt these comments.
Another commenter requested clari­
fication that if property that would oth­
erwise qualify as thermal energy storage
property is connected to a district heating
system that provides energy for the heat­
ing or cooling of multiple buildings, it
would nonetheless be considered “directly

Bulletin No. 2024–52 1367 December 23, 2024
connected to a heating, ventilation, or air
conditioning system”. Proposed §1.48­
9(e)(10)(iii) would not preclude ther­
mal energy storage technology property
that is directly connected to more than
one HVAC system from being a thermal
energy storage property. The final regula­
tions do not modify the example.
Commenters also requested modifica­
tion of the definition of thermal energy
storage property in proposed §1.48­9(e)
(10)(iii). A commenter suggested adding
“refrigeration” to “is directly connected to
a heating, ventilation, or air conditioning
system” because industrial refrigeration
systems are considered part of the HVAC
system in construction. This commenter
also joined another in recommending add­
ing “industrial” to “for use in heating a
residential or commercial building” to pre­
vent restricting the use of thermal energy
storage in industrial sites and to elimi­
nate confusion regarding commercial and
industrial building types. To maintain con­
sistency with the statutory text, the final
regulations maintain the wording set forth
in section 48(c)(6)(C)(i)(I) and (III) as is.
Commenters also expressed concerns
that the language “directly connected
to...” in proposed §1.48­9(e)(10)(iii)
might exclude thermal energy storage
property that directly functions as a heat­
ing system itself without connecting to an
HVAC system. A commenter suggested
providing guidance to clarify that thermal
energy storage property that functions as a
self­contained heating or cooling system
is eligible thermal energy storage property
under proposed §1.48­9(e)(10)(iii). Sec­
tion 48(c)(6)(C)(i)(I) requires that ther­
mal energy storage property is directly
connected to a heating, ventilation, or air
conditioning system, but does not include
the HVAC system itself as eligible ther­
mal energy storage property. Therefore,
these comments are not adopted because
they would be inconsistent with the stat­
ute. However, elements of such a system
could constitute eligible thermal energy
storage property.
Additionally, a commenter requested
clarification that thermal energy storage
property may be considered battery stor­
age technology for the purpose of claiming
the credit available to residential custom­
ers under section 25D(d)(6) of the Code.
The Treasury Department and the IRS
decline to address this request because it
is outside of the scope of section 48 and,
therefore, these final regulations.
d. Modifications of energy storage
property
Proposed §1.48­9(e)(10)(v) would pro­
vide that with respect to electrical energy
storage property and hydrogen energy
storage property placed in service after
December 31, 2022, energy storage tech­
nology that is modified as set forth in pro­
posed §1.48­9(e)(10)(v) is treated as elec­
trical energy storage property or hydrogen
energy storage property, except that the
basis of any existing property prior to such
modification is not taken into account for
purposes of the section 48 credit. Proposed
§1.48­9(e)(10)(v) applies to any electrical
energy storage property and hydrogen
energy storage property that either: (A)
was placed in service before August 16,
2022, and would be described in section
48(c)(6)(A)(i), except that such property
had a capacity of less than 5 kWh and is
modified in a manner that such property
(after such modification) has a nameplate
capacity (after such modification) of not
less than 5 kWh; or (B) is described in
section 48(c)(6)(A)(i) and is modified in
a manner that such property (after such
modification) has an increase in name­
plate capacity of not less than 5 kWh.
A commenter asked if the section 48
credit is available for repurposed batter­
ies used to build energy storage systems.
Whether a battery is repurposed and eli­
gible for the section 48 credit requires a
factual determination that is beyond the
scope of these regulations. The 80/20
Rule provides general rules for taxpayers
that include some used components when
placing in service an energy property.
Another commenter requested that the
requirement that any modified energy stor­
age property must increase the nameplate
capacity of the energy storage property by
5 kWh or more be removed. Section 48(c)
(6)(B) sets forth the 5 kWh requirement
for modifications to energy storage prop­
erty so it cannot be removed. The final
regulations do not adopt this comment.
Multiple commenters requested clari­
fication that the minimum 5 kWh capac­
ity increase needed for modifications of
energy storage under section 48(c)(6)
(B) be the nameplate capacity not actual
capacity (which may have decreased
due to degradation). The commenters
explained that focusing on nameplate
capacity will provide greater certainty
than measuring actual capacity. Another
commenter explained that nameplate
capacity should be tested at the time of
purchase, rather than on the date of mod­
ification, especially due to non­degrading
systems and storage augmentation. The
commenter noted that if augmentations
are implemented, the installed energy
storage capacity of the energy storage
technology is increased (original instal­
lation nameplate capacity plus the aug­
mentation totaling the amount installed),
but the nameplate capacity of the property
and interconnection agreement remains
unchanged.
Section 48(c)(6)(B) provides that, for
purposes of the modification rule, name­
plate capacity is examined at the time
of the modification and must result in a
nameplate capacity increase from below 5
kWh to not less than 5 kWh (for energy
storage property originally placed in ser­
vice before enactment of the IRA) or by
at least 5 kWh (for energy storage tech­
nology placed in service after the enact­
ment of the IRA that is later modified).
Consistent with the statute, the Proposed
Regulations would not take into account
actual capacity but instead use nameplate
capacity. The only instance in which sec­
tion 48(c)(6)(B) uses the term “capacity”
alone, rather than “nameplate capacity”,
is nonetheless still a reference to name­
plate capacity. Specifically, section 48(c)
(6)(B)(i) refers to property that “would be
described in subparagraph (A)(i), except
that such property has a capacity of less
than 5 kilowatt hours”. The referenced
section 48(c)(6)(A)(i) text makes clear that
the 5 kWh capacity threshold is, in fact, a
nameplate capacity threshold. Therefore,
for the avoidance of doubt, the final regu­
lations at §1.48­9(e)(10)(v)(A) clarify that
the relevant pre­modification capacity is
the nameplate capacity. Therefore, other
than the minor clarification noted above,
these comments were not adopted in the
final regulations.
Additionally, a commenter requested
clarification whether capacity must be
added within the bounds of an existing
electrical storage property enclosure, or

December 23, 2024 1368 Bulletin No. 2024–52
whether the enclosure may be expanded or
an additional enclosure added to accom­
modate the increased capacity. Another
commenter requested clarification that
adding new battery racks to an existing
enclosure would be eligible for the section
48 credit if the nameplate capacity of the
new battery rack is at least 5 kWh. The
Proposed Regulations would provide no
limitation on the physical space occupied
by an energy storage technology and the
final regulations retain this approach.
5. Qualified Biogas Property
Section 48(a)(3)(A)(x) was added by
the IRA to provide that energy property
includes qualified biogas property. Sec­
tion 48(c)(7)(A) defines qualified biogas
property as property comprising a system
that converts biomass (as defined in sec­
tion 45K(c)(3), as in effect on the date of
enactment of section 48(a)(7) (August 16,
2022)) into a gas that consists of not less
than 52 percent methane by volume, or is
concentrated by such system into a gas
that consists of not less than 52 percent
methane, and captures such gas for sale
or productive use, and not for disposal via
combustion. Section 48(c)(7)(B) provides
that qualified biogas property includes any
property that is part of such system that
cleans or conditions such gas.
Proposed §1.48­9(e)(11) would adopt
the statutory definition of qualified bio­
gas property. Proposed §1.48­9(f)(2)
(i) would provide that components of
property are considered qualified biogas
property if they are functionally inter­
dependent, that is, if the placing in ser­
vice of each component is dependent
upon the placing in service of each of the
other components in order to perform the
intended function of the qualified bio­
gas property as described in proposed
§1.48­9(e)(11)(i). The Proposed Regu­
lations adopted this approach because it
provides a function­oriented method to
determine what is considered included in
a qualified biogas property and is broad
enough to encompass technological
changes. Additionally, proposed §1.48­
9(e)(11)(i) would provide examples of
functionally interdependent components
of a qualified biogas property including,
but not limited to, a waste feedstock col­
lection system, a landfill gas collection
system, mixing or pumping equipment,
and an anaerobic digester.
Proposed §1.48­9(e)(11)(i) would
clarify that upgrading equipment is not
a functionally interdependent component
of qualified biogas property. The pream­
ble to the Proposed Regulations stated
that the upgrading equipment that is nec­
essary to condition biogas into the appro­
priate mixture for injection into the pipe­
line is not functionally interdependent
with the qualified biogas property that
converts biomass into a gas containing
not less than 52 percent methane and cap­
tures such gas for sale or productive use
as specified in the statute. The preamble
to the Proposed Regulations also stated
that while this upgrading equipment
makes the injection of biogas into a pipe­
line possible, such upgrading equipment
is not necessary to satisfy the statutory
requirements that the biogas converted
from biomass contain not less than 52
percent methane, and that it be captured
for sale or productive use.
a. Correction and cleaning and
conditioning property
The Correction published on Feb­
ruary 22, 2024, stated that a correction
was needed to clarify that gas upgrading
equipment that is necessary to concentrate
the gas from qualified biogas property
into the appropriate mixture for injection
into a pipeline through removal of other
gases such as carbon dioxide, nitrogen,
or oxygen, would be energy property if
it is an integral part of an energy prop­
erty as defined in proposed §1.48­9(f)(3).
Accordingly, the Proposed Regulations
were corrected by revising the following
sentence: “However, gas upgrading equip­
ment necessary to concentrate the gas
into the appropriate mixture for injection
into a pipeline through removal of other
gases such as carbon dioxide, nitrogen, or
oxygen is not included in qualified bio­
gas property.” to read as follows: “How­
ever, gas upgrading equipment necessary
to concentrate the gas into the appropri­
ate mixture for injection into a pipeline
through removal of other gases such as
carbon dioxide, nitrogen, or oxygen is not
a functionally interdependent component
(as defined in paragraph (f)(2)(ii) of this
section) of qualified biogas property.”
The Proposed Regulations and Correc­
tion requested comments regarding what
types of components may be included
within the definition of cleaning and con­
ditioning property provided in the defini­
tion of qualified biogas property in section
48(c)(7)(B). The Treasury Department
and the IRS received numerous comments
regarding the components that should be
included in qualified biogas property.
Commenters universally supported the
inclusion of upgrading equipment in qual­
ified biogas property and some asserted
that the Proposed Regulations’ exclusion
of upgrading equipment conflicts with
analogous provisions in the Proposed Reg­
ulations that allow the inclusion of power
conditioning and transfer equipment such
as that allowed in offshore wind projects.
Most commenters asserted that upgrading
equipment should be considered function­
ally interdependent to qualified biogas
property and therefore, eligible for the
section 48 credit. A commenter requested
that biogas energy property include a defi­
nition of system for section 48(c)(7)(A)
purposes that includes all integrated prop­
erty.
Commenters also expressed concern
that the Proposed Regulations and the
Correction unduly limit what would be
included as qualified biogas property. For
example, a commenter stated that prop­
erty used to capture, clean, condition,
upgrade, and perform “chemical, mechan­
ical, or thermochemical conversion” are
all necessary to convert biogas into usable
products. Commenters explained that
the Proposed Regulations would allow
only biogas property with limited utility
to qualify and would exclude a majority
of costs related to biogas property. For
example, a commenter stated that under
the Proposed Regulations, property used
to produce the raw biogas from the land­
fill, remove sulfur from the biogas, and
remove the volatile organic compounds
from the biogas would appear to qualify
for the section 48 credit, whereas property
used to remove carbon dioxide, nitrogen,
and oxygen from biogas and to otherwise
prepare the gas for injection into a natu­
ral gas pipeline would not qualify for the
section 48 credit. The commenter asserted
that the equipment used in these latter pro­
cesses are essential components of a RNG
system and comprise approximately 85

Bulletin No. 2024–52 1369 December 23, 2024
percent of overall capital investment in an
RNG project.
A commenter asserted that the Pro­
posed Regulations read the sale or pro­
ductive use language out of the statute.
Another commenter stated that the Pro­
posed Regulations would limit eligibility
for the section 48 credit to essentially
raw biogas (if it can meet the 52 percent
methane threshold). According to the
commenter, raw biogas generally cannot
be used without some treatment due to the
contaminants present in the gas stream
and even if the raw biogas can be used,
such use is typically through combustion
(that is, burned on­site for electricity or
as process energy), which is excluded
under the statute. The commenter
explained that, at best, the Proposed Reg­
ulations may allow some medium­BTU
gas, which is biogas that received only
limited treatment to remove certain con­
taminants, to be eligible for the section
48 credit. However, medium­BTU gas is
not as valuable as RNG and is typically
used locally.
Generally, many commenters agreed
that the utility of biogas is significantly
limited without proper cleaning and con­
ditioning. These commenters stated that,
without upgrading, the extracted biogas
faces considerable challenges for market­
ability because its high moisture content
and corrosive properties make it difficult
to safely store, compress, mix with other
gases, transport, inject into the natural
gas system, or market. Consequently, the
non­upgraded biogas is of limited util­
ity, such as on­site combustion to create
process heat, generate electricity, or to be
flared into the atmosphere. In contrast, a
commenter described the marketable uses
of upgraded RNG as including, but not
limited to, advanced electricity genera­
tion in fuel cells, hydrogen production,
advanced liquid fuels for aviation, and
RNG for use in trucking, industrial pro­
cesses, and space heating.
Generally, commenters requested the
final regulations correct the treatment of
“gas upgrading equipment” in the Pro­
posed Regulations to instead treat it as
property that “cleans and conditions” gas,
asserting that such treatment is consistent
with the plain text of the statute and the
intention of Congress. To support this
position, a commenter asserted that the
statute and legislative history do not con­
template any limitation on what property
“cleans or conditions” gas. Several com­
menters cited certain congressional state­
ments regarding the Agriculture Environ­
mental Stewardship Act to support their
reading of the definition of qualified bio­
gas property added to section 48 by the
IRA.
Similarly, many commenters asserted
there is a misunderstanding in the Pro­
posed Regulations that the term “upgrad­
ing” is interchangeable with the phrase
“cleaning and conditioning.” For exam­
ple, a commenter stated that the exclusion
of upgrading equipment appears contra­
dictory to the statute, which expressly
includes cleaning and conditioning prop­
erty. This commenter noted that the Pro­
posed Regulations misunderstand the
“upgrading” process, which is an indus­
try verbiage, but is essentially part of the
“cleaning and conditioning process” nec­
essary to process biogas to standards that
support its productive use or sale. Another
commenter stated that the DOE uses these
terms interchangeably.
Additionally, a few commenters stated
that the Proposed Regulations incorrectly
implemented the 52 percent measurement
as a ceiling rather than a floor. For exam­
ple, a commenter pointed to the preamble
to the Proposed Regulations as mistakenly
interpreting that the statute was enacted to
incentivize taxpayers to produce 52 per­
cent methane (and nothing greater). The
commenter stated that this is contrary to
the statute, to the relevant legislative his­
tory, and to an understanding of how the
quantities of biogas that can be produced
by RNG developers can be used.
Several commenters also pointed to
the reference to “such gas” in the stat­
ute to evidence that “such gas” refers to
biogas not less than 52 percent methane
and captured for sale or productive use.
A commenter asserted that the reference
to “such gas” provides a two­prong test.
According to the commenter, first the sys­
tem must convert the biomass into a gas
that is between 52 percent and 100 per­
cent methane by volume and second the
system must capture “such gas for sale or
productive use, and not for disposal via
combustion”; thus, in the commenter’s
view, the reference to “such gas” is to gas
described in the first prong.
Another commenter stated that the ref­
erence to “such gas” includes biogas that
is at least 52 percent methane by volume.
The commenter concluded therefore, that
the statute does not exclude from qualified
biogas property cleaning and conditioning
equipment that is used to process biogas
that is already 52 percent methane by vol­
ume.
Another commenter stated that the
statute uniquely and broadly defines the
term “cleaning and condition property”
not as the Proposed Regulations suggest,
which limits its applicability to instances
in which an otherwise ineligible property
needs cleaning and conditioning to be eli­
gible. Instead, the commenter noted that
the Proposed Regulations’ interpretation
of section 48(c)(7)(B) ignores the refer­
ence to “such gas,” referring to the defini­
tion in section 48(c)(7)(A), which clearly
states “any property which is part of such
system which cleans or conditions such
gas.” The commenter asserted that the
term “such gas” refers to biogas that is not
less than 52 percent methane and captured
for sale or productive use, as confirmation
that cleaning and conditioning equipment
for gas that has already met the conditions
set forth in section 48(c)(7)(A), is quali­
fied biogas property.
Commenters also objected to the exclu­
sion of gas upgrading equipment provided
in the Proposed Regulations because com­
menters assert that it could negatively
impact investment and financing for bio­
gas projects, especially those on small
farms, agricultural projects, and municipal
projects. A commenter, who works with
smaller scale farms including dairy farms,
asserted that the upgrading equipment is
integral to the cleaning and conditioning
process, and crucial for achieving energy
output suitable for productive use or sale,
especially for projects in rural and remote
communities. The commenter concluded
that the limitation on upgrading equip­
ment provided in the Proposed Regula­
tions will prevent projects from moving
forward and disproportionately impact
small agricultural projects.
Several commenters asserted that the
statute supports redefining the components
of property that are considered function­
ally interdependent to a qualified biogas
property. A commenter suggested redefin­
ing qualified biogas property as property

December 23, 2024 1370 Bulletin No. 2024–52
that is placed in service to upgrade biogas
for sale or a productive use beyond the
point that such gas is typically vented or
flared. This commenter explained that this
definition properly places the focus on
property used to convert an unproductive
substance (such as landfill gas) into a pro­
ductive substance (such as RNG).
Another commenter agreed with the
inclusion of the gas upgrading equipment
as integral property but stated that the Cor­
rection is limited to technology specific
to upgrading for pipeline injection and
therefore, is out of line with the technol­
ogy neutral definition in the statute. The
commenter asserted that upgrading, pro­
cessing, or reforming should be viewed
without limitation to specific technology
and that many biomass resources may not
be close to natural gas pipelines or have
other limitations on pipeline injection. The
commenter further stated that the focus
should be on the components required for
property that captures such gas for sale or
productive use. Therefore, if additional
onsite steps are required to process raw
biogas that meets the minimum 52 percent
methane content threshold into a usable
product, whatever the product may be,
then the property necessary to take those
steps should be considered qualified bio­
gas property.
The Treasury Department and the
IRS agree with the commenters that the
proposed rule addressing gas upgrading
equipment is too restrictive. As comment­
ers explained, upgrading equipment is
used interchangeably with cleaning and
conditioning equipment and such equip­
ment may be needed to make the biogas
suitable for sale or productive use. The
Treasury Department and IRS also agree
that specific upgrading equipment should
not be identified for injection into a pipe­
line. Therefore, the final regulations pro­
vide more generally that gas upgrading
equipment is cleaning and conditioning
property.
Commenters requested clarifications
regarding what types of equipment are
considered qualified biogas property,
including as functionally interdependent
components or as property integral to the
qualified biogas property. For example, a
commenter requested that a list of equip­
ment be included as qualifying biogas
property in the final regulations includ­
ing gas removal equipment, pressure and
temperature control equipment, moisture
removal equipment, compression equip­
ment, thermal oxidizer equipment, gas
recycling equipment, and synthetic meth­
ane production equipment. Another com­
menter proposed revisions to the example
in proposed §1.48­9(e)(11)(i) to include
as qualified biogas property cleaning and
conditioning equipment used to remove
toxins or any other impurities from raw
biogas or concentrate the gas into the
appropriate mixture for sale or produc­
tive use through removal of other gases
such as carbon dioxide, nitrogen, or oxy­
gen. A commenter requested the inclu­
sion of landfill municipal solid waste as a
renewable resource to produce renewable
natural gas as energy property because
such a system may implement thermal
gasification and other relevant technolo­
gies. Another commenter suggested that
qualified biogas property should include
the pipeline and compression equipment
necessary to transport the gas from the
production plant to the common carrier
pipeline.
Another commenter suggested that
the Proposed Regulations be modified to
specifically provide that the property com­
prising a biogas conversion/concentration
and capture system, including any prop­
erty that is part of such system and that
cleans and conditions, is a single unit of
energy property (collectively referred to
as a RNG Production System). This com­
menter also suggested that the gas upgrad­
ing equipment necessary to concentrate the
gas into the appropriate mixture for injec­
tion into a pipeline through the removal
of other gases and impurities is a func­
tionally interdependent component of the
RNG Production System. This commenter
also described a second type of property, a
landfill gas collection system (LFG Col­
lection System), and noted that the LFG
Collection System is property that is an
integral part of, but not functionally inter­
dependent with, the RNG Production Sys­
tem because the placing in service of an
LFG Collection System is not dependent
upon placing in service the RNG Produc­
tion System, but the LFG Collection Sys­
tem is used directly in and essential to the
completeness of the intended function of
the RNG Production System. While this
commenter’s focus was on landfills, the
commenter noted the same analysis would
apply to other collection systems such as
anaerobic digesters operating at farms.
Some commenters asserted that anaerobic
digesters were functionally interdepen­
dent property, while others asserted that
anaerobic digesters were integral property.
After consultation with the DOE, the
Treasury Department and IRS understand
that the methane content of biogas in an
anaerobic digester can vary between 44%
and 68%. Thus, if biogas processed by
an anaerobic digester consists of not less
than 52% methane and all other statu­
tory requirements are met, an anaerobic
digester would be a unit of energy prop­
erty. Commenters explained that although
biogas exiting an anaerobic digester might
not be put to productive use, the statute
requires that qualified biogas property
capture the gas “for sale or productive
use.” To illustrate, if a taxpayer places in
service an anaerobic digester, which gen­
erates biogas meeting the not less than
52% methane requirement, and sells the
biogas to another taxpayer who in turn
places in service cleaning and condition­
ing property to clean such biogas, each
taxpayer has a qualified biogas property
and may be eligible for the section 48 tax
credit. On the other hand, if the biogas in
the anaerobic digester does not meet the
not less than 52% methane requirement,
then such digester is not, by itself, a qual­
ified biogas property. Nevertheless, the
anaerobic digester still may be an integral
part of other qualified biogas property,
such as a system that cleans and condi­
tions the biogas.
The Treasury Department and the IRS
intend that the final regulations provide a
function­oriented approach to determin­
ing what property is considered energy
property, including qualified biogas prop­
erty. The Proposed Regulations provided
examples of types of property that are
included as qualified biogas property,
which were intended to be illustrative but
not exclusive. Therefore, the final regula­
tions do not include additional examples
of property that is included as qualified
biogas property but do clarify that prop­
erty that is an integral part of qualified
biogas property includes, but is not lim­
ited to, a waste feedstock collection sys­
tem, landfill gas collection system, and
mixing and pumping equipment.

Bulletin No. 2024–52 1371 December 23, 2024
b. Flaring allowance
The preamble to the Proposed Reg­
ulations explained that a commenter to
Notice 2022­49 stated that some proper­
ties that produce electricity from gas using
a combustion process may flare waste or
tail gas, including during commissioning
or maintenance periods. This commenter
recommended a de minimis exception.
In response to this concern, the Proposed
Regulations requested comments regard­
ing whether such an exception is neces­
sary and what should be considered de
minimis for this purpose.
All comments received in response to
this request were in favor of an exception.
Some comments pointed to the overarch­
ing purpose of the qualified biogas prop­
erty and noted that nominal leakage should
not prevent property from qualifying. For
example, a commenter asserted that if the
overarching purpose of the biogas is for
sale or productive use, then the combus­
tion of a de minimis portion should not
prevent a property that produced such gas
from being a qualified biogas property.
Similarly, a commenter recommended
allowing a de minimis exception for flare
waste or tail gas so that otherwise eligible
biomass systems will not be disqualified
from the credit due to small amounts of
leakage arising from normal business
operations.
Another commenter pointed to the ben­
efit of hazard reduction associated with
nominal flaring. This commenter stated
that flaring in appropriate circumstances
should not disqualify a facility, because
“flares are often required as a safety and
emissions hazard reducer to be used in
case of emergency, accidental release,
start­up and shut­down procedures, and
other rare occurrences.”
The Treasury Department and the IRS
understand commenters’ concerns regard­
ing whether flaring performed for com­
missioning, maintenance, safety, or other
reasons may impact eligibility for the sec­
tion 48 tax credit. Qualified biogas prop­
erty is defined, in part, as capturing biogas
“for sale or productive use, and not for
disposal via combustion.” The Treasury
Department and the IRS interpret this stat­
utory requirement to not impact a quali­
fied biogas property that combusts, or
flares, some biogas under standard oper­
ating conditions, provided the primary
purpose of the qualified biogas property is
sale or productive use of biogas and any
flaring complies with all relevant Federal,
State, regional Tribal, and local laws and
regulations. After consulting the DOE, the
Treasury Department and the IRS under­
stand that flare permits are specific to a
given biogas facility design. Determin­
ing the amount of flaring appropriate for
safety purposes is specific to each quali­
fied biogas property and enforcing that
limit is best left to relevant Federal, State,
regional, local, and/or Tribal regulators.
Flaring performed in accordance with
applicable permits from relevant Federal,
State, regional, local, and/or Tribal regula­
tors should not jeopardize a qualified bio­
gas property’s eligibility for the section 48
credit. Accordingly, the final regulations
at §1.48­9(e)(11) provide that while a
qualified biogas property generally may
not capture biogas for disposal via com­
bustion, combustion in the form of flar­
ing will not disqualify a qualified biogas
property, provided the primary purpose
of the qualified biogas property is sale or
productive use of biogas and any flaring
complies with all relevant Federal, State,
regional, Tribal, and local laws and reg­
ulations.
c. Point of measurement
Proposed §1.48­9(e)(11)(ii) would pro­
vide that the methane content requirement
described in section 48(c)(7)(A)(i) and
in the Proposed Regulations is measured
at the point at which gas exits the biogas
production system, which may include an
anaerobic digester, landfill gas collection
system, or thermal gasification equipment.
This measurement point was described in
the Proposed Regulations as the point at
which a taxpayer generally must deter­
mine whether it will convert the biogas to
fuel for sale or use it directly to generate
heat or to fuel an electricity generation
unit.
Several commenters requested clarifi­
cation regarding the point of measurement
for the methane content requirement. A
commenter specifically requested clari­
fication regarding the point at which the
gas exits the biogas production system.
Several commenters noted that the point
of measurement provided in the Proposed
Regulations was incorrect because it is
too early in the process. These comments
responded to the Proposed Regulations
as well as the Correction. This sentiment
generally is consistent with the comment­
ers’ view that biogas upgrading equipment
should be considered eligible biogas prop­
erty.
One commenter stated that the Cor­
rection does not address the measurement
point for the methane content requirement
for purposes of determining whether the
definition of “qualified biogas property”
is met. The commenter asserted that the
final rule must clarify that the 52 percent
methane content requirement is measured
at the point at which the biogas is going
to be sold or put to productive use, which
would be after the biogas has been passed
through the cleaning and conditioning and/
or gas upgrading equipment. The com­
menter suggested that a change should be
made regardless of whether gas upgrad­
ing equipment is considered “integral” or
“functionally interdependent.” The com­
menter submitted another comment after
the Correction was issued urging that the
methane content of 52 percent should be
measured at the point at which the gas is
ready for sale or applicable productive
use, that is, at the end of the cleaning and
conditioning process. Several commenters
supported these comments and incorpo­
rated them into their own comments.
Another commenter similarly stated
that the methane content should be mea­
sured at the end of the cleaning and condi­
tioning process, which would be the point
at which the biogas is going to be sold or
put to a productive use, to ensure it con­
sists of at least 52 percent methane. Many
commenters have asserted that the 52 per­
cent measurement is a floor (not a ceiling).
Therefore, even if the measurement point
were to occur earlier, taxpayers that later
upgrade the biogas could still satisfy the
52 percent requirement.
The Treasury Department and the IRS
agree that the point of measurement in the
Proposed Regulations was too early in the
biogas production process, which could
potentially frustrate compliance with the
“sale or productive use” requirement.
Therefore, the final regulations adopt at
§1.48­9(e)(11)(ii) the rule that the meth­
ane content requirement described in sec­
tion 48(c)(7)(A)(i) and in the Proposed

December 23, 2024 1372 Bulletin No. 2024–52
Regulations is measured at the point at
which the biogas exits the qualified biogas
property.
6. Microgrid Controllers
Section 48(a)(3)(A)(xi) provides that
energy property includes microgrid con­
trollers. Section 48(c)(8)(A) defines a
microgrid controller as equipment that is
part of a qualified microgrid and designed
and used to monitor and control the
energy resources and loads on such micro­
grid. Section 48(c)(8)(B) defines a quali­
fied microgrid as an electrical system that
includes equipment that is capable of gen­
erating not less than 4 kW and not greater
than 20 MW of electricity; is capable of
operating in connection with the electri­
cal grid and as a single controllable entity
with respect to such electrical grid, and
independently (and disconnected) from
such electrical grid; and is not part of a
bulk­power system (as defined in section
215 of the Federal Power Act (16 U.S.C.
824o)).
Proposed §1.48­9(e)(12)(i) would pro­
vide generally that a microgrid controller
is equipment that is part of a qualified
microgrid and is designed and used to
monitor and control the energy resources
and loads on such microgrid. A qualified
microgrid is an electrical system that
includes equipment that is capable of gen­
erating not less than 4 kW and not greater
than 20 MW of electricity; is capable of
operating in connection with the electrical
grid and as a single controllable entity with
respect to such electrical grid, and inde­
pendently (and disconnected) from such
electrical grid; and is not part of a bulk­
power system (as defined in section 215 of
the Federal Power Act (16 U.S.C. 824o)).
Proposed §1.48­9(e)(12)(ii) would pro­
vide that for purposes of proposed §1.48­
9(e)(12), a qualified microgrid includes an
electrical system that is capable of operat­
ing in connection with the larger electrical
grid, regardless of whether a connection to
the larger electrical grid exists.
The preamble to the Proposed Regu­
lations requested comments on whether
the rules for functionally interdependent
property as would be provided in pro­
posed §1.48­9(f)(2)(ii) would be sufficient
to determine the components that should
be included as part of a microgrid con­
troller, or whether another test is needed
due to the specific role of microgrid con­
trollers and their components. A few com­
menters advocated for the application of
the functional interdependence standard
to microgrid controllers. For example,
one commenter stated that the functional
interdependence standard is thoughtful,
provides direct language applicable to the
definition of microgrid controllers, and
creates an easy and thorough way to iden­
tify the multi­faceted infrastructure that
goes into microgrid controllers to generate
and store energy.
However, several commenters
requested that particular components of
property be listed specifically in the defi­
nition of microgrid controllers: optimiza­
tion software, communications software,
communications equipment, incoming
service, cables, wiring, ethernet switches,
computer hardware, load controllers,
programmable logic controllers, meters
and relays, building management sys­
tems, local human management interface
screens, protective relays, breakers, rout­
ers, and other hardware necessary to mon­
itor and control the energy resources and
loads on a qualified microgrid.
Additionally, two commenters specif­
ically requested the inclusion of switch­
gear in the definition of microgrid con­
trollers. One of the commenters explained
that switchgear is the true backbone of the
microgrid controls system. However, the
commenter also pointed out that switch­
gear is an essential part of any building’s
electrical operations with or without a
microgrid. This commenter also noted
that because switchgear is a critical piece
of a building’s infrastructure, it is usually
also owned by the building owner. The
commenters generally suggested that if
switchgear is owned by the building owner
but paid for by the taxpayer that owns the
microgrid controller, then the cost of the
switchgear should be included in the basis
of the taxpayer’s section 48 credit for the
microgrid controller similar to the inclu­
sion of interconnection property costs in
the credit basis of certain lower­output
energy properties.
The two commenters also suggested
that if switchgear is part of an existing
building, and a microgrid controller is
added in a case in which a taxpayer is
applying the 80/20 Rule, then the switch­
gear should not be taken into account for
purposes of the 80/20 Rule. For example,
one of the commenters explained that
switchgear in an existing building may
be sufficient for connecting microgrid
controls with relevant distributed energy
resources and load resources either as is or
with some additional pieces of equipment
and because all microgrid control compo­
nents will connect through the switchgear,
it is critical that the integrated but stand­
alone microgrid control equipment is not
considered as retrofitting of the switch­
gear in existing buildings under the 80/20
Rule. The other commenter likewise rec­
ommended that equipment integrated into
switchgear to enable the installation of a
microgrid controller should not be consid­
ered retrofitted equipment but a separate
purchase of functionally interdependent
energy property.
The Treasury Department and the IRS
consulted with the DOE and confirmed
that while switchgear may be a necessary
part of a microgrid, switchgear is neither
functionally interdependent nor integral
to a microgrid controller. Switchgear
plays a vital role in ensuring the reliabil­
ity and safety of microgrids by managing
power distribution, providing protection,
and maintaining system integrity. How­
ever, the microgrid controller is respon­
sible for the overall management and
optimization of a microgrid’s energy
resources and its interaction with the
main grid. For example, in the build­
ing context, technically a fuse or circuit
breaker could be considered a switchgear,
in which case they would exist in build­
ings with or without microgrid control.
As a result, switchgear is not part of the
energy property defined as a “microgrid
controller” and is not taken into account
for purposes of the 80/20 Rule. For fur­
ther discussion of the 80/20 Rule see part
III.A. of this Summary of Comments and
Explanation of Revisions.
After considering comments request­
ing that the final regulations add more
examples of specific components eligible
as part of a microgrid controller, the Trea­
sury Department and the IRS decline to do
so. The Treasury Department and the IRS
have further considered the unit of energy
property as applied to microgrid control­
lers and conclude that the proposed rule
is clear.

Bulletin No. 2024–52 1373 December 23, 2024
Commenters also requested clarifi­
cation concerning what is included as a
“microgrid” for purposes of section 48.
Two commenters requested the adoption
of language clarifying that an eligible
microgrid includes an electrical system
that is capable of operating in connection
with the larger electrical grid regardless
of whether the microgrid is physically
connected to the electrical grid. Another
commenter noted that until it is clarified
that single­family homes with systems
greater than 4 kW are eligible “microg­
rids,” tax equity investors likely will be
reluctant to finance the installation of
load controllers associated with rooftop
solar, storage, and residential microgrid
installations. Similarly, another com­
menter asserted that the term “qualified
microgrid” applies both to microgrids as
they are conventionally known, which
could involve many households or busi­
nesses, and to “nanogrids,” which usually
involve a single household. Regarding the
request for clarification about a microg­
rid needing to be physically connected to
the electrical grid, proposed §1.48­9(e)
(12)(ii) already provides that a qualified
microgrid includes an electrical system
that is capable of operating in connection
with the larger electrical grid, regardless
of whether a connection to the larger
electrical grid exists. Regarding the other
comments, proposed §1.48­9(e)(12)(i)
adopts the statutory definition of a qual­
ified microgrid as an electrical system
that includes equipment that is capable
of generating not less than 4 kW and not
greater than 20 MW of electricity. This
definition encompasses a wide range
of technologies. To the extent that such
“nanogrids” used in single family homes
meet the definition under the statute and
proposed §1.48­9(e)(12)(i), it is unneces­
sary to change the definition to identify
this certain technology. The proposed rule
is adopted without change.
C. Definition of energy property and
scope of included components
Since shortly after the enactment of
section 48, energy property eligible for the
section 48 credit has been interpreted by
the Treasury Department and the IRS to
include, in addition to energy generation
property, costs related to components such
as power conditioning equipment, transfer
equipment, and parts related to the func­
tioning of that equipment.
On November 9, 1978, the Energy
Tax Act of 1978, amended section 48 by
adding a new subsection (then section
48(l)) to define “energy property.” Public
Law 95­816, 92 Stat. 2174. On January
23, 1981, the Treasury Department and
the IRS promulgated T.D. 7765, 46 FR
7287­01, to provide additional guidance
regarding the definition of energy prop­
erty. The preamble to T.D. 7765 states that
“[i]n response to comments, the definition
of solar energy property was expanded
to make it clear that it includes storage
devices, power conditioning equipment,
transfer equipment, and property solely
related to the functioning of those items.
However, such equipment does not
include transmission equipment.”
The preamble to T.D. 7765 also states
that “[a] number of comments cited spe­
cific legislative history to the effect that
wind energy property includes ‘transfer
equipment.’” T.D. 7765 defines “trans­
fer equipment” as including equipment
that permits the aggregation of electricity
generated by several windmills and equip­
ment that alters voltage in order to permit
transfer to a transmission line. T.D. 7765
adds transfer equipment, but not transmis­
sion lines, to the definition of wind energy
property.
Former §1.48­9(d)(3) defines “solar
energy property” as equipment that uses
solar energy to generate electricity, and
includes storage devices, power condi­
tioning equipment, transfer equipment,
and parts related to the functioning of
those items. This provision also provides
that solar energy property used to generate
electricity includes only equipment up to
(but not including) the stage that transmits
or uses electricity.
Former §1.48­9(e) defines “wind
energy property” as consisting of a wind­
mill, wind­driven generator, storage
devices, power conditioning equipment,
transfer equipment, and parts related to
the functioning of those items. Section
48(a)(3) no longer includes wind energy
property as a type of energy property.
However, qualified wind facilities (includ­
ing qualified offshore wind facilities) may
be qualified investment credit facilities
that a taxpayer may elect to treat as energy
property if they meet all the requirements
provided in section 48(a)(5).
While not specifically addressed in sec­
tion 48, guidance published in the Internal
Revenue Bulletin interpreting section 48
has provided that functionally interde­
pendent components are considered com­
ponents of energy property eligible for
the section 48 credit. In Notice 2018­59,
2018­28 I.R.B. 196, the Treasury Depart­
ment and the IRS clarified components
that are considered part of an energy prop­
erty. Section 7.01(1) of Notice 2018­59
states that an energy property generally
includes all components of property that
are functionally interdependent (unless
such equipment is an addition or mod­
ification to an energy property). Notice
2018­59 also provides that components of
property are functionally interdependent if
the placing in service of each component
is dependent upon the placing in service of
each of the other components in order to
generate electricity. Further, Notice 2018­
59 cites Revenue Ruling 94­31, 1994­1
C.B. 16, in stating that functionally inter­
dependent components of property that
can be operated and metered together and
can begin producing electricity separately
from other components of property within
a larger energy project will be considered
an energy property.
In the context of defining “section 38
property,” §1.48­1(d)(4) provides that
“section 38 property” is “used as an inte­
gral part of one of the specified activities
[for which section 38 property may func­
tion] if it is used directly in the activity
and is essential to the completeness of
the activity.” Section 1.48­1(d)(4) also
provides that “[p]roperty shall be consid­
ered used as an integral part of one of the
specified activities if so used either by the
owner of the property or by the lessee of
the property.” Notice 2018­59 incorpo­
rates the concept of integral property from
§1.48­1(d) to provide that certain property
that is an integral part of an energy prop­
erty is included in energy property for pur­
poses of the section 48 credit.
Notice 2018­59 also explains that prop­
erty that is “functionally interdependent”
to the generation of electricity is treated as
a unit of energy property. Further, Notice
2018­59 provides that certain other prop­
erty integral to the production of electric­
ity is included in determining what costs

December 23, 2024 1374 Bulletin No. 2024–52
to include in the basis of energy property
and the date on which construction of the
energy property began. Section 7.02(1) of
Notice 2018­59 includes an example illus­
trating that, while a transmission tower
located at a site where energy property
is located is not energy property because
transmission is not an integral part of the
activity performed by the energy property,
a custom­designed transformer that steps
up the voltage of electricity produced at
an energy property to the voltage needed
for transmission is power conditioning
equipment, which is an integral part of the
activity performed. In addition, section
7.02(2) of Notice 2018­59 explains that
onsite roads used to operate and maintain
the energy property are integral to the pro­
duction of electricity, but not roads used
primarily to access the site or primarily for
employee or visitor vehicles. Similarly,
section 7.02(3) and (4) of Notice 2018­59
explain that fences are not integral to the
production of electricity nor are buildings,
unless the building is essentially an item
of machinery or equipment, or a structure
that houses property that is integral to the
activity of an energy property if the use
of the structure is so closely related to the
use of the housed energy property that the
structure clearly can be expected to be
replaced if the energy property it initially
houses is replaced.
One challenge in defining components
that are included in energy property is
determining the components that are com­
mon to all energy property, without lim­
iting or constraining future technological
advances. To avoid limiting future energy
technologies, the Treasury Department
and the IRS consulted with the DOE and
determined that the best option is to adopt
a function­oriented approach to describe
the types of components that are con­
sidered energy property. Accordingly,
proposed §1.48­9(f) would adopt the
concepts of functional interdependence
and property that is an integral part of an
energy property as provided in guidance
published in the Internal Revenue Bulletin
issued previously by the Treasury Depart­
ment and the IRS.
Further, consistent with prior guidance,
proposed §1.48­9(f)(1) would provide
the general rule that an energy property
includes a unit of energy property that
meets the requirements for energy prop­
erty, is not excluded from energy property,
and is of a type of energy property included
in section 48(a)(3). Property owned by
the taxpayer that is an integral part of an
energy property is treated as energy prop­
erty. Energy property does not include any
electrical transmission equipment, such
as transmission lines and towers, or any
equipment beyond the electrical trans­
mission stage. With the exception of the
modification of energy storage technology
(as provided in proposed §1.48­9(e)(10)
(iii)) and the application of the 80/20 Rule
(as provided in proposed §1.48­14(a)(1)),
energy property does not include equip­
ment that is an addition or modification to
an existing energy property.
1. Unit of Energy Property
Proposed §1.48­9(f)(2)(i) would pro­
vide, in part, that the term unit of energy
property means all functionally inter­
dependent components of property (as
defined in proposed §1.48­9(f)(2)(ii))
owned by the taxpayer that are operated
together and that can operate apart from
other energy properties within a larger
energy project (as defined in proposed
§1.48­13(d)). For rooftop solar energy
property, all components of property that
are installed on a single rooftop would
also be considered a single unit of energy
property under the Proposed Regulations.
A commenter requested additional
examples regarding the “unit of energy
property” with respect to electrical energy
storage and other energy property. For
example, the commenter requested an
example illustrating that an individual
battery capable of operating on its own
or with other batteries is a “unit of energy
property.” The commenter asserted that
this should be the clear result if such a bat­
tery can “operate apart from other energy
properties,” including, for example, a sin­
gle storage container with multiple battery
packs. The commenter noted that this is
also consistent with prior guidance pub­
lished in the Internal Revenue Bulletin
regarding wind farms. The commenter
asserted that if under this prior guid­
ance, the addition of a new wind turbine
is treated as the addition of a new unit of
energy property, then the same rule should
apply to batteries. A definitive response to
such comments would require the Trea­
sury Department and the IRS to conduct
a complete factual analysis of the property
in question, which may include informa­
tion beyond that which was provided by
the commenters. Because more informa­
tion is needed to make the determina­
tions requested by the commenters, the
requested clarifications are not addressed
in these final regulations.
With respect to solar energy property,
some commenters suggested that the Pro­
posed Regulations did not clearly draw the
line between the unit of energy property
and property integral to the unit of energy
property. For example, a commenter
stated that the final regulations need to
clarify that a unit of solar energy prop­
erty includes all solar panels, racks, wires,
cables, and equipment connected through
a single inverter (rather than all prop­
erty through the transformer). This com­
menter referred to Example 1 in proposed
§1.48­9(f)(5)(i) and recommended adding
an example (or modifying the existing
example) to clarify the components in the
unit of solar energy property. This com­
menter explained that this is necessary to
comport with the definition of a unit of
energy property as all functionally inter­
dependent components, since each group
of components connected through an
inverter may be operated independently.
Similarly, a commenter requested that the
final regulations clarify that a solar project
may have multiple units of energy prop­
erty connected through a single inverter.
Another commenter also requested a new
or revised example to illustrate that for a
larger­scale ground­mounted solar array, a
“unit of energy property” is a single string
or block of panels connected to each other
and through a common inverter.
As highlighted by commenters, solar
energy property may be configured in
different ways. The Treasury Department
and IRS agree with commenters that
clarity on how the definition of a unit of
energy property is applied to solar energy
property is warranted. Under the Pro­
posed Regulations, a unit of energy prop­
erty means all functionally interdependent
components of property (as defined in
proposed §1.48­9(f)(2)(ii)) owned by the
taxpayer that are operated together and
that can operate apart from other energy
properties within a larger energy project
(as defined in proposed §1.48­13(d)). In

Bulletin No. 2024–52 1375 December 23, 2024
applying this definition to a solar energy
property, the Treasury Department and
IRS view the unit of energy property as
all the solar panels that are connected to a
common inverter, which would be consid­
ered an integral part of the energy prop­
erty, or connected to a common electrical
load, if a common inverter does not exist.
Accordingly, a large, ground­mounted
solar energy property may be comprised
of one or more units of energy property
depending upon the number of inverters.
The example in the final regulations is
updated to reflect this. The final regula­
tions adopt the definition of unit of energy
property as proposed.
For rooftop solar energy property, all
components of property that are installed
on a single rooftop would also be consid­
ered a single unit of energy property under
the Proposed Regulations. The final regu­
lations adopt this rule as proposed.
2. Functional Interdependence
Proposed §1.48­9(f)(2)(ii)(A) would
provide that except as provided in pro­
posed §1.48­9(f)(2)(ii)(B), with respect
to components of a unit of energy prop­
erty, the term functionally interdependent
means that the placing in service of each
component is dependent upon the placing
in service of each of the other components
in order to generate or store electricity,
thermal energy, or hydrogen as provided
by section 48(c) and as described in pro­
posed §1.48­9(e).
Proposed §1.48­9(f)(2)(ii)(B) would
provide that in the case of solar process
heat equipment, fiber­optic solar energy
property, electrochromic glass property,
GHP property, qualified biogas property,
and microgrid controllers, with respect
to components of such property, the term
functionally interdependent means that
the placing in service of each component
is dependent upon the placing in service
of each of the other components in order
to perform the intended function of the
energy property as provided by section
48(c) and as described in proposed §1.48­
9(e).
Many commenters requested that tax­
payers be permitted to claim a credit for
a functionally interdependent piece of
property without owning the entire unit
of energy property. These comments
addressing ownership are discussed in
part III.D. of this Summary of Comments
and Explanation of Revisions.
Other commenters asserted that the
statute does not require ownership of a
unit of energy property; instead, the tax­
payer must only own something that fits
the relevant definition of “energy prop­
erty.” These commenters stated that the
proposed definitions of the unit of energy
property based on “functional interde­
pendence” and integral property have no
basis in section 48. A commenter stated
that section 48 does not require or per­
mit the Treasury Department or the IRS
to discriminate between types of energy
property, whether based on functionality,
ownership, or otherwise. This commenter
referred to the flush language at section
48(a)(3)(D): “[energy property] shall
not include any property which is part
of a facility the production from which
is allowed as a credit under section 45
for the taxable year or any prior taxable
year.” The commenter said this language
clearly signals that Congress recognizes
that property may be part of a facility, but
that the term “property” represents some­
thing less than a facility. The commenter
also referred to Technical Advice Mem­
orandum 8528001 (January 8, 1985) for
the principle that components of property
that may function together can also retain
their separate identity for tax purposes.
Lastly, the commenter stated that section
48 is focused on capitalized expenditures
on items of property that are tangible
personal property for Federal income tax
purposes that are used in a trade or busi­
ness. As a result, the commenter asserted
that to define the types of property that
qualify for the section 48 credit, taxpay­
ers should focus on items of property that
are integral to a process that Congress has
chosen to incentivize, for example, the
production of energy using certain inputs.
This commenter requested the removal of
the functional interdependence standard
at proposed §1.48­9(f) and asserted that
while this standard is needed for section
45 to determine a qualified facility and
for beginning of construction purposes,
this standard is not needed for purposes of
section 48.
Another commenter stated that the Pro­
posed Regulations contradict the language
and intent of the IRA by distinguishing
between “functionally interdependent”
components and “integral parts” of energy
property to determine the owner or own­
ers of energy property who may claim the
section 48 credit. The commenter noted
that this distinction contravenes the plain
text of section 48, which permits the sec­
tion 48 credit to be claimed by the owner
of energy property if the original use of
that energy property began with such
owner.
The concept of a unit of energy prop­
erty also is intertwined with the discus­
sion of the 80/20 Rule in part III.A. of this
Summary of Comments and Explanation
of Revisions. In the context of the 80/20
Rule, a few commenters also did not
agree with this concept. For example, a
commenter highlighted the statutory lan­
guage and pointed out that certain defi­
nitions of energy property use the word
“equipment” as opposed to “system.” A
commenter explained that some energy
properties are defined as equipment that
serves a function, such as solar energy
property defined in section 48(a)(3)(A)(i)
and GHP property defined in section 48(a)
(3)(A)(vii). This commenter contrasted
those definitions with statutory definitions
of other types of energy property as com­
prising a system, such as the definition of
CHP property in section 48(c)(3), thermal
energy storage property as defined in sec­
tion 48(c)(6)(C)(i), and qualified biogas
property as defined in section 48(c)(7).
The commenter concluded that the “unit
of energy property” concept as provided
in proposed §1.48­9(f)(2)(i) is appropriate
for energy properties defined as systems,
but it should not be applied to energy
properties defined as equipment.
Another commenter made a similar
point about misalignment of the “unit of
energy property” concept by focusing
specifically on its application to geother­
mal energy property. The commenter
stated that despite the statute defining
“energy property” at the equipment level,
“equipment used to produce, distribute,
or use energy derived from a geother­
mal deposit,” the Proposed Regulations
use the term “unit of energy property,” a
term defined more expansively, such that
it could be interpreted to be equivalent to
an entire facility in the case of geothermal
energy property. By using the term “unit of
energy property,” the commenter asserted

December 23, 2024 1376 Bulletin No. 2024–52
that the Proposed Regulations give a mis­
leading appearance that the rules comport
with the statutory text of section 48 but
define that term so that it is functionally
equivalent to the term “facility” as applied
in section 45.
In the context of microgrid control­
lers, some commenters agreed with the
application of the functional interdepen­
dence standard. A commenter stated that
microgrids are highly customizable, and
the functional interdependence standard
as proposed would allow accommodation
of the different engineering requirements
of qualified microgrids to future­proof
the definition and allow for technological
advances. This commenter agreed that the
functional interdependence standard is
sufficiently flexible for microgrid control­
lers.
The statute supports the Proposed Reg­
ulations’ definition and use of the terms
“functionally interdependent” and “unit
of energy property.” Additionally, these
concepts have been adopted in previous
guidance published in the Internal Reve­
nue Bulletin under section 48, particularly
Notice 2018­59, which provides guidance
regarding the beginning of construction
rules for the section 48 credit.
There are three key reasons for requir­
ing an energy property to include all
functionally interdependent components
that are part of a unit of energy property.
First, the statutory definition of each type
of energy property as provided in section
48(a)(3) and (c) is included at proposed
§1.48­9(e). The unit of energy property
definition at §1.48­9(e)(2) aligns with
these statutory definitions by encompass­
ing the property required to generate elec­
tricity or perform the required function as
described in the statute. If a taxpayer owns
merely a component of property within a
larger unit of energy property and is not
required to place in service the entire unit
of energy property, then in some cases
there would be no certainty that the gen­
eration of electricity or other statutorily
required function would be satisfied when
the taxpayer claims the credit.
Some commenters suggested that this
uncertainty could be eliminated or reduced
by a coordinated operating plan among
separate taxpayers. However, section 48
provides a credit only if a taxpayer places
in service “energy property” as defined
by statute. It does not provide a credit for
placing in service a mere component of
energy property, regardless of whether it
is subject to an operating plan. In addition,
taxpayers claim the section 48 credit by
filing Form 3468, Investment Credit, with
their Federal income tax return. The IRS
has no authority to compel taxpayers to
coordinate tax credit claims or share tax
return information with other taxpayers.
Any taxpayer claiming a section 48 credit
must satisfy the statutory requirements, as
described by Congress, for each type of
energy property, and the functional inter­
dependence standard provided in the Pro­
posed Regulations would ensure that the
statutory requirements are met.
Second, focusing on the statutory lan­
guage in section 48(a)(1), which provides
that “the energy credit for any taxable
year is the energy percentage of the basis
of each energy property placed in service
during such taxable year,” the defini­
tion of the unit of energy property using
a functional interdependence standard
is consistent with how the term “placed
in service” has been interpreted by the
courts and developed in various forms of
guidance. Proposed §1.48­9(b)(5) largely
incorporates the general rules provided by
§1.46­3(d)(1) for determining when a tax­
payer has placed a property in service for
the section 48 credit. An energy property
is considered “placed in service” in the
earlier of the taxable year in which, under
the taxpayer’s depreciation practice, the
depreciation of such energy property
begins or the taxable year in which the
property is “placed in a condition or state
of readiness and availability for a specifi­
cally assigned function.” See §§1.46­3(d)
(1) and 1.167(a)­11(e)(1)(i).
To determine the taxable year in which
depreciation begins, it is the energy prop­
erty described in section 48(a)(3)(A) that
must be depreciable. See section 48(a)(3)
(C). As stated earlier, this energy property
cannot be a mere component that would
be depreciated in isolation from the rest of
the components that would make up a unit
of energy property. Treating individual
components within a unit of energy prop­
erty as an energy property would make
it practically impossible to determine the
taxable year in which the depreciation
of components that comprise an energy
property begins.
The Tax Court has said that “when an
individual component that is designed to
operate as a part of a larger system is inca­
pable of contributing to the system in isola­
tion, it is not regarded as placed in service
until the entire system reaches a condition
of readiness and availability for its specif­
ically assigned function.” Green Gas Del.
Statutory Tr. v. Commissioner, 147 T.C. 1,
52 (2016), aff’d, 903 F.3d 138 (D.C. Cir.
2018). The Tax Court further explained
that components “are not to be considered
placed in service separately from the sys­
tem of which they are an essential part.”
Olsen v. Commissioner, T.C. Memo 2021­
41, aff’d 52 F.4th 889 (10th Cir. 2022). See
also Sealy Power, Ltd. v. Commissioner,
46 F.3d 382, 390 (5th Cir. 1995), aff’g in
part, rev’g in part on other grounds T.C.
Memo. 1992­168; see Pub. Serv. Co. v.
United States, 431 F.2d 980, 984 (10th
Cir. 1970) (holding that individual com­
ponents of a power plant could not be con­
sidered separately because no component
“would serve any useful purpose” on its
own). As demonstrated by these rulings,
courts have long interpreted the placed in
service requirement to apply to all of the
functionally interdependent components
of a unit of property that must be placed in
service collectively.
Lastly, in amending section 48 for
taxable years after the enactment of the
IRA, Congress did not contradict or dis­
place these concepts, which had already
been established in guidance published in
the Internal Revenue Bulletin. In Notice
2018­59, the Treasury Department and the
IRS clarified what components are con­
sidered part of an energy property. Sec­
tion 7.01(1) of Notice 2018­59 states that
an energy property generally includes all
components of property that are function­
ally interdependent (unless such equip­
ment is an addition or modification to an
energy property). Further, Notice 2018­59
provides that components of property are
functionally interdependent if the placing
in service of each component is dependent
upon the placing in service of each of the
other components to generate electricity.
Notice 2018­59 relies upon the ratio­
nale provided in Revenue Ruling 94­31,
1994­1 C.B. 16, that functionally inter­
dependent components of property that
can be operated and metered together and
can begin producing electricity separately

Bulletin No. 2024–52 1377 December 23, 2024
from other components of property within
a larger energy project will be considered
an energy property.
3. Integral Part of an Energy Property
Proposed §1.48­9(f)(3)(i) would pro­
vide that for purposes of the section 48
credit, property owned by a taxpayer
is an integral part of an energy property
owned by the same taxpayer if it is used
directly in the intended function of the
energy property as provided by section
48(c) and as described in proposed §1.48­
9(e) and is essential to the completeness
of the intended function. Property that is
an integral part of an energy property is
energy property. A taxpayer may not claim
the section 48 credit for any property not
owned by the taxpayer that is an inte­
gral part of the taxpayer’s energy prop­
erty. Multiple energy properties (whether
owned by one or more taxpayers) may
include shared property that may be con­
sidered an integral part of each energy
property so long as the cost basis for the
shared property is properly allocated to
each energy property. The total cost basis
of such shared property divided among
the energy properties may not exceed 100
percent of the cost of such shared prop­
erty. In addition, property that is an inte­
gral part of an energy property that is also
shared by a qualified facility (as defined
in section 45(d)) will not be considered
property that is not energy property under
proposed §1.48­9(d). This means that
property that is also used by a qualified
facility (as defined in section 45(d)) may
still be energy property.
Proposed §1.48­9(f)(3)(ii) would pro­
vide that property that is an integral part
of energy property includes power condi­
tioning equipment and transfer equipment
used to perform the intended function of
the energy property as provided by sec­
tion 48(c) and as described in proposed
§1.48­9(e). Power conditioning equip­
ment includes, but is not limited to, trans­
formers, inverters, and converters, which
modify the characteristics of electricity
or thermal energy into a form suitable for
use or transmission or distribution. Parts
related to the functioning or protection
of power conditioning equipment are
also treated as power conditioning equip­
ment and include, but are not limited to,
switches, circuit breakers, arrestors, and
hardware and software used to monitor,
operate, and protect power conditioning
equipment.
Transfer equipment includes equipment
that permits the aggregation of energy
generated by components of energy prop­
erties and equipment that alters voltage to
permit transfer to a transmission or distri­
bution line. Transfer equipment does not
include transmission or distribution lines.
Examples of transfer equipment include,
but are not limited to, wires, cables, and
combiner boxes that conduct electricity.
Parts related to the functioning or pro­
tection of transfer equipment are also
treated as transfer equipment and may
include items such as current transform­
ers used for metering, electrical interrupt­
ers (such as circuit breakers, fuses, and
other switches), and hardware and soft­
ware used to monitor, operate, and protect
transfer equipment.
Power conditioning equipment and
transfer equipment that are integral to an
energy property may be integral to another
energy property or used by a qualified
facility (as defined in section 45(d)), so
long as the total cost basis of the integral
property is not exceeded for purposes of
the section 48 credit claimed with respect
to any energy property or qualified facility
that share such property.
Proposed §1.48­9(f)(3)(iii) would pro­
vide that roads that are an integral part
of an energy property are integral to the
activity performed by the energy prop­
erty such as onsite roads that are used
for equipment to operate and maintain
the energy property. Roads primarily for
access to the site, or roads used primarily
for employee or visitor vehicles, are not
integral to the activity performed by an
energy property.
Proposed §1.48­9(f)(3)(iv) would pro­
vide that fencing is not an integral part
of an energy property because it is not
integral to the activity performed by the
energy property. A commenter disagreed
that fencing is not integral and asserted
that concerns of national security dictate
the fences, along with security systems and
monitoring devices, be treated as integral
to electricity generation. Fencing is not
considered property integral to an energy
property because it is not essential to the
completeness of the intended function of
an energy property, whether electricity
generation or another specific function
of energy property. This rule originally
was provided in Notice 2018­59 and was
included in the Proposed Regulations. The
proposed rule is adopted without change.
For the various section 48 energy prop­
erties, commenters requested confirma­
tion that certain property is an integral
part of an energy property. A commenter
requested clarification that an HVDC
(high­voltage direct current) power sys­
tem is either a “unit of energy property”
or a “functionally interdependent compo­
nent” of an offshore wind facility. If the
HVDC power system is used directly in
the intended function of the energy prop­
erty and is essential to the completeness
of the intended function, then the HVDC
power system would be an integral part to
an energy property, and thus, treated as part
of that energy property. However, because
the generation or storage of electricity or
thermal energy is not dependent upon the
placing in service of an HVDC power sys­
tem, it is not a functionally interdependent
component of an energy property and not
a separate “unit of energy property.” Fur­
ther, the Proposed Regulations included
an offshore wind example, retained in
these final regulations, that illustrates the
application of the energy property rules
and addresses this commenter’s concern.
Another commenter requested that
the final regulations clarify that software
that operates, monitors, or protects the
project applies more broadly than power
conditioning and transfer equipment and
may be considered property integral to an
energy property. The commenter asserted
that certain types of software used as a
part of energy management systems, bat­
tery management systems, and microgrid
controllers should be considered property
integral to an energy property. This com­
menter also requested that software that
optimizes and automates integral parts
also be eligible. Finally, this commenter
believed that the final regulations should
clarify that a taxpayer who owns an energy
property can include software costs in the
basis of the energy property to compute
the section 48 credit. Another commenter
stated that the definition of power condi­
tioning equipment expressly includes soft­
ware used to “monitor, operate, and pro­
tect” such equipment and requested this

December 23, 2024 1378 Bulletin No. 2024–52
definition be modestly expanded. As dis­
cussed in part I.B.6. of this Summary of
Comments and Explanation of Revisions,
software may be integral to different types
of energy property, including microgrid
controllers. Therefore, software that opti­
mizes and automates may be integral if it
meets the integral property rule in §1.48­
9(f)(3). To the extent the commenter is
asking whether software costs may be
capitalized, that issue is beyond the scope
of these regulations. The proposed rules
are adopted without change.
In the context of qualified biogas prop­
erty, commenters requested additional
examples of what components may be
integral property. Specifically, a com­
menter asked for clarification that mobile
trailers or containers used to transfer bio­
gas are integral to biogas energy property.
The final regulations do not adopt these
comments, as these regulations are meant
to apply to all energy properties and do
not provide an exclusive list of compo­
nents of property that may be included in
energy property. The final regulations do
provide certain examples of property that
is an integral part of qualified biogas prop­
erty including, but not limited to, a waste
feedstock collection system, a landfill gas
collection system, and mixing or pumping
equipment.
Additionally, a few commenters
requested clarification regarding the deter­
mination of when construction begins in
cases in which two or more energy prop­
erties share integral property. The com­
menters proposed that the beginning of
construction on one energy property does
not determine when construction begins
on another energy property, even if they
share property integral to both energy
properties. The Treasury Department and
the IRS have addressed the beginning of
construction rules in several pieces of
Internal Revenue Bulletin guidance. The
Proposed Regulations do not address
these rules and they are beyond the scope
of the final regulations.
In the context of solar energy property,
a commenter requested that the Treasury
Department and the IRS confirm that
power conditioning equipment, including
transformers, is not considered a compo­
nent of a unit of energy property; rather,
power conditioning equipment is an “inte­
gral part” of energy property. This com­
menter noted that the example included
in proposed §1.48­9(f)(5)(i) says this, but
requested that the Treasury Department
and the IRS clarify that the language in
this example, “[a]ll components of the
Property, up to and including the trans­
former are either functionally interdepen­
dent components of the Property or are
integral parts of the Property,” means it is
the transformer that is the “integral part”
and the other solar components that are the
functionally interdependent components
of the property. This same commenter also
requested that gen­tie lines be clarified as
integral property. The final regulations,
at §1.48­9(f)(3)(ii), provide that power
conditioning and transfer equipment is
considered an integral part of an energy
property and provide a nonexclusive list
of types of property that are considered
power conditioning equipment, including
transformers and transfer equipment.
Another commenter requested con­
firmation that offshore generating assets
and components of island­based hydro­
power facilities qualify for the section
48 credit. This commenter also requested
that similar rules and examples as those
provided in the Proposed Regulations for
offshore wind facilities apply to marine
and hydrokinetic energy property. As dis­
cussed in more detail in part III.F. of this
Summary of Comments and Explanation
of Revisions, offshore wind facilities and
qualified hydropower facilities are both
qualified facilities under section 45(d) for
which a taxpayer may make an election to
claim the section 48 credit in lieu of the
section 45 credit. Whether certain assets
are included in an offshore wind facility or
qualified hydropower facility as defined in
section 45(d) is beyond the scope of these
final regulations.
4. Property Excluded from Energy
Property
Proposed §1.48­9(d)(2) would pro­
vide that energy property does not include
power purchase agreements, goodwill,
going concern value, or renewable energy
certificates. A commenter requested addi­
tional clarification and examples of the
potential bifurcation of tax basis between
renewable energy certificates and an
associated energy property. A definitive
response to this comment would require
the Treasury Department and the IRS to
conduct a complete factual analysis of the
renewable energy certificates and associ­
ated energy property, which may include
information beyond that which was pro­
vided by the commenters. Because more
information is needed to provide the clari­
fication requested by the commenters, the
requested clarification is not addressed in
these final regulations. The final regula­
tions adopt the rule as proposed.
II. Rules Relating to the Increased Credit
Amount for Satisfying Certain Prevailing
Wage and Apprenticeship Requirements
and the Energy Project Rule
Section 48(a)(9) provides for an
increased credit amount for energy proj­
ects for taxpayers who satisfy certain
requirements. Section 48(a)(9)(A)(i) pro­
vides a general rule that in the case of any
energy project that satisfies the require­
ments of section 48(a)(9)(B), the amount
of the credit determined under section
48(a) (determined after the application of
section 48(a)(1) through (8) and (15), and
without regard to section 48(a)(9)(A)(i))
is equal to such amount multiplied by 5.
Section 48(a)(9)(A)(ii) provides that
for purposes of section 48(a), the term
“energy project” means a project consist­
ing of one or more energy properties that
are part of a single project.
Section 48(a)(9)(B) provides that a
project meets the requirements of section
48(a)(9)(B) if it is one of the following: (i)
a project with a maximum net output of
less than 1 megawatt of electrical (as mea­
sured in alternating current) or thermal
energy (One Megawatt Exception); (ii) a
project the construction of which begins
before the date that is 60 days after the
Secretary publishes guidance with respect
to the requirements of section 48(a)(10)
(A) and (11) (BOC Exception); and (iii)
a project that satisfies the requirements
of section 48(a)(10)(A) and (11) (PWA
requirements).
Section 48(a)(10) provides rules with
respect to the prevailing wage require­
ments (Prevailing Wage Requirements)
under section 48, including the special
recapture provision under section 48(a)
(10)(C). Section 48(a)(10)(B) provides
that rules similar to the correction and
penalty procedures for a failure to satisfy

Bulletin No. 2024–52 1379 December 23, 2024
the Prevailing Wage Requirements under
section 45(b)(7)(B) apply, and those rules
generally apply prior to a recapture event
under section 48(a)(10)(C). Section 48(a)
(11) provides that rules similar to the rules
of section 45(b)(8) apply with respect to
the apprenticeship requirements (Appren­
ticeship Requirements).
Under the BOC Exception in section
48(a)(9)(B)(ii), taxpayers may claim the
amount of the increased credit without
satisfying the PWA requirements if con­
struction “begins before the date that is 60
days after the Secretary publishes guid­
ance with respect to the [PWA require­
ments].” The Treasury Department and
the IRS published Notice 2022­61, 2022­
52 I.R.B. 560, on November 30, 2022,
providing initial guidance with respect
to the PWA requirements and starting
the 60­day period described in those sec­
tions. To qualify for the BOC Exception,
a taxpayer must begin construction of
a section 48 energy project before Janu­
ary 29, 2023. Unless the One Megawatt
Exception applies, taxpayers who do not
meet the BOC Exception under section
48 would need to satisfy the applicable
PWA requirements to claim the increased
amount of credit.
A. PWA requirements
Comments on the general PWA
requirements (including comments that
referenced section 48 but addressed the
PWA requirements more generally) were
addressed in the PWA Final Regulations.
Comments received regarding the specific
PWA requirements under section 48, the
One Megawatt Exception under section
48, and the recapture rules contained in
section 48(a)(10)(C) were not addressed
in the PWA Final Regulations and are
addressed in this Summary of Comments
and Explanation of Revisions.
To the extent consistent with this Sum­
mary of Comments and Explanation of
Revisions section of these final regula­
tions, the Summary of Comments and
Explanation of Revisions section of the
PWA Final Regulations is incorporated in
these final regulations. Therefore, general
comments addressed in the preamble to the
PWA Final Regulations are not addressed
again in this Summary of Comments and
Explanation of Revisions.
The PWA Final Regulations provide
generally applicable rules on the PWA
requirements. These final regulations
generally adopt by cross­reference those
rules in the PWA Final Regulations pro­
mulgated under section 45(b)(7) and (8);
specifically, in §1.45­7 (Prevailing Wage
Requirements), §1.45­8 (Apprenticeship
Requirements), and §1.45­12 (recordkeep­
ing and reporting). Consistent with the
PWA Final Regulations, the PWA require­
ments under section 48 apply with respect
to the creditable portion of an energy proj­
ect within the meaning of section 48(a)(9)
(A) and these final regulations.
As stated in the preamble to the PWA
Final Regulations, the Treasury Depart­
ment and the IRS have determined that
given the complexity of the PWA require­
ments, the uncertainty regarding the
potential retroactive effects of the PWA
requirements, and the benefits to tax
administration gained with consistency
across the various Code sections con­
taining PWA requirements, a transition
rule is appropriate. The PWA Final Reg­
ulations provide that any work performed
before January 29, 2023 (that is, the date
that is 60 days after the publication of
Notice 2022­61) is not subject to the PWA
requirements, regardless of whether there
is an applicable BOC Exception. This tran­
sition rule also applies for taxpayers that
may initially satisfy the BOC Exception,
but later fail to meet the BOC Exception
(for example, by failing to meet certain
continuity requirements). These taxpay­
ers must satisfy the PWA requirements
for construction, alteration, or repair (as
applicable) that occurs on or after January
29, 2023, but do not need to meet the PWA
requirements for work that occurred prior
to that date. For those reasons described
in the preamble to the PWA Final Regu­
lations, this transition rule also applies to
the PWA requirements under section 48
and is adopted by reference into §§1.45­7
and 1.45­8 in these final regulations.
The PWA Final Regulations also pro­
vide a limited transition waiver for the
penalty payment with respect to the cor­
rection and penalty procedures described
in section 45(b)(7)(B) for a failure to
satisfy the Prevailing Wage Require­
ments. The PWA Final Regulations pro­
vide that the penalty payment is waived
with respect to a laborer or mechanic
who performed work in the construction,
alteration, or repair of a qualified facility
on or after January 29, 2023, and prior
to June 25, 2024, if the taxpayer relied
upon Notice 2022­61 or the PWA Pro­
posed Regulations for determining when
the obligation to pay prevailing wages
began, provided the taxpayer makes the
appropriate correction payments to the
impacted workers within 180 days of June
25, 2024. These final regulations clarify
that this limited transition waiver applies
to section 48 provided the taxpayer makes
the appropriate correction payments to the
impacted workers within 180 days of the
publication of these final regulations.
Similarly, these final regulations also
allow taxpayers to use Notice 2022­61
for determining when construction begins
for purposes of the applicable percentage
of labor hours performed by qualified
apprentices required under section 48(a)
(11) (by reference to section 45(b)(8)) in
satisfying the Labor Hours Requirement
described in §1.45­8. These transition
rules are explained further in the preamble
to the PWA Final Regulations.
The PWA Final Regulations provide
special rules applicable to Indian Tribal
governments. These final regulations also
adopt by cross­reference the special rules
with respect to Indian Tribal governments
under §1.45­7 for purposes of the Prevail­
ing Wage Requirements.
B. Section 48(a)(10)(C) recapture rules
Section 48(a)(10)(C) authorizes the
Secretary, by regulations or other guid­
ance, to provide for recapturing the benefit
of any increase in the credit allowed under
section 48(a) by reason of section 48(a)
(10) with respect to any project that does
not satisfy the requirements under section
48(a)(10)(A) (after application of section
48(a)(10)(B)) for the period described in
section 48(a)(10)(A)(ii) but that does not
cease to be investment credit property
within the meaning of section 50(a). The
period and percentage of such recapture is
to be determined under rules similar to the
rules of section 50(a).
Proposed §1.48­13(c)(9) provides a
rule to coordinate the recapture of an
increase credit amount in a prior taxable
year with recapture under section 50(a) in
a current taxable year. These final regula­

December 23, 2024 1380 Bulletin No. 2024–52
tions do not adopt proposed §1.48­13(c)
(9) because the proposed rule may have
resulted in an inaccurate calculation of
the amount of the “aggregate decrease in
credit allowed” calculated under section
50(a). Section 50(a) and §§1.47­1, 1.47­2,
and 1.50­1 provide rules governing recap­
ture of the investment credit, including the
section 48 credit.
Proposed §1.48­13(c)(3)(i) would pro­
vide generally that the increased credit
amount under proposed §1.48­13(b)(3)
is subject to recapture for any project
that does not satisfy the Prevailing Wage
Requirements in §1.45­7(b) through (d)
and proposed §1.48­13(c)(1) for any
period with respect to an alteration or
repair of such project during the five­year
period beginning on the date such project
is originally placed in service (five­year
recapture period) (but that does not cease
to be investment credit property within
the meaning of section 50(a)). Further,
proposed §1.48­13(c)(7) would provide
that, in addition to the general reporting
requirements described in §1.45­12, a
taxpayer that has claimed an increased
credit amount under proposed §1.48­13(b)
(3) or transferred a specified credit por­
tion under section 6418 that includes an
increased credit amount under proposed
§1.48­13(b)(3) is required to provide to
the IRS, information on the payment of
prevailing wages with respect to any alter­
ation or repair of the project during the
five­year recapture period at the time and
in the form and manner prescribed in IRS
forms or instructions or in publications or
guidance published in the Internal Reve­
nue Bulletin.
Commenters requested more detail on
the “annual prevailing wage compliance
report” because the Proposed Regula­
tions do not specify what information is
required to be reported to the IRS. A com­
menter noted that the Proposed Regula­
tions do not provide any applicable pro­
cedures if the IRS should disagree with
the completeness of the information or
provide detail on the scope of prevailing
wages for an alteration or repair. The com­
menter further asserted that the guidance
should avoid imposing any additional bur­
dens on the taxpayer and creating any fur­
ther uncertainty with respect to the already
substantial compliance obligations created
by the PWA Proposed Regulations.
The details requested by these com­
menters were addressed in the PWA Final
Regulations. The PWA Final Regulations
provided definitions of terms, including
what constitutes an alteration or repair,
and detail on the required recordkeeping
and reporting for the purposes of the PWA
requirements. Further, as provided in the
Proposed Regulations, information on the
payment of prevailing wages with respect
to any alteration or repair of the project
during the five­year recapture period is
to be provided in the form and manner as
described in IRS instructions or in publi­
cations or guidance published in the Inter­
nal Revenue Bulletin. Accordingly, these
comments are not addressed again in this
Summary of Comments and Explana­
tion of Revisions. These final regulations
do clarify that if there is no alteration or
repair that occurs during the relevant year
during the five­year recapture period, then
the taxpayer is deemed to satisfy the Pre­
vailing Wage Requirements for that year.
Proposed §1.6418­5(f) would provide
rules addressing the notification require­
ments and the impact of recapture under
section 48(a)(10)(C). The final regulations
update the rules in proposed §1.6418­
5(f) because the 6418 Final Regulations,
which included updated recapture rules in
§1.6418­5, were published after publica­
tion of proposed §1.6418­5(f). Thus, it is
necessary to update §1.6418­5(f), which
was reserved in the 6418 Final Regula­
tions, in these final regulations to ensure
consistency with the updated recapture
rules in the 6418 Final Regulations.
C. Definition of energy project
Section 48(a)(9)(A)(ii) defines the term
“energy project” as a project consisting of
one or more energy properties that are part
of a single project. Proposed §1.48­13(d)
(1) would provide that, for purposes of
the increased credit amount under sec­
tion 48(a)(9) and proposed §1.48­13(b)
and (c), the domestic content bonus credit
amount under section 48(a)(12), and the
increase in credit rate for energy commu­
nities provided in section 48(a)(14), the
term “energy project” means one or more
energy properties (multiple energy prop­
erties) that are operated as part of a single
energy project. Proposed §1.48­13(d)(1)
would provide that multiple energy prop­
erties will be treated as one energy project
if, at any point during the construction of
the multiple energy properties, they are
owned by a single taxpayer (subject to the
related taxpayer rule provided in proposed
§1.48­13(d)(2)) and any two or more of
the following factors are present:
(i) The energy properties are con­
structed on contiguous pieces of land;
(ii) The energy properties are described
in a common power purchase, thermal
energy, or other off­take agreement or
agreements;
(iii) The energy properties have a com­
mon intertie;
(iv) The energy properties share a com­
mon substation, or thermal energy off­take
point;
(v) The energy properties are described
in one or more common environmental or
other regulatory permits;
(vi) The energy properties are con­
structed pursuant to a single master con­
struction contract; or
(vii) The construction of the energy
properties is financed pursuant to the same
loan agreement.
Proposed §1.48­13(d)(2) would define
the term “related taxpayers” and provide
a related taxpayer rule. Proposed §1.48­
13(d)(3) would require consistent treat­
ment as an energy project.
1. Challenges for Project Structures
The Treasury Department and the IRS
received several comments regarding the
energy project definition, and comment­
ers raised concerns regarding the single
project rule. Emblematic of comment­
ers’ views, a commenter summarized its
concerns that the Proposed Regulations
would expand the definition of a “project”
by potentially grouping energy properties
that would not commonly be considered
as a single energy project if those energy
properties were paid for under the same
construction contract or financing agree­
ment, even if the properties were operated
separately. The commenter explained that
the problems caused by the grouping of
multiple energy properties as a single proj­
ect are particularly acute for behind the
meter solar facilities in different locations
that are typically sized to provide power
for their respective dedicated sites. This
commenter described several concerns

Bulletin No. 2024–52 1381 December 23, 2024
including geographic and time disparity,
the impact on small bidders, the ability
to plan around the proposed definition’s
factors, and the impact on domestic con­
tent bonus credit amount requirements.
Another commenter stated that the single
project rule in the Proposed Regulations
would capture energy properties located
on contiguous parcels that are owned by
the same tax equity partnership (which
is overinclusive and does not take into
account projects for which the owner of
each project is a disregarded special pur­
pose entity), yet the energy properties are
subject to separate permits, separate power
purchase agreements, separate substations
and gen­tie lines, separate construction
contracts, and separate construction loans
and permanent debt, and ownership of the
underlying real estate is separate.
A commenter explained that typically,
each project partnership will have a sep­
arate engineering, procurement, and con­
struction (EPC) agreement. If, for exam­
ple, project partnerships A, B, C, and D
hold four separate energy properties and
four separate EPC agreements are entered
into on four separate dates, that would
create four distinct prevailing wage rates
that need to be tracked for prevailing wage
purposes. If all four energy properties
owned by the four project partnerships
are deemed to be a single energy project,
then each project partnership would still
have to determine separately whether it
met the PWA requirements due to the dif­
fering prevailing wage rates from the var­
ious dates the EPC contracts were signed.
The commenter suggested that if any one
of the four energy properties comprising
the single energy project does not meet
the PWA requirements, then none would
be treated as meeting the requirements.
Another commenter explained that
the single project rule would make thou­
sands of separate residential rooftop sys­
tems one “energy project,” because two
of the factors (common construction and
loan agreements) always will be met.
This commenter explained that these sys­
tems generally are constructed under the
same EPC contract and financed via the
same debt facility purely as a matter of
convenience and not because the systems
are intended to be operated together as a
single project. Therefore, the commenter
explained that all rooftop photovoltaic
(PV) solar systems installed by any indi­
vidual EPC contractor (even if installed
years apart and in separate States) poten­
tially could be treated as one energy proj­
ect under the Proposed Regulations. This
commenter also raised concerns that this
approach creates uncertainty and is thus
administratively unworkable with regard
to the timing of credit claims.
Several commenters had concerns and
requested clarification regarding the appli­
cation of the single project rule to co­lo­
cated energy property and energy storage
technology (such as solar energy prop­
erty and battery storage). A commenter
explained that battery storage co­located
within the solar array would meet the cri­
teria that the projects be contiguous to
one another (indeed integrated), and other
criteria could apply as well, for example,
that both types of energy property are part
of the same construction contract and sub­
ject to the same permits. This commenter
explained that the listed criteria in the Pro­
posed Regulations appear to be focused
on traditional energy generating projects,
which makes sense if there are multiple
energy properties that should be treated
as a single energy project but could inad­
vertently bring energy storage technology
under the umbrella of a section 45 credit
solar project. Additionally, several com­
menters requested that if the single project
rule is adopted in final regulations, such
regulations should confirm that “[s]ection
45 qualified facilities that are co­located
with section 48 energy property will not
be considered part of an energy project
(unless they elect under section 48(a)
(5) to be treated as energy property),” as
stated in the preamble to the Proposed
Regulations.
Another commenter provided an
example of a project in a school district
(District) for which potentially varying
PWA requirements must be met. The
District installs solar energy properties
on a school, district offices, and a sup­
ply warehouse located across separate
non­contiguous locations within the Dis­
trict boundaries. The District issues a sin­
gle series of tax­exempt bonds to finance
construction costs at all properties. After
a single request for proposal, the District
selects a single contractor to construct the
energy properties at each location. Even
if the District were to send out requests
for proposals for each separate property,
the same contractor may be selected for
all sites. In addition, although the District
could issue separate series of bonds for
each site, those bonds may be considered
a single issue under §1.150­1. Under the
Proposed Regulations, the various solar
energy properties would be considered
a single energy project even though the
energy properties are distinct and located
miles apart.
Many commenters proposed alterna­
tives to the Proposed Regulations’ defi­
nition of energy project. Several com­
menters recommended re­instituting the
facts and circumstances single project test
from Notice 2018­59. A commenter also
suggested allowing taxpayers an option,
but not a requirement, to elect to have
multiple energy properties be “treated as
one energy project” if they meet the sin­
gle project rule with two factors and com­
mon ownership found in the Proposed
Regulations. This commenter stated that
if the Proposed Regulations’ definition of
energy project is retained, the rule should
change the timing for analyzing common
ownership from “at any point during the
construction” to “when the energy prop­
erty is placed in service.” This commenter
also suggested removing the related tax­
payer rule and instead providing an option
to elect to be treated as one taxpayer.
Another commenter proposed that the
final regulations could instead create a
rebuttable presumption under which tax­
payers can avoid having multiple energy
properties treated as a single energy proj­
ect by demonstrating that the project cov­
ers multiple technologies, taxpayers, tax­
able years, or interconnection agreements.
A commenter proposed that to the extent
that the Treasury Department and the IRS
are concerned with the potential for abuse,
the final regulations could require meeting
three or four factors before mandating sin­
gle project treatment. Alternatively, con­
sistent with the approach taken in regula­
tions under section 48(e) (T.D. 9979, 88
FR 55506 (Aug. 15, 2023), corrected in
88 FR 59446 (Aug. 29, 2023), corrected
in 88 FR 87903 (Dec. 20, 2023)), these
final regulations could limit the applica­
tion of the facts and circumstances deter­
mination to smaller projects (that is, under
five megawatts). Another commenter
offered as an alternative that the final reg­

December 23, 2024 1382 Bulletin No. 2024–52
ulations add a requirement for satisfaction
of an additional factor or factors (that is,
more than two) and provide that aggre­
gation will only occur if the projects are
clearly operated together. Another com­
menter similarly suggested that three fac­
tors should be met.
Additionally, one commenter sug­
gested that, if the rule were retained, fur­
ther clarification is needed regarding what
qualifies as a loan agreement and whether
the definition of “energy project” applies
to projects of any size. This commenter
requested that the final regulations clar­
ify that the definition does not include
tax equity positions. This commenter also
recommended that the final regulations
align the effective date of the new energy
project definition with the construction of
an energy property or an energy project
beginning on or after January 29, 2023,
to eliminate any confusion regarding the
new definition and to mitigate additional
risk to taxpayers.
A commenter supported the Proposed
Regulations’ definition of energy proj­
ect in a comment submitted in response
to the PWA Proposed Regulations stated
that the Treasury Department and the IRS
should make clear that a taxpayer seeking
the increased credit rate for satisfying the
PWA requirements cannot subdivide proj­
ects and construction contracts to evade
the PWA requirements. The commenter
stated that certain factors, including
ownership and proximity, should deter­
mine whether multiple qualified facili­
ties or units of equipment constitute one
single qualified facility for purposes of
determining whether the One Megawatt
Exception applies. For example, with
respect to solar projects, the commenter
suggested that multiple energy properties
should be treated as one single project if
they are owned by a single legal entity,
or the energy properties are constructed
and/or installed in the same general geo­
graphic location or on adjacent or con­
tiguous pieces of land. The same general
geographic location may include more
than one State, provided that the multiple
energy properties are on adjacent or con­
tiguous pieces of land.
Overall, commenters expressed a view
that the single project rule as drafted in the
Proposed Regulations would apply to an
overly broad range of energy properties
and lead to illogical groupings and practi­
cal difficulties in complying with various
bonus credit amounts and increased credit
rates under section 48. Based on the con­
cerns raised in these comments, the Trea­
sury Department and the IRS acknowledge
that additional flexibility is warranted. See
part II.C. 4 of this Summary of Comments
and Explanation of Revisions.
2. Facts and Circumstances Approach
Commenters asserted that a facts and
circumstances approach should be applied
to the definition of energy project. Several
commenters raised concerns about incon­
sistency with prior guidance published
in the Internal Revenue Bulletin with
regard to the beginning of construction
rules applicable to section 48. Comment­
ers also stated that the Proposed Regula­
tions would implement the energy project
definition differently than a similar rule
provided in the beginning of construc­
tion guidance and Notice 2022­61 (which
addresses the application of PWA require­
ments), by mandating single­project treat­
ment if common ownership and any two
factors are met, rather than applying a
facts and circumstances test. Similarly,
commenters stated that regulations under
section 48(e) for the Low­Income Com­
munities Bonus Credit Program provide a
single project definition that uses a facts
and circumstances test.
The Treasury Department and the IRS
confirm that the definition of energy proj­
ect in the Proposed Regulations adopts a
different approach than the facts and cir­
cumstances test used in other tax guidance.
These comments requesting alternatives
to the Proposed Regulations’ definition
of energy project are not adopted because
the increased credit rate for satisfying the
PWA requirements, the domestic content
bonus credit amount, and the increase in
the credit rate for energy communities
under section 48 require a greater degree
of certainty for taxpayers and the IRS.
Further, the Low­Income Communities
Credit Program is a competitive, allocated
credit program which requires an applica­
tion; the section 48 credit does not. This
difference in the process for claiming the
section 48 tax credit supports the need for
a more specific approach for the credit.
Accordingly, the definition of energy
project in these final regulations provides
particular and specific requirements rather
than a facts and circumstances approach.
3. Interaction with Domestic Content
Bonus Credit Amounts
Several commenters asserted that the
definition of “energy project” in proposed
§1.48­13(d) is inconsistent with the ini­
tial domestic content guidance set forth
in Notice 2023­38, 2023­22 I.R.B. 872.
A few commenters stated that the appli­
cation of the single project rule in the Pro­
posed Regulations may cause any co­lo­
cated energy properties to be aggregated
for domestic content bonus credit amount
purposes. The commenters suggested that
this aggregation of different classes or cat­
egories of energy property as a single proj­
ect is inappropriate and may create signifi­
cant issues in qualifying for the domestic
content bonus credit amount, including
potentially distorting the domestic content
calculation by overinclusion of costs for
energy storage technology.
Commenters provided specific exam­
ples with domestic content bonus credit
amount implications. In one such example,
a taxpayer places a solar array in service
in 2023 and then places a battery energy
storage system (BESS) associated with
the array in service in 2026. Construction
of the BESS began, for example, by clear­
ing and grading at the site of the BESS in
2023. The solar array and the BESS are on
contiguous parcels and share a common
substation. Under the proposed rule, the
array and the BESS would be treated as
a single energy project. The array would
qualify for the domestic content bonus
credit amount, but the addition of the
BESS would put the energy project below
the applicable percentage calculation for
domestic content purposes, despite the
“project” involving different technologies
and different tax years. The taxpayer may
be unable to avoid this result for proj­
ects with limited access to substations or
if required upgrades would exceed the
value of the domestic content bonus credit
amounts, and thus may choose not to add
new BESS to the grid, in clear contraven­
tion of Congressional intent. However,
assuming no other factors under the single
project rule are present, the taxpayer could
avoid this result simply by placing the

Bulletin No. 2024–52 1383 December 23, 2024
BESS on a non­contiguous parcel, a result
that is likely to be technically inefficient,
and more importantly, is inconsistent with
the intent of the domestic content bonus
credit as set forth by Congress in the IRA.
Another commenter provided addi­
tional feedback on domestic content
issues arising from placing different types
of energy property in service in different
taxable years. This commenter explained
that if multiple energy properties were
treated as a single project for purposes of
the domestic content bonus credit amount,
then the energy properties would be tested
on a combined basis for the steel, iron,
and manufactured components require­
ments. This could affect situations in
which different types of energy properties
are co­located, and the domestic content
bonus credit amount could be pursued for
one type of energy property but not for
the other type of energy property. Accord­
ing to the commenter, the result likely
would be that foreign products would be
sourced for both types of energy prop­
erty. Further, the commenter noted that
combined testing would raise questions
regarding the impact to energy properties
that are placed in service years apart. For
example, the commenter noted that if an
earlier phase of an energy project did not
qualify for the domestic content bonus
credit amount, then it would likely be
impossible for a later phase of the project
to qualify if tested on a combined basis.
Alternatively, the commenter noted that if
an earlier phase of an energy project qual­
ified for the domestic content bonus credit
amount, then it could later become ineligi­
ble for the domestic content bonus credit
amount if a later phase of that energy proj­
ect caused the project to fail to meet the
domestic content requirements.
Another commenter stated that the Pro­
posed Regulations’ definition of energy
project would deter many taxpayers from
attempting to satisfy the domestic content
bonus credit amount requirements and
disqualify otherwise qualifying energy
properties. This commenter explained that,
increasingly, procurement decisions are
made earlier in the project life cycle due to
long lead times. Therefore, the commenter
noted that a developer might be able to
secure enough domestic equipment or steel
to allow one energy property to satisfy
the domestic content bonus credit amount
requirements but not enough for additional
energy properties. However, the com­
menter stated that if these multiple energy
properties were aggregated and treated as
a single energy project, that energy project
likely would not qualify for the domestic
content bonus credit amount since the com­
bined domestic cost percentage would be
unlikely to satisfy the adjusted percentage
rule as defined in Notice 2023­38.
Some commenters asserted that the
Proposed Regulations’ definition of energy
project should apply only to energy prop­
erties that are within the same category
for purposes of section 48. These com­
menters also requested clarification that
energy storage technology such as a BESS
is treated as an “energy project” separate
from solar energy property and other cat­
egories of energy property for purposes of
the domestic content bonus credit amount.
For example, a commenter highlighted the
concern that “energy project” may be read
broadly to apply to all energy properties
that are owned by the same taxpayer and
co­located, even if the energy properties
are of different classes or categories and
have separate pathways to eligibility. This
commenter requested that the final regu­
lations clarify the “energy project” defi­
nition by providing that the reference to
“one or more energy properties” in sec­
tion 48(a)(9)(A)(ii) should be properly
interpreted to refer only to the same class
or category of energy property. The com­
menter concluded that a better approach to
the definition of “energy project” would be
to treat specific types of energy property,
such as solar, wind, and other categories,
as separate from energy storage technol­
ogy property even if co­located, owned by
the same taxpayer, and sharing common
facilities and infrastructure.
Section 48 applies the domestic content
bonus credit amounts to an entire energy
project defined as one or more energy prop­
erties that are part of a single project. As a
result, all types of energy property, includ­
ing energy storage technologies that meet
the criteria as would be provided in pro­
posed §1.48­13(d) are included within an
energy project for purposes of the domes­
tic content bonus credit amount. As noted
earlier, the Treasury Department and the
IRS recognize that additional flexibility is
warranted with respect to the definition of
energy project. The final regulations revise
the definition of energy project to allow
the taxpayer to choose when to assess the
factors of an energy project, either at any
point during construction or during the tax­
able year energy properties are placed in
service. However, multiple types of energy
property may be appropriately treated as a
single energy project in certain situations.
Accordingly, the final regulations do not
adopt comments requesting that an energy
project must be limited to energy properties
of the same type.
4. Revisions to Definition of Energy
Project
The Treasury Department and the IRS
agree with commenters that the Proposed
Regulations’ definition of energy project,
described as ownership plus two factors,
is too rigid and could have unintended
impacts, such as preventing small rooftop
solar installations from being eligible for
the One Megawatt Exception and treating
multiple energy properties that are located
in different States as a single energy proj­
ect. Further, the Treasury Department and
the IRS understand that the “at any point
during construction” language in the Pro­
posed Regulations may be problematic
for taxpayers, potentially grouping energy
properties that will be placed in service in
different taxable years.
In response to the concerns raised by
commenters, the definition of energy proj­
ect is modified in the final regulations.
The Proposed Regulations would have
required two or more factors to be present.
In the case of multiple energy properties
owned by a taxpayer, the final regulations
require that four or more factors be pres­
ent and that the factors may be assessed, at
the taxpayer’s choice, either at any point
during construction or during the taxable
year the energy properties are placed in
service. The Treasury Department and
the IRS understand that taxpayers require
flexibility given the varied landscape of
energy property development and financ­
ing structures. However, the Treasury
Department and the IRS disagree that a
facts and circumstances analysis should
be applied to the definition of energy proj­
ect. Energy project is the statutory term
for the unit of property to which the PWA
requirements, the domestic content bonus
credit amount, and the increase in credit

December 23, 2024 1384 Bulletin No. 2024–52
rate for energy communities are applied.
In addition, in promulgating these final
regulations pursuant to the express delega­
tion of authority in section 48(a)(16), the
Treasury Department and the IRS deter­
mined that using particular and specific
factors in the definition of energy project
will increase certainty for taxpayers and
the IRS. That increased certainty will pro­
mote sound tax administration and help to
carry out the purposes of section 48(a).
Separately, a commenter requested
confirmation that an energy project will
be deemed placed in service when the
final energy property within the energy
project is placed in service. Section 48(a)
(9)(A)(ii) defines an “energy project” as a
project consisting of one or more energy
properties that are part of a single proj­
ect. Because the PWA requirements, the
domestic content bonus credit amount,
and the increase in credit rate for energy
communities are each applied at the
energy project level, the determination of
whether an energy project meets any of
these requirements cannot be made before
the last of the multiple energy properties
within such energy project are placed in
service. Accordingly, the final regulations
clarify the definition of energy project
consistent with this comment.
Further, the final regulations do not
adopt proposed §1.48­13(d)(3). The Pro­
posed Regulations would have provided
that, if multiple energy properties are treated
as a single energy project for beginning of
construction purposes with respect to the
section 48 credit, then the multiple energy
properties also will be treated as a single
energy project for purposes of the PWA
requirements, the domestic content bonus
credit amount, and the increase in credit
rate for energy communities. The Treasury
Department and the IRS recognize that this
proposed rule may conflict with existing
BOC guidance and the definition of “energy
project” that is being adopted in these final
regulations. Accordingly, the final regula­
tions do not adopt this proposed rule.
D. One Megawatt exception
1. Nonapplication to Certain Energy
Properties
Proposed §1.48­13(e) would provide
rules for nameplate capacity for pur­
poses of the One Megawatt Exception.
Proposed §1.48­13(e) would provide that
for purposes of proposed §1.48­13(b)(1),
the determination of whether an energy
project has a maximum net output of less
than one MW of electrical (as measured
in alternating current) or thermal energy is
determined based on the nameplate capac­
ity. Proposed §1.48­13(e) would provide
that if applicable, taxpayers should use the
International Standard Organization (ISO)
conditions to measure the maximum elec­
trical generating output or usable energy
capacity of an energy project. Lastly,
proposed §1.48­13(e) would provide
that because electrochromic glass prop­
erty (as defined in proposed §1.48­9(e)
(2)(ii)), fiber­optic solar energy property
(as defined in proposed §1.48­9(e)(2)(i)),
and microgrid controllers (as defined in
proposed §1.48­9(e)(12)) do not generate
electricity or thermal energy, these energy
properties are not eligible for the One
Megawatt Exception.
Two commenters supported the rule
as proposed, including disallowing the
exception for certain properties. One of
the commenters stated that the proposed
rules for the One Megawatt Exception will
provide certainty with respect to the appli­
cability of labor standards and prevent
fraud. Both commenters requested the
Treasury Department and the IRS to retain
the nameplate capacity rule for maximum
net output in the final regulations.
One commenter asserted that the One
Megawatt Exception, as proposed, is too
broad, undermining the PWA require­
ments, and should not apply to any energy
properties that do not generate or produce
electrical or thermal energy. This com­
menter disagreed with the alternatives
provided for some types of energy prop­
erty and requested clarity that others also
should not be eligible, including GHP
property, energy storage technology, clean
hydrogen production facilities, and quali­
fied biogas property.
Conversely, most commenters asserted
that the One Megawatt Exception should
be available for non­energy generating
property. Some commenters suggested
that the final regulations provide a de
minimis threshold to the One Megawatt
Exception. A commenter suggested con­
sideration of a basis dollar threshold with
respect to prevailing wage exemptions for
types of energy property that do not gen­
erate electricity, namely electrochromic
glass, fiber­optic solar energy property,
and microgrid controllers.
Another commenter stated that these
excluded types of energy property should
be included if part of an “energy proj­
ect.” Commenters explained that the One
Megawatt Exception in section 48(a)(9)
(B)(i) applies to “energy projects” and
therefore, can apply to microgrid control­
lers, fiber­optic solar energy property, or
electrochromic glass that are combined
with other types of energy property (for
example, solar energy property) as part of
an “energy project.”
Several commenters made the same
point specifically regarding microgrid
controllers. For example, a commenter
stated that the final regulations should
include microgrid controllers within the
One Megawatt Exception. This com­
menter said that a strict statutory interpre­
tation would mean that if the sum capacity
of all energy properties within an energy
project is below one MW, then the One
Megawatt Exception is satisfied. The com­
menter asserted that this statutory inter­
pretation is simple, straightforward, and
accurately reflects the IRA. Similarly, a
commenter suggested that to ensure small
microgrid projects can take advantage of
the One Megawatt Exception, the rule
should allow microgrid controllers used
in a microgrid for which the cumulative
nameplate capacity value of the electrical
generating distributed energy resources
is less than one MW to be eligible for the
One Megawatt Exception.
Another commenter noted that the inel­
igibility of microgrid controllers for the
One Megawatt Exception contradicts the
definition of a qualified microgrid, which
requires that a qualified microgrid includes
equipment capable of generating not less
than 4 kW and not greater than 20 MW of
electricity. This commenter asserted that if
the aggregate of the nameplate capacity of
the assets managed by a qualified microg­
rid is under one MW, or if there are other
physical limitations built into the microg­
rid that limit generation to one MW, then
the microgrid controller should qualify for
the One Megawatt Exception.
Another commenter stated that because
microgrid controllers do not generate
energy, they should be considered to gen­

Bulletin No. 2024–52 1385 December 23, 2024
erate under one MW and thus should qual­
ify for the One Megawatt Exception. This
commenter asserted that because Con­
gress did not specifically exclude energy
properties with a maximum net output
of less than one MW of electrical energy
(and could have) —even if that output is
zero — microgrid controllers should qual­
ify under the plain language of the statute.
A similar suggestion was raised by sev­
eral commenters in the context of elec­
trochromic glass. One commenter stated
that nothing in section 48(a)(9)(B)(i) sug­
gests that the One Megawatt Exception is
limited to generating property; the statute
simply looks to the output of the project,
if any. This commenter concluded that the
simplest and clearest reading of section
48(a)(9)(B)(i) is that an energy property
that does not generate electricity is eligi­
ble for the One Megawatt Exception.
Similarly, another commenter stated
that section 48(a)(9)(B)(i)’s focus on an
energy project’s energy output capabil­
ity indicates that properties not produc­
ing any output could be considered for
the One Megawatt Exception. This com­
menter asserted that the essence of the
law was not to create a hierarchy favoring
energy producers over non­producers but
to encourage a broad spectrum of energy
efficiency and conservation measures.
Another commenter stated that the Pro­
posed Regulations’ interpretation of the
One Megawatt Exception is highly coun­
terintuitive as it runs contrary to obvi­
ous mathematical logic. This commenter
stated that the One Megawatt Exception
should be considered in light of the clear
legislative intent behind it, which is that
PWA requirements are disproportionately
burdensome for smaller projects. This
commenter alleged that, most troublingly,
the interpretation is not merely prospec­
tive, from the date of publication of either
the Proposed Regulations or the final
regulations, but also retroactive, and that
applying this interpretation retroactively
will harm market actors who made good
faith, logical decisions in the absence
of any IRS guidance. This commenter
requested that, at a minimum, the Trea­
sury Department and the IRS apply rules
regarding the One Megawatt Exception on
a prospective basis.
In addition to these comments, com­
menters also provided feedback on meth­
ods to measure the maximum net output
of microgrid controllers to allow them to
qualify for the One Megawatt Exception.
One commenter proposed that a mea­
surement of the maximum net generation
that a microgrid controller can provide
via interconnection to the grid be used to
determine whether a microgrid controller
is eligible for the One Megawatt Excep­
tion, and that the maximum net output be
calculated as the nameplate capacity of
the microgrid generation less the mini­
mum historical microgrid load.
Commenters also provided methods
for electrochromic glass to qualify for the
One Megawatt Exception. Two comment­
ers suggested using anticipated energy
savings for a building on which electro­
chromic windows are installed. For exam­
ple, a commenter suggested that a taxpayer
should be able to measure the amount of
energy expected to be saved by use of the
electrochromic glass property and com­
pare that amount to one MW. The com­
menter noted that this approach is similar
to the approach used to determine whether
energy efficient investments in a commer­
cial building qualify for a deduction under
section 179D of the Code; this commenter
recommended that final regulations pro­
vide that the DOE program “Energy Plus”
model be used to determine the amount
of anticipated energy savings. Two com­
menters also proposed a safe harbor that
would deem any electrochromic glass
property installed in any building to meet
the One Megawatt Exception if no more
than 60,000 square feet of electrochromic
glass is installed in the building. Another
commenter highlighted administrative
concerns with the non­application of the
One Megawatt Exception to electrochro­
mic glass. The commenter explained that
electrochromic glass is one of many struc­
tural components installed in a building,
and laborers who are involved in the con­
struction, alteration or repair of electro­
chromic glass may also be involved in the
construction, alteration or repair of other
building components that are not qualified
energy property, creating an additional
recordkeeping burden for taxpayers.
The Treasury Department and the
IRS have considered these comments on
the One Megawatt Exception. The Trea­
sury Department and the IRS appreciate
the suggestions made by commenters
in response to the request for comments
in the Proposed Regulations regarding
whether other methods of measurement
may allow electrochromic glass prop­
erty, fiber­optic solar energy property, and
microgrid controllers to be eligible for the
One Megawatt Exception. However, after
considering the statute further as well as
the intent of the rules in the context of the
PWA requirements, the Treasury Depart­
ment and the IRS have determined that
the One Megawatt Exception applies only
to the generation of electricity or thermal
energy. The statutory language in section
48(a)(9)(B)(i) providing the increased
credit amount for a project with a maxi­
mum net output of less than one MW of
electrical (as measured in alternating cur­
rent) or thermal energy, means that there
must be output, and that output must be
under one MW. The proposed conversion
formulas for certain types of energy prop­
erty, such as GHP property and energy
storage property, do not undermine the
PWA requirements. Rather, the proposed
formulas provide clarity across various
energy properties that generate output.
Because electrochromic glass property,
fiber­optic solar energy property, and
microgrid controllers do not generate
electrical or thermal energy, these types
of energy property are not eligible for the
One Megawatt Exception. These final reg­
ulations adopt this proposed rule without
change.
2. Determination of Nameplate Capacity
As explained in the preamble to the
Proposed Regulations, the DOE has
advised the Treasury Department and the
IRS that for energy projects that generate
electrical or thermal energy, the determi­
nation of an energy project’s nameplate
capacity will provide the necessary guid­
ance to determine the maximum electrical
generating output in megawatts of elec­
trical (as measured in alternating current)
or thermal energy that the unit is capable
of producing on a steady state basis and
during continuous operation under stan­
dard conditions. Accordingly, proposed
§1.48­13(e) would provide that the deter­
mination of whether an energy project has
a maximum net output of less than 1 MW
of electrical (as measured in alternating
current) or thermal energy is based on

December 23, 2024 1386 Bulletin No. 2024–52
nameplate capacity. Proposed §1.48­13(e)
(1) would provide that in the case of an
electrical generating energy property, the
nameplate capacity is the maximum elec­
trical generating output in MW that the
unit of energy property is capable of pro­
ducing on a steady state basis and during
continuous operation under standard con­
ditions, as measured by the manufacturer
and consistent with the definition of name­
plate capacity provided in 40 CFR 96.202.
Proposed §1.48­13(e)(2) would pro­
vide that in the case of electrical energy
storage property (as defined in proposed
§1.48–9(e)(10)(ii)), the nameplate capac­
ity is the storage device’s maximum net
output.
Proposed §1.48­13(e)(3) would provide
that in the case of thermal energy storage
property (as defined in proposed §1.48–
9(e)(10)(iii)) and other energy property
that generates thermal energy for produc­
tive use (for example, direct geothermal
use, GHP property, solar process heat­
ing), a taxpayer must use the equivalent
of 3.4 million British Thermal Units per
hour (mmBtu/hour) for heating and 284
tons for cooling (Btu per hour/3,412,140
= MW) to determine if the thermal energy
storage property satisfies the One Mega­
watt Exception. For projects delivering
thermal energy to a building or build­
ings, this determination can be made with
respect to either the aggregate maximum
thermal output of all individual heating
or cooling elements within the building
or buildings, or as the maximum thermal
output that the entire project is capable of
delivering to a building or buildings at any
given moment.
Proposed §1.48­13(e)(4) would pro­
vide that a hydrogen energy storage prop­
erty (as defined in proposed §1.48­9(e)
(10)(iv)) or a specified clean hydrogen
production facility (as defined in section
48(a)(15)(C)) must have a maximum net
output of less than 3.4 mmBtu/hour of
hydrogen or equivalently 10,500 scf per
hour of hydrogen to satisfy the One Mega­
watt Exception.
Proposed §1.48­13(e)(5) would pro­
vide that in the case of qualified biogas
property, 3.4 mmBtu/hour can be used as
equivalent to the One Megawatt Excep­
tion. Taxpayers may convert the maxi­
mum net output of 3.4 mmBtu/hour into
an equivalent maximum net volume flow
in scf per hour using the appropriate high
heat value conversion factors found in
the Environmental Protection Agency
(EPA) Greenhouse Gas Reporting Rule
(GHGRR) at table C–1 to subpart C of
part 98 (40 CFR part 98). Otherwise, tax­
payers may calculate their own equivalent
volumetric flow if the heat content of the
gas is known.
Commenters provided feedback on the
proposed conversion factors specific to
certain types of property. For example, a
commenter recommended that for thermal
energy storage property and other prop­
erty generating thermal energy, the con­
version from mmBtu/hr to tons for cooling
should be 3­5 times higher than proposed
§1.48­13(e)(3), which refers to 284 tons
for cooling to determine if thermal energy
property meets the One Megawatt Excep­
tion. This commenter said that the con­
version factor provided by the Proposed
Regulations is too low at a quarter of the
conversion factor for electrical generat­
ing property, and instead the final regula­
tions should use an electrical equivalent.
This commenter stated that for buildings
cooled by chilled­water systems, it is
widely accepted that the electrical power
(in kW) required to generate cooling (in
ton) by chillers is approximately 0.6­0.7
kW/ton for water­cooled chillers, and
1.1­1.2 kW/ton for air­cooled chillers,
and cited a few sources. This commenter
proposed replacing the conversion factor
with 1,550 tons for water­cooled systems
or 870 tons for air­cooled systems.
Similarly, for qualified biogas prop­
erty, a commenter stated that the proposed
conversion factor of 3.4 mmBtu/hr in pro­
posed §1.48­13(e)(5) for the One Mega­
watt Exception should be increased. The
commenter stated that this conversion
factor for qualified biogas property is the­
oretical and not based in practical appli­
cations. The commenter also noted that
any biogas plant producing onsite power
typically does not produce more than 10
mmBtu/hr, and that a plant of this size
would be very small and likely face eco­
nomic constraints even with the section 48
credit.
In consultation with the DOE, the Trea­
sury Department and the IRS have deter­
mined that the conversion formulas in the
Proposed Regulations provide a direct and
accurate conversion and that no changes
are needed to the conversion factors for
thermal energy property, thermal energy
storage property, and other energy prop­
erty that generates thermal energy for
productive use, or for qualified biogas
property. By providing a broadly­applica­
ble rule, these conversion formulas should
provide accurate results for a broad set of
applications and technologies. The com­
menters’ requests for specific formulas
applicable to specific technologies conflict
with the approach of these regulations to
provide general rather than narrow rules.
Therefore, the final regulations adopt
these rules as proposed.
Other commenters stated general con­
cerns regarding lack of clarity with the
measurement methods included in the
Proposed Regulations. These commenters
focused their concerns on thermal energy
storage property and property generat­
ing thermal energy. For example, a com­
menter stated that it is unclear whether
the One Megawatt Exception applies
with respect to the thermal energy gen­
erated from the thermal energy source
for the thermal energy storage (TES) (for
example, a chiller or heat pump), or to the
nameplate capacity of the TES property
itself (for example, peak discharge rate
from TES). The commenter then asked
what conditions govern the discharge rate
of TES if the One Megawatt Exception
refers to the nameplate capacity of the
TES property itself. This commenter sug­
gested that, alternatively, perhaps either
could be used.
The Treasury Department and the IRS
recognize that demonstrating the name­
plate capacity of thermal energy storage
property may be technically impractical
for some types of thermal energy storage
property such as commercial heat pump
storage systems. The Treasury Depart­
ment and the IRS, following consultation
with the DOE, revise the rule in the final
regulations to provide an option when
nameplate capacity for the thermal energy
storage property is not available, to use the
nameplate capacity of the equipment that
delivers thermal energy. For example, the
nameplate capacity of the heat pump to a
thermal energy storage property would be
converted to megawatts based on the con­
version factors set forth in §1.48­13(e).
For thermal energy storage property, as
well as for other energy property that gen­

Bulletin No. 2024–52 1387 December 23, 2024
erates or distributes thermal energy for
productive use, the final regulations clar­
ify that the maximum thermal output that
the entire system is capable of delivering
is calculated as the greater of the maxi­
mum instantaneous rate of cooling or the
rate of heating of the aggregate of all the
equipment distributing energy for produc­
tive use, which for thermal energy storage
is distributing the thermal energy from
the thermal energy storage to the building
or buildings. Alternatively, for purposes
of thermal energy storage property only,
when the nameplate capacity for the ther­
mal energy storage property is unavail­
able, the maximum thermal output may be
considered to be the greater of the rate of
cooling or the rate of heating of the aggre­
gate of the nameplate capacity of all the
equipment delivering energy to the ther­
mal energy storage property. Based on the
comments, the Treasury Department and
the IRS conclude that the revised rule will
provide a clear, administrable standard of
measurement.
Several commenters had similar con­
cerns regarding the measurement standard
for geothermal energy property. A com­
menter explained that by design, a distrib­
uted GHP property’s maximum net output
is always less than the total nameplate
capacity. These commenters asserted that,
for equipment generating thermal energy,
it is not clear how nameplate capacity is
defined. Commenters recommended that
nameplate capacity be defined as either the
published rating data on the Air Condition­
ing, Heating, and Refrigeration Institute
(AHRI) Certification Directory or proj­
ect specific selections at design tempera­
tures. Commenters also stated that many
buildings require redundant equipment
to ensure consistent operating conditions
within the building if a piece of equip­
ment fails, but that because the redundant
equipment is not used during normal oper­
ation it should be excluded from the cal­
culation of the one­MW threshold. These
commenters also suggested the final regu­
lations provide an example illustrating the
method of assessment based on the use of
thermal output from a full year.
As previously explained, the final reg­
ulations provide that the discharge rate
of a thermal energy source is based on
the nameplate capacity of the equipment,
which would be converted to megawatts
based on the conversion factors set forth
in §1.48­13(e). Therefore, taxpayers must
use the nameplate capacity of the equip­
ment. Commenters’ concerns for geother­
mal energy property appear to be more
focused on how to determine that name­
plate capacity if not all equipment will
be used or will only be used to a specific
temperature. Proposed §1.48­13(e)(3)
would provide that, for projects delivering
thermal energy to a building or buildings,
the measurement can be assessed as either
the aggregate maximum thermal output
of all individual heating or cooling ele­
ments within the building or buildings,
or as the maximum thermal output that
the entire project is capable of delivering
to a building or buildings at any given
moment. The Treasury Department and
the IRS consulted with the DOE, and the
final regulations clarify that the maximum
thermal output an entire project is capa­
ble of delivering at any given moment
does not take into account the capacity of
redundant equipment if such equipment is
not operated when the system is at maxi­
mum output during normal operation. The
determination of maximum thermal out­
put is intended to reflect normal operating
conditions for the energy project.
Another commenter requested clarifi­
cation regarding the measurement method
for electrical energy storage property. The
commenter asserted that it is unclear at
what stage to determine maximum electri­
cal generating output for the One Mega­
watt Exception, and that the definition
of “nameplate capacity” is ambiguous
because it turns on the phrase “maximum
electrical generating output” but does not
provide a method for determining such
output. The commenter stated that for
inverter­based resources, like solar and
energy storage technologies, “maximum
electrical generating output” could be
determined at different stages. It could be
measured as the initial output from PV
modules (as measured in direct current),
the subsequent output from associated
storage (usually measured in direct cur­
rent), or the final output after the inverter
(measured in alternating current).
In response to these comments, the
Treasury Department and the IRS con­
sulted with the DOE to provide a method
of measuring nameplate capacity for an
energy property that generates electric­
ity in direct current. The final regulations
provide a rule limited to energy properties
that generate electricity in direct current.
Under this rule, a taxpayer may choose to
determine the maximum net output of each
energy property that is part of the energy
project (in alternating current) by using
the lesser of (i) the sum of the nameplate
generating capacities within the unit of
energy property in direct current, which is
deemed the nameplate generating capacity
of the unit of energy property in alternat­
ing current; or (ii) the nameplate capacity
of the first component of property that
inverts the direct current electricity gen­
erated into alternating current. This rule
provides flexibility for taxpayers while
ensuring that the maximum net output (in
alternating current) can be determined in
an administrable and reasonably accurate
manner for energy properties that generate
electricity in direct current.
III. Rules Applicable to Energy Property
A. Retrofitted energy property (80/20
Rule)
Proposed §1.48­14(a)(1) would pro­
vide generally that for purposes of section
48(a)(3)(B)(ii), (5)(D)(iv), and (8)(B)(iii),
a retrofitted energy property may be origi­
nally placed in service even though it con­
tains some used components of the unit
of energy property only if the fair market
value of the used components of the unit
of energy property is not more than 20 per­
cent of the total value of the unit of energy
property taking into account the cost of
the new components of property plus the
value of the used components of the unit
of energy property (80/20 Rule). Only
expenditures paid or incurred that relate to
the new components of the unit of energy
property are taken into account for pur­
poses of computing the section 48 credit
with respect to the unit of energy property.
The cost of new components of the unit
of energy property includes all costs prop­
erly included in the depreciable basis of
the new components. If the taxpayer satis­
fies the 80/20 Rule with regard to the unit
of energy property and the taxpayer pays
or incurs new costs for property that is an
integral part of the energy property, then
the taxpayer may include the new costs
paid or incurred for property that is an

December 23, 2024 1388 Bulletin No. 2024–52
integral part of the energy property in the
basis of the energy property for purpose
of the section 48 credit. Further, in the
case of an energy project, the 80/20 Rule
is applied to each unit of energy property
comprising an energy project.
Proposed §1.48­14(a)(2) would pro­
vide that costs incurred for new compo­
nents of property added to used compo­
nents of a unit of energy property may
not be taken into account for purposes of
the section 48 credit unless the taxpayer
satisfies the 80/20 Rule by placing in ser­
vice a unit of energy property for which
the fair market value of the used compo­
nents of property is not more than 20 per­
cent of the total value of the unit of energy
property taking into account the cost of
the new components of property plus the
value of the used components of property.
Proposed §1.48­14(a)(3) would provide
examples illustrating the 80/20 Rule.
1. General Comments regarding the
80/20 Rule
Several commenters provided com­
ments regarding the 80/20 Rule. Some
commenters favored retaining the 80/20
Rule for application in limited cir­
cumstances. Generally, commenters
that opposed the use of the 80/20 Rule
expressed similar concerns regarding the
ownership rules in the context of certain
types of energy property.
Commenters that opposed the 80/20
Rule asserted that it is inconsistent with
previous Internal Revenue Bulletin guid­
ance. Multiple commenters asserted that
under current law, capital improvements
to energy property are eligible for the
section 48 credit without regard to the
80/20 Rule. These commenters pointed
to existing §1.48­2(b)(7) and the exam­
ples in existing §1.48­2(c) to support this
assertion. Existing §1.48­2(b)(7) pro­
vides, in relevant part: “The term ‘origi­
nal use’ means the first use to which the
property is put, whether or not such use
corresponds to the use of such property by
the taxpayer.” A commenter noted that the
examples in existing §1.48­2(c) illustrate
the difference between a reconditioned or
rebuilt unit of energy property previously
in service and the addition of “some used
parts,” on the one hand, and the addition
of new property or capital improvements,
on the other. Additionally, the commenter
asserted that Example 5 in existing §1.48­
2(c) establishes that capitalized costs are
included in computing the section 48
credit. Importantly, existing regulations
under §1.48­2 do not reflect the current
version of section 48 and are not informa­
tive to the extent those regulations do not
take into account subsequent amendments
to section 48, such as amendments made
by the IRA.
Commenters also asserted that the pur­
pose of the 80/20 Rule was to address the
“original use requirement” or to achieve
a new “original placed in service date” in
the context of the production tax credit
under section 45. These commenters
explained that the 80/20 Rule was con­
cerned with ensuring that taxpayers do not
qualify for the entirety of the section 45
credit over a new ten­year credit period by
making modest investments in an existing
facility. Commenters explained this issue
does not exist in the section 48 credit
context, because the section 48 credit is
available only for new property and not
for any used components of property. A
commenter noted that the 80/20 Rule only
really matters if one is focused on the
totality of the property that is used to pro­
duce energy in a manner incentivized by
the Code. This is different for section 48,
for which the proper focus is on specific
items of energy property, not assemblages
of energy property under common owner­
ship. Commenters asserted that, by apply­
ing the 80/20 Rule to energy property
under section 48 and excluding the cost of
otherwise eligible new equipment or prop­
erty that does not satisfy the 80/20 Rule,
the Proposed Regulations fundamentally
misconstrue the 80/20 Rule’s purpose and
are inconsistent with current law.
While commenters correctly noted
that the purpose of the 80/20 Rule was to
address the “original use requirement” or
achieve a new “originally placed in ser­
vice” date, the 80/20 Rule remains rele­
vant in the context of the section 48 credit.
Section 48 requires the credit to be deter­
mined on the basis of energy property
placed in service during the taxable year.
In situations in which energy property
has already been placed in service, exist­
ing units of energy property cannot qual­
ify for the credit without the 80/20 Rule
(with the exception of the modification of
energy storage technology as provided in
proposed §1.48­9(e)(10)(iii)).
Supporters of retaining the 80/20 Rule
noted that it should apply for purposes of
the section 48 credit only in limited cir­
cumstances. First, the 80/20 Rule should
apply to the acquisition of retrofitted
energy property by a taxpayer for purposes
of obtaining an original placed in service
date for such retrofitted property (which
commenters noted is the traditional appli­
cation of the 80/20 Rule). Second, the
80/20 Rule should apply if it is necessary
for a qualified facility (otherwise eligible
for the section 45 credit) to obtain a new
original placed in service date, such as a
retrofitted qualified facility for which the
taxpayer elects to claim the section 48
credit in lieu of the section 45 credit.
While many commenters suggested
dropping the 80/20 Rule altogether, other
commenters suggested a range of possible
alternatives. For example, a commenter
suggested excepting from the 80/20 Rule
property that is no longer functional for its
intended energy purpose such as a prop­
erty that has fallen into disuse and has
been sitting idle for years and that would
require extensive renovations to return
to use for its intended purpose; property
that is no longer in a “condition or state
of readiness and availability for a specifi­
cally assigned function”; and property that
has been idle for a certain period of time
prior to rehabilitation and reuse such as
property located in opportunity zones and
property for which no tax credit has previ­
ously been claimed. This commenter also
proposed requiring a reduced percentage
threshold to meet the policy objectives of
the 80/20 Rule and referred to the Dual
Use percentage rules as more favorable
than the 80/20 Rule.
Multiple commenters suggested that,
if the 80/20 Rule is retained, then the
section 48 credit should apply to capi­
tal improvements without regard to the
80/20 Rule. However, these commenters
noted that the 80/20 Rule could continue
to apply to individual components placed
in service by the taxpayer. Commenters
asserted that the application of the 80/20
Rule to capital improvements would
lead to uneconomic decisions or waste,
such as favoring demolition and rebuild­
ing instead of investments to modify an
existing energy property or encouraging

Bulletin No. 2024–52 1389 December 23, 2024
many existing waste processing sites
to continue to vent or flare methane.
Commenters also expressed concerns
regarding the prohibition on claiming
the section 48 credit in respect of new
property that is installed after other items
of energy property have been placed in
service in cases in which the 80/20 Rule
is not met. A commenter explained that
such interpretation would disincentiv­
ize asset owners from upgrading their
existing solar plants to maximize energy
generation. This concern was shared
by other commenters in the context of
maintenance and upgrades performed on
certain types of energy property such as
GHP property.
Commenters also stated that net­
works of GHP properties grow over time
by design, adding additional customer
buildings and ground loop capacity as
needed. Therefore, commenters asserted
that application of the 80/20 Rule would
hinder the adoption of networked GHP
property as additional users may be
reluctant to link into an existing shared
ground loop due to the unavailability of
the section 48 credit. Another commenter
requested reconsideration of the 80/20
Rule, comparing the rule for modification
of an energy storage technology (which
is allowed) with “equipment that may
make trash or biomass energy properties
more efficient” (which is not allowed).
This commenter also requested consider­
ation of the 80/20 Rule in light of various
factors such as planned versus unplanned
improvements.
In the context of a qualified biogas
property, a commenter stated that the final
regulations should clarify and explicitly
state that any new cost paid or incurred
by the taxpayer for property that is an
integral part of the energy property may
be included in the basis of the energy
property for purposes of the section 48
credit, without regard to the application
of the 80/20 Rule at the integral prop­
erty level and regardless of whether the
new costs paid or incurred would gener­
ally be eligible for the section 48 credit.
As an example, the commenter noted that
this approach would allow the section 48
credit for a landfill gas collection system
that primarily serves a purpose unrelated
to the qualified biogas property (that is,
storage of municipal solid waste).
Commenters also raised concerns
regarding the use of the 80/20 Rule in the
context of an energy project. Comment­
ers generally asserted that the application
of the 80/20 Rule disincentivizes new
projects. A commenter requested that the
final regulations clarify and explicitly
state that the 80/20 Rule is applied sepa­
rately with respect to each unit of energy
property within an energy project and
does not take into account any of the used
property retained and used as an integral
part of an energy project irrespective of
whether these energy properties together
are determined to satisfy any two or
more of the factors described in proposed
§1.48­13(d)(1)(i) through (vii). Another
commenter explained the commenter’s
understanding that if a section 48 credit
is claimed on an energy project, then
the 80/20 Rule would be applied to the
entire project rather than to each compo­
nent separately. The commenter asserted
that this interpretation conflicts with the
historical understanding of the 80/20
Rule as it applies to the section 48 credit,
which is based on each component of the
unit of energy property. Another com­
menter noted that the final rule should
make clear that any application of the
80/20 Rule does not apply to the entire
energy project. If deemed applicable, it
should be limited to the individual energy
properties being put into operation by the
claiming taxpayer and should not include
new or expanded energy projects that are
added to existing operations. The Pro­
posed Regulations already would pro­
vide that in the case of an energy project,
the 80/20 Rule is applied to each unit of
energy property comprising an energy
project and a taxpayer that satisfies the
80/20 Rule with respect to an individual
unit of energy property that is part of a
larger energy project may be eligible for
the section 48 credit. Additional clarifi­
cation to ensure that the 80/20 Rule is
not applied at the energy project level is
unnecessary.
The Treasury Department and the
IRS have considered the comments sum­
marized earlier but decline to modify or
abandon the 80/20 Rule as requested. The
section 48 credit is available for “each
energy property placed in service” during
a taxable year. See section 48(a)(1). The
80/20 Rule is designed to broaden the
availability of the section 48 credit to pro­
vide a new original placed in service date
for an energy property that includes some
components of property that have already
been placed in service, rather than requir­
ing the entire unit of energy property to
be composed of only new property. The
80/20 Rule also encourages retrofitting of
existing energy property provided there is
sufficient new investment.
As discussed, in part III.D. of this Sum­
mary of Comments and Explanation of
Revisions, the ownership rules would pro­
vide that the section 48 credit is available
for an entire unit of energy property and
not for individual components of prop­
erty. The 80/20 Rule is consistent with the
ownership rules because it ensures that an
energy property that is retrofitted to a suf­
ficient extent is considered a new energy
property, whereas the addition of mere
components is not eligible for the section
48 credit.
The lone express rule for modification
of existing energy property in section 48 is
found in section 48(c)(6)(B). This special
rule is limited to modifications of existing
energy storage technology. In the Pro­
posed Regulations, the Treasury Depart­
ment and the IRS noted the significance
of Congress providing specifically for
modifications to energy storage technol­
ogy because the inclusion of this specific
provision suggests that, otherwise, modi­
fications of existing energy properties are
ineligible for the section 48 credit. In light
of this modification rule for energy stor­
age technology, the structure of section 48
indicates that other modifications to exist­
ing energy property do not qualify for the
credit.
However, providing the 80/20 Rule is
appropriate and consistent with its pre­
vious adoption for the section 48 credit
in Internal Revenue Bulletin guidance.
As explained in the preamble to the
Proposed Regulations, Notice 2018­59
addresses the application of the 80/20
Rule to retrofitted energy property for
purposes of applying the beginning of
construction rules for the section 48
credit. Section 7.05(1) of Notice 2018­59
provides that retrofitted energy property
may qualify as originally placed in ser­
vice even though it contains some used
components of property, provided it sat­
isfies the 80/20 Rule. Consistent with the

December 23, 2024 1390 Bulletin No. 2024–52
80/20 Rule provided in Notice 2018­59,
the 80/20 Rule provided in these final
regulations requires a taxpayer to own a
unit of energy property to claim the sec­
tion 48 credit. Additionally, §1.48­14(a)
specifically provides that if a taxpayer
satisfies the 80/20 Rule, then the tax­
payer may include the new costs paid or
incurred for property that is an integral
part of the energy property in the basis of
the energy property for purposes of the
section 48 credit. By allowing an exist­
ing energy property to be retrofitted and
afterwards to be treated as a new energy
property, the 80/20 Rule is consistent
with the ownership rules and is supported
by the same rationale. Moreover, because
modifications other than those described
in section 48(c)(6)(B) (for existing
energy storage technology) generally do
not qualify for the section 48 credit, the
provision of the 80/20 Rule is favorable
to taxpayers and encourages substantial
additional investment in existing energy
property.
2. Application to Specific Technologies
Commenters raised concerns regarding
the application of the 80/20 Rule to certain
types of energy property. Several com­
menters had concerns about the applica­
tion of the 80/20 Rule to qualified biogas
property, battery energy storage, and qual­
ified hydropower facilities. These issues
were largely intertwined with concerns
raised regarding the ownership require­
ment as it applies to these types of energy
property.
a. Qualified biogas property
Many commenters shared concerns
about the application of the 80/20 Rule
stating that the rule would prevent the
development of most qualified biogas
property and other RNG projects. As
described in the discussion of qualified
biogas property in part I.B.5. of this Sum­
mary of Comments and Explanation of
Revisions, commenters explained that
unlike many other types of energy prop­
erty incentivized under section 48, com­
ponents of qualified biogas property (as
described in the Proposed Regulations) are
likely to have been placed in service prior
to the enactment of the IRA. Comment­
ers also expressed concerns regarding the
definition of “qualified biogas property,”
the ownership provisions, and the 80/20
Rule, asserting that the combined impact
of these rules provided in the Proposed
Regulations would limit eligibility for
qualified biogas property.
According to a commenter, the 80/20
Rule should be aligned with the “original
use” requirement. To illustrate this point,
the commenter provided an example,
asserting that if a taxpayer is building a
new unit of energy property that is func­
tionally interdependent with a pre­existing
and previously placed in service unit of
energy property (qualified or otherwise)
that is owned by a separate taxpayer, the
application of the 80/20 Rule is unneces­
sary. The commenter stated that for quali­
fied biogas property, it is common for the
entire system to be comprised of compo­
nents of property owned by two different
taxpayers and for the original use of these
various components of property (that is,
landfill gas collection components and
cleaning and conditioning components,
both compromising a qualified biogas
property or “system”) to be with different
taxpayers at potentially different points in
time.
Several commenters expressed con­
cerns that the 80/20 Rule would not work
for the qualified biogas projects that Con­
gress intended to incentivize. Representa­
tive of that view, a commenter stated that
the 80/20 Rule is potentially problematic
for RNG projects located at pre­existing
landfills. The commenter proposed that
the application of the 80/20 Rule be lim­
ited to the individual units put into opera­
tion by the claiming taxpayer and should
not exclude new or expanded projects that
are added to existing operations.
Commenters’ concerns stem from the
ownership issues described in part III.D.
of this Summary of Comments and Expla­
nation of Revisions. As described in part
III.D., the final regulations clarify the
definition of what is included in qualified
biogas property in a manner that is respon­
sive to the ownership structures used by
the biogas industry and allow for new
property to be added to pre­existing land­
fills. Therefore, these final regulations do
not adopt commenters’ specific comments
concerning the application of the 80/20
Rule to qualified biogas property.
b. Second life batteries
The preamble to the Proposed Reg­
ulations explained that “a commenter
requested that re­used or ‘second life’
batteries should be considered ‘new
energy property.’” Generally, used prop­
erty cannot be considered “new property”
for purposes of the 80/20 Rule, which is
described earlier in part III.A. of this Sum­
mary of Comments and Explanation of
Revisions. The preamble to the Proposed
Regulations requested comments on
whether “second life” batteries should be
considered new components for purposes
of the 80/20 Rule.
Commenters proposed considering
second­life batteries that are disassembled
substantially to the electric vehicle mod­
ule level to be new energy property for
purposes of the 80/20 Rule. These com­
menters reasoned that such batteries go
through a substantial transformation pro­
cess including dissembling and restructur­
ing, which is a manufacturing process that
meets the modification rule. A commenter
suggested that, for purposes of the 80/20
Rule, second life batteries be considered
new energy property if documentation
is provided supporting the fact that the
batteries were remanufactured. Another
commenter asserted that “second life”
batteries may be considered within the 80
percent portion (as new property) of the
80/20 Rule if applied to energy storage
technology and believed this is especially
applicable in contexts in which the batter­
ies were originally used for a fundamen­
tally different purpose, or if in their previ­
ous iteration the batteries were ineligible
for the section 48 credit.
The 80/20 Rule recognizes that a retro­
fitted energy property that contains only a
relatively minimal amount of used com­
ponents is essentially a new energy prop­
erty. While “second­life” battery compo­
nents may be used to modify an energy
storage technology as provided in section
48(c)(6)(B) and addressed in part I.B.4.d.
of this Summary of Comments and Expla­
nation of Revisions, allowing primarily
used components to be considered new
property for purposes of applying the
80/20 Rule would be contrary to the basis
of the 80/20 Rule. Accordingly, the Trea­
sury Department and the IRS do not adopt
these comments.

Bulletin No. 2024–52 1391 December 23, 2024
c. Hydropower facilities
Section 48(a)(3) provides and pro­
posed §1.48­9(d)(1) would provide that
for purposes of the section 48 credit, an
energy property does not include any
property that is part of a qualified facil­
ity the production from which is allowed
a section 45 credit for the taxable year or
any prior taxable year. Some commenters
requested that the final regulations clar­
ify the interplay of the 80/20 Rule under
section 48 in the case of a property that
was previously part of a qualified facil­
ity under section 45. These commenters
requested specific confirmation that the
80/20 Rule may be applied to a retrofitted
pumped storage hydropower property for
which the section 45 credit had previously
been claimed to allow a section 48 credit
to be claimed. Although the 80/20 Rule
permits a retrofitted energy property to
be treated as originally placed in service
and qualify for the section 48 credit even
though it contains some used components,
the 80/20 Rule must be applied by giving
effect to the statutory language in section
48(a)(3) that prohibits a section 48 credit
on any property that is part of a facility
the production from which is allowed as
a section 45 credit for the taxable year or
any prior taxable year. However, in the
case of a retrofitted qualified facility for
which a section 45 credit was not allowed,
the 80/20 Rule could be used to obtain
a new original use and placed in service
date in order to claim a section 48 credit if
an election under section 48(a)(5) is made.
After consideration of the comments, an
example of the application of the 80/20
Rule to a qualified hydropower production
facility has been added to the final regu­
lations.
B. Dual use rule
Former §1.48­9 includes a Dual Use
Rule, which provides that a solar energy
property, wind energy property, or geother­
mal equipment is eligible for the section
48 credit to the extent of the energy prop­
erty’s basis or cost allocable to its annual
use of energy from a qualified source if
the use of energy from “non­qualifying”
sources does not exceed 25 percent of the
total energy input of the energy property
during an annual measuring period. This
version of the Dual Use Rule is referred to
as the “75­percent Cliff.”
Proposed §1.48­14(b)(1) would pro­
vide that for purposes of section 48, the
term dual use property means property
that uses energy derived from both a
qualifying source (that is, from an energy
property including a qualified facility
for which an election has been made)
and from a non­qualifying source (that
is, sources other than an energy property
including a qualified facility for which an
election has been made).
Proposed §1.48­14(b)(2)(i) would pro­
vide that, in general, dual use property
will qualify as energy property if its use of
energy from non­qualifying sources does
not exceed 50 percent of its total energy
input during an annual measuring period.
If the energy used from qualifying sources
is between 50 percent and 100 percent,
only a proportionate amount of the basis
of the energy property will be taken into
account in computing the amount of the
section 48 credit (for example, if 80 per­
cent of the energy used by a dual use prop­
erty is from qualifying sources, 80 percent
of the basis of the dual use property will
be taken into account in computing the
amount of the section 48 credit).
1. Dual Use Rule and Energy Storage
Technology
The preamble to the Proposed Regula­
tions explained that the Treasury Depart­
ment and the IRS recognize that the Dual
Use Rule is no longer relevant to determin­
ing the eligibility of energy storage tech­
nology placed in service after December
31, 2022, because the IRA added energy
storage technology as an energy property
effective for property placed in service
after December 31, 2022. However, the
Dual Use Rule may still have other appli­
cations under section 48. The Proposed
Regulations requested comments on the
application of the Dual Use Rule to sec­
tion 48 after its amendment by the IRA.
A commenter suggested that the final
regulations should eliminate the applica­
tion of the Dual Use Rule for all energy
storage, including energy storage property
placed in service before January 1, 2023.
In the alternative, the commenter sug­
gested reducing the requirement for energy
storage property placed in service prior to
2023 to 50 percent charging from qualify­
ing energy sources. This commenter also
requested that final regulations eliminate
any penalties or recapture for energy stor­
age systems that charge less from quali­
fying energy sources than they did during
a previous annual measuring period.
Finally, the commenter recommended that
the final regulations allow for exceptions
to charging restrictions during actual or
anticipated emergency days, particularly
when there are severe weather conditions,
which are periods during which storage
resources are badly needed. The com­
menter explained that the charging limita­
tions disqualify energy storage property
placed in service before January 1, 2023,
that is charged by grid rather than by solar,
wind, or other qualifying property from
the section 48 credit eligibility. The com­
menter noted that it would be difficult to
ensure that the charge comes from quali­
fying sources during severe weather con­
ditions. Because these final regulations
apply only to property placed in service
after December 31, 2022, these comments
are outside the scope of the regulations.
Section 13102(q)(2) of the IRA pro­
vides that amendments to section 48
regarding energy storage technology
apply to properties placed in service after
December 31, 2022. Accordingly, pro­
posed §1.48­14(i) would limit application
of proposed §1.48­14 “to property placed
in service after December 31, 2022, and
during a taxable year beginning after
the date of publication of the final rule.”
Therefore, the prior version of the Dual
Use Rule referred to as the 75­percent
Cliff continues to apply to energy proper­
ties placed in service prior to January 1,
2023. These final regulations do not adopt
the requested change to the applicability
date provided in the Proposed Regulations
for these provisions.
2. Aggregation of Energy Inputs
Proposed §1.48­14(b)(2)(ii) would
provide that the measurement of energy
use required for purposes of proposed
§1.48­14(b)(2)(i) is made by comparing,
on the basis of Btus, energy input to dual
use property from all qualifying sources
with energy input from all non­qualifying
sources. The Proposed Regulations fur­
ther would provide that the Commissioner

December 23, 2024 1392 Bulletin No. 2024–52
may also accept any other method that
accurately establishes the relative annual
use of energy derived from all qualify­
ing sources and of energy input from all
non­qualifying sources by dual use prop­
erty.
A commenter requested clarifica­
tion regarding the appropriate means of
demonstrating annual energy consump­
tion for an energy property, especially for
solar water heating systems. The com­
menter noted that solar thermal systems
have accepted Federal sizing guidelines
for accurately estimating energy con­
sumption by source, whether from solar,
electric, gas, or other applicable technol­
ogies, and because of this, not all solar
thermal systems may include heat meters
or other specialized monitoring equip­
ment that may be needed to determine
the annual energy consumption by source
requirements and, thus, requiring such
measurement could add undue and unnec­
essary costs to comply with this rule. This
commenter recommended that the final
regulations specify types of monitoring
in general, or in lieu of or in addition to
monitoring, provide guidance on appro­
priate or acceptable energy consumption
modeling that might otherwise meet this
requirement. For example, the commenter
noted system performance modeling that
may be used to determine annual energy
production for a given system that is situ­
ated in a specific climate and used in the
ENERGY STAR Residential Water Heater
Certification Program. This commenter
also noted that clarification regarding the
costs that can be included in the basis of
an energy property would also be useful in
other Dual Use contexts, such as for solar
carports.
The Treasury Department and the IRS
decline to adopt additional measurements
to determine energy input from qualify­
ing and nonqualifying sources. The Pro­
posed Regulations state that the Commis­
sioner may accept any other method that
accurately establishes the relative annual
use of energy derived from all qualify­
ing sources and of energy input from all
non­qualifying sources by dual use prop­
erty. The final regulations will continue
to allow the Commissioner to accept any
other method that accurately establishes
the qualifying sources and energy inputs
to an energy property during the annual
measuring period. Additionally, the final
regulations do not provide clarification
regarding what costs may be included in
the basis of energy property. See part I.B
of this Summary of Comments and Expla­
nation of Revisions for a discussion of the
definitions of types of energy property.
3. Dual Use Property and Microgrid
Controllers
The preamble to the Proposed Reg­
ulations states that certain equipment is
necessary for a microgrid controller to
perform its functions. However, such
equipment may also have been required
to be installed without the presence of a
microgrid. An example is a communica­
tions system (for example, a local eth­
ernet network or a commercial wireless
network). Because a microgrid controller
must be connected to a communications
system to operate properly, such a com­
munications system could be considered
part of the microgrid controller itself. The
communications system could also be
used for other purposes and may not be
dedicated to the microgrid system. The
Treasury Department and the IRS con­
sider the Dual Use Rule inapplicable to
this scenario because it does not involve
the use of energy derived from both quali­
fying and non­qualifying sources.
A commenter asserted that it is neces­
sary to create a Dual Use Rule for micro­
grid controllers because requiring specific
equipment to be dedicated to the microgrid
controller that could otherwise be used for
multiple purposes is an inefficient use of
resources. The commenter also noted that
given the complexity and unique nature
of microgrids, it is impossible to specify
all conditions under which a Dual Use
might arise. This commenter suggested
that any component of property that is tied
into the microgrid system (whether hard­
ware­based or software­based) becomes
a necessary component of either the
operation of the microgrid or the mon­
itoring/maintenance of the operation of
the microgrid. The commenter noted that
existing equipment would not be included
in the basis of the microgrid controller for
purposes of the credit, but if new equip­
ment is needed or if existing equipment
needs to be replaced to accommodate the
operations of the microgrid, such equip­
ment should be included in the basis of the
microgrid controller for purposes of the
section 48 credit even if such equipment
is partially used for other purposes that are
not eligible for the section 48 credit. This
comment poses the issue of whether the
cost of components of property is included
in an energy property’s basis even though
such components can be used for purposes
not intended for energy property. That
issue is addressed in the discussion of
the functional interdependence and inte­
gral property rules described in part I.C.2
and 3 of this Summary of Comments and
Explanation of Revisions.
C. Incremental cost
Former §1.48­9(k) defines incremen­
tal cost as the excess of the total cost of
equipment over the amount that would
have been expended for the equipment if
the equipment were not used for a qual­
ifying purpose related to the section 48
credit. Proposed §1.48­14(d)(1) would
adopt a similar definition and allow only
the incremental cost of energy property to
be included in basis for purposes of deter­
mining the section 48 credit.
Proposed §1.48­14(d)(2) would pro­
vide as an example, a scenario in which
the incremental cost of a reflective roof
for the purpose of installing a solar
energy property is $5,000, the difference
between the costs of a reflective roof and
a standard roof. A commenter suggested
expanding this example to include other
roof upgrades that enable the operation of
energy property.
The amount of incremental cost is
determined on a case­by­case basis and
the example is only intended to illustrate
the general application of the incremental
cost rule. Accordingly, this comment is
not adopted.
D. Ownership rules
Proposed §1.48­14(e)(1) would pro­
vide that for purposes of section 48, a
taxpayer that owns an energy property is
eligible for the section 48 credit only to
the extent of the taxpayer’s basis in the
energy property. Further, proposed §1.48­
14(e)(1) would provide that in the case of
multiple taxpayers holding direct owner­
ship in an energy property, each taxpayer

Bulletin No. 2024–52 1393 December 23, 2024
determines its basis based on its fractional
ownership interest in the energy property.
Proposed §1.48­14(e)(2) would pro­
vide that a taxpayer must directly own at
least a fractional interest in the entire unit
of energy property for a section 48 credit
to be determined with respect to such tax­
payer’s interest. Further, proposed §1.48­
14(e)(2) would provide that no section 48
credit may be determined with respect to
a taxpayer’s ownership of one or more
separate components of an energy prop­
erty if the components do not constitute
a unit of energy property. However, pro­
posed §1.48­14(e)(2) would also provide
that the use of property owned by one tax­
payer that is an integral part of an energy
property owned by a second taxpayer will
not prevent a section 48 credit from being
determined with respect to the second tax­
payer’s energy property.
Proposed §1.48­14(e)(3)(i) would
provide that the term “related taxpayers”
means members of a group of trades or
businesses that are under common control
(as defined in Treasury Regulations §1.52­
1(b)). Proposed §1.48­14(e)(3)(ii) would
provide that related taxpayers are treated
as one taxpayer in determining whether
a taxpayer has made an investment in an
energy property with respect to which a
section 48 credit may be determined.
Many commenters disagreed with the
application of the ownership rules. Sev­
eral commenters raised general arguments
focused on prior interpretations of sec­
tion 48, while others voiced disagreement
regarding the application of the ownership
rules to qualified biogas property, GHP
property, and offshore wind facilities (eli­
gible for the section 48 credit through an
election under section 48(a)(5)).
1. Prior Interpretations of the Ownership
Rules
Some commenters raised interpreta­
tions of the ownership rules and the defi­
nition of an “energy property” in caselaw
and guidance. These commenters assert
that these sources demonstrate that own­
ership of individual components of energy
property, and not of an entire unit of
energy property, is sufficient to claim the
section 48 credit.
Several commenters pointed to Coo-
per v. Commissioner, 88 T.C. 84 (1987),
which was decided under prior versions
of sections 46 and 48 and the regula­
tions thereunder. In Cooper, the taxpayer
asserted that owning specific compo­
nents of solar water heating system was
sufficient to claim the section 48 credit
for solar energy property. While the Tax
Court agreed that the taxpayer did not own
the entire working solar water heating sys­
tem, the Court held that the definition of a
solar energy property provided in former
section 48(l)(4) was sufficiently broad to
provide a credit for component parts of a
solar water heating system. Id. at 116­117.
The Tax Court subsequently clarified
the holding in Cooper, explaining that “the
property in Cooper consisted of integrated
water­heating systems that were ready
for installation to discharge their desig­
nated function”; they just had not been
installed yet. Olsen, T.C. Memo 2021­41
at *14. Conversely, in the Olsen case, the
Tax Court found that “[p]etitioners’ lenses
were mere components of a system....”
and not a complete system and therefore
unable to be placed in service as a system.
Id. Stated otherwise, while commenters
cite to Cooper to support the assertion
that the section 48 credit is available for
separate components of property within
an energy property, the Tax Court clarified
in Olsen that components that “operate as
part of a complicated...system and were
incapable of performing any useful func­
tion in isolation” were not placed in ser­
vice. Id. at 13. Additionally, Cooper was
decided under former section 48(l)(4) and
not under the current version of section
48, which is substantially different.
Commenters also cited Samis v. Com-
missioner, 76 T.C. 609 (1981), for the
proposition that ownership of an entire
energy property is not required to claim
the section 48 credit. However, Samis
stands only for the proposition that prop­
erty connected to a building is a part of
the building regardless of ownership. In
Samis, although the taxpayers owned a
“total energy plant” that provided hot
water and heating/cooling for a residen­
tial apartment complex not owned by the
taxpayers, the total energy plant was held
to be a structural component of the apart­
ment complex and therefore not “tangi­
ble personal property” or “other tangible
property” qualifying for the investment
credit. The Tax Court explained in a foot­
note that the ownership of the plant was
irrelevant because the total energy plant
is not eligible for the section 48 credit.
Therefore, in Samis it was clear only that
the taxpayer could not separate ownership
of the heating and cooling system from the
apartment complex to sidestep rules that
the property must not be part of a building.
Commenters also pointed to Revenue
Ruling 78­268, 1978­2 C.B. 10, to support
the premise that components of an energy
property may be owned by different tax­
payers. However, in Revenue Ruling
78­268, the taxpayers did not own just a
component of one energy property—they
owned a fractional interest in the entire
facility. In Revenue Ruling 78­268, four
parties, two of which were tax­exempt,
owned an electric generating facility
through a tenancy in common. Revenue
Ruling 78­268 held that the presence of
the tax­exempt owners did not disqualify
the other owners from claiming a credit
because the fractional interests in the
tenancy in common were treated as sepa­
rate assets. The Treasury Department and
the IRS disagree with commenters that
the holding of Revenue Ruling 78­268
conflicts with the ownership rules in the
Proposed Regulations. Instead, Revenue
Ruling 78­268 illustrates that a fractional
interest in the entire energy property is
sufficient for a taxpayer to claim a section
48 credit, which is the very rule in pro­
posed §1.48­14(e)(2).
Commenters also cited PLR
201536017 (PLR) to support the premise
that ownership of an entire energy prop­
erty is not required to claim the section
48 credit. However, private letter rulings
are not precedential and cannot be relied
upon by a taxpayer other than the tax­
payer addressed in the PLR (see section
6110(k)(3) of the Code). Furthermore,
the PLR does not involve the section
48 credit but instead section 25D of the
Code. Regardless, similar to Revenue
Ruling 78­268, the PLR involves credit
eligibility through fractional ownership
of an entire energy property, not owner­
ship of just certain components. The PLR
addresses a factual scenario in which a
taxpayer purchased solar PV panels in
an offsite array (that also contains other
solar PV panels owned by other individu­
als) as well as a partial ownership in rack­
ing equipment, inverter equipment, and

December 23, 2024 1394 Bulletin No. 2024–52
wiring and other equipment and installa­
tion services required for the integration
of the panels in the array and the inter­
connection of the array to a local utility’s
electric distribution system. The PLR
concludes that as a result, the taxpayer
has made a “qualified solar electric prop­
erty expenditure” under section 25D(d)
(2) and the taxpayer is eligible to claim a
section 25D credit. To the extent this PLR
provides any helpful analysis regarding
the section 48 credit, it involves partial
ownership in all the other equipment
necessary to integrate the panels into the
array and interconnect the array to a local
utility’s electric distribution system, and
not just certain components.
Finally, commenters pointed to FAQs
34 and 35 of guidance from the Treasury
Department regarding payments under
section 1603 of the American Recovery
and Reinvestment Act of 2009
1
(Section
1603 Grant Program) to support the prem­
ise that ownership of an entire energy
property is not required to claim the sec­
tion 48 credit. FAQ 34 addressed grant
eligibility for a factual scenario involving
an open­loop biomass facility owned by
one taxpayer that uses off­site feedstock
conversion equipment owned by another
taxpayer. The FAQ provided that the con­
version equipment may be considered part
of the open­loop biomass facility eligible
for the grant if the conversion equipment
is integrated into the open­loop biomass
facility. Evidence that the conversion
facility is integrated into the open­loop
biomass facility includes factors such as
whether they are placed in service simul­
taneously, the extent to which the conver­
sion facility’s output is dedicated to the
facility (for example, under an exclusive
long­term supply contract), and the depen­
dence of the open­loop biomass facility on
the output of the conversion equipment (at
least 75 percent).
Additionally, FAQ 35 addressed the
procedural requirements of the 1603
Grant Program as applied to the facts pre­
sented in FAQ 34, by providing that the
taxpayer that owns the conversion equip­
ment and taxpayer that owns the open­
loop biomass facility must each submit an
application filed jointly in order to receive
Section 1603 grant payments. While the
1603 Grant Program did adopt concepts
from sections 45 and 48, the Section 1603
Grant Program is not based on any income
tax provisions and thus is not a relevant
precedent for purposes of the section 48
credit.
The Proposed Regulations’ approach to
ownership eligibility is further supported
by the IRA’s amendments to section 48
and administrability considerations. The
IRA amended section 48 to provide for
an increased credit amount for energy
projects satisfying the PWA requirements
(section 48(a)(9) through (11)), a bonus
credit amount for energy projects satisfy­
ing domestic content requirements (sec­
tion 48(a)(12)), and an increase in credit
rate for energy projects in energy com­
munities (section 48(a)(14)). Addition­
ally, the IRA amended section 48(a)(8) to
allow the cost of qualified interconnection
property to be included in the basis of cer­
tain lower­output energy properties. This
statutory framework indicates that special
rules enacted by the IRA amendments
apply to either an energy property or an
energy project, which is further defined as
a project consisting of one or more energy
properties that are part of a single project.
This statutory scheme requires that the
section 48 credit is available only if an
entire energy property (or energy project)
is placed in service. Under the alternative
ownership rules requested by comment­
ers, a taxpayer’s eligibility for the IRA’s
bonuses could depend, in many cases, on
whether unrelated parties met the require­
ments for the various bonus credits pro­
vided by the IRA. This uncertainty would
create severe challenges for tax adminis­
tration.
While the Treasury Department and
the IRS understand the concerns raised by
commenters, the statutory language and
administrability concerns arising from the
overall statutory scheme effected by the
IRA’s recent amendments both support a
requirement that the taxpayer own all or
a fraction of an entire energy property or
energy project. Therefore, the final regula­
tions do not adopt the changes to the own­
ership rules requested by the commenters.
The rule is adopted as proposed.
2. Application to Qualified Biogas
Property
Commenters presented practical rea­
sons for disagreeing with the ownership
rules, particularly in the context of the
section 48 credit for qualified biogas
property placed in service at dairy farms
and landfills. Commenters provided rea­
sons that the owner of biogas upgrading
equipment cannot be the same owner of
the functionally interdependent qualified
biogas property, which is described in pro­
posed §1.48­9(e)(11)(i) as including, but
not limited to, a waste feedstock collec­
tion system, a landfill gas collection sys­
tem, mixing or pumping equipment, and
an anaerobic digester. Commenters also
explained that biogas upgrading equip­
ment is often added to dairy farms and
landfills, and those that engage in biogas
upgrading are not the same owners of the
underlying farms and landfills.
A commenter explained that different
types of qualified biogas property located
at a site are almost always owned by differ­
ent taxpayers as a result of regulatory con­
straints, financial capability, or other busi­
ness considerations. Another commenter
explained that because qualified biogas
property is prohibitively expensive, farm­
ers and ranchers often work with cooper­
atives or other organizations to facilitate
shared ownership of such equipment, and
the ownership rules, as proposed, would
have an exclusionary effect on Ameri­
can agriculture and specifically on farm­
er­owned cooperatives. Emphasizing
these same concerns, another commenter
stated that often farmers and ranchers are
not interested in an outside entity owning
the anaerobic digester that, in addition
to biogas, produces nutrients and water
used within the farming operation and
are therefore crucial for the farmers and
ranchers to own and control.
Commenters note that similar issues
arise in the context of landfills. For exam­
ple, a commenter (whose comments were
endorsed by many others) explained
that landfill owners often use collection
equipment for compliance with regula­
tory requirements and view methane gas
capture as a core operation. As a result,
1
Payments for Specified Energy Property in Lieu of Tax Credits Under the American Recovery and Reinvestment Act of 2009, Frequently Asked Questions and Answers.

Bulletin No. 2024–52 1395 December 23, 2024
landfill gas collection systems are almost
always owned and operated by the land­
fill operator, which may be a municipality,
while the biogas upgrading equipment is
owned by another taxpayer. This makes
common ownership of both the func­
tionally interdependent qualified biogas
property as described in the proposed
§1.48­9(e)(11) and the biogas upgrading
equipment difficult to achieve.
Moreover, those engaged in biogas
upgrading at a landfill may not legally
be allowed to own the landfill biogas
equipment. For example, a commenter
stated that the proposed treatment of a
landfill gas collection system property
as a functionally interdependent part of
the qualified biogas property is problem­
atic because it is very common for RNG
production systems to be developed by a
taxpayer at a landfill owned by a differ­
ent taxpayer. In this type of arrangement,
it is important for the owner of the land­
fill to retain ownership and control of the
landfill gas collection property to comply
with existing regulatory and permitting
requirements for operation of the landfill.
Additionally, this commenter noted that
it is common for such landfill gas collec­
tion system property to have already been
placed in service before biogas collected
from the system is captured and integrated
into a new RNG production system.
Another commenter emphasized both
timing issues and legal restrictions cre­
ated by the ownership rules, stating that
the ownership rules fail to recognize
that most landfills have already installed
gas capture and control systems (GCCS
System). These systems are generally
required under existing regulations, and
the landfills typically insist on maintaining
total control and ownership of the GCCS
System to ensure they remain within reg­
ulatory requirements. This commenter
explained that RNG developers provide
additional equipment to further refine cap­
tured landfill gases into beneficial end use
products, but that additional equipment
may not benefit from section 48 credits
under proposed §1.48­9(e)(11), which
requires the split ownership of the GCCS
System and gas upgrading equipment.
The final regulations address the com­
menters’ concerns through other revisions
to the final regulations. The Treasury
Department and the IRS expect that these
revisions will alleviate the concerns raised
by the biogas industry without requiring
changes to the ownership rules. For dis­
cussion of these revisions to the definition
of qualified biogas property see part I.B.5.
of this Summary of Comments and Expla­
nation of Revisions.
3. Application to GHP Property and
Geothermal Energy Property
Commenters also provided feedback
on the effect of the ownership rules in
the context of GHP property and geother­
mal energy property. Many commenters
asserted that the Proposed Regulations
could cause significant potential harm
to development of geothermal projects.
These commenters stated that it is import­
ant that the Treasury Department and
the IRS provide a method for split own­
ership of GHP property and geothermal
energy property to qualify for the section
48 credit. In support of these requests,
commenters pointed to congressional cor­
respondence urging support for the geo­
thermal industry and requesting guidance
to allow for viable third­party ownership
business models, including clarifying that
GHP property and geothermal energy
property are exempt from the “limited use
property” doctrine.
Commenters also explained that there
are dozens of networked geothermal proj­
ects currently planned or deployed across
the country. Commenters stated that net­
worked GHP property and geothermal
energy systems almost always involve
multiple owners by design, and that GHP
property networks can serve a diverse
array of customer buildings while those
customers own and maintain their own
GHP property. Commenters stated that the
ground loop and the heating and cooling
units are functionally interdependent yet
distinct components of the GHP property
that are often owned by utilities. The com­
menters also noted that in many instances,
utilities are prohibited by regulators from
owning their customers’ heating and cool­
ing equipment. These commenters sug­
gested that the delineation between out­
door and indoor equipment is sufficient
to allow for clear allocation of the credit
between taxpayers.
Several other commenters made sim­
ilar points about GHP property and the
ownership rules. Some commenters
emphasized the need for an exception for
geothermal property and others focused
on the reasoning for separate ownership.
For example, a commenter highlighted
the commonality of separate ownership
arrangements because utilities are often
prohibited from owning a customer’s
heating and cooling equipment. Another
commenter provided a detailed discus­
sion on separate ownership of geothermal
property and highlighted the business
necessity for this structure. This com­
menter explained that the barrier to geo­
thermal energy use is the high cost and
expertise required for the overall under­
ground system. This commenter said it
makes perfect sense for the underground
system to be owned by a specialized
company with both the technical skills
and a long­range investment strategy.
This commenter explained that in other
cases, it will be independent companies
that contract to supply geothermal energy
to the edge of a facility. The commenter
noted that in both cases, the facility or
building owner would then connect to
the system to make use of the geother­
mal energy, and that the energy user is
required neither to make the investment
in the geothermal system, nor to have
expertise in developing the system.
This same commenter also explained
that the Proposed Regulations ignore his­
torical precedent that virtually all geo­
thermal energy development was split
ownership. This commenter asserted that
since the 1980s and into the future, split
ownership remains an important model
for geothermal energy development and
use. The commenter gave several exam­
ples illustrating the split ownership model
across the United States.
Commenters generally recommended
that split ownership be allowed for geo­
thermal property, including GHP prop­
erty. One commenter (whose comments
were endorsed by many others) suggested
drawing the line at indoor/outdoor own­
ership. Another commenter asserted that
property within a home or building should
be considered an entire unit of energy
property while another taxpayer owns the
equipment underground as a separate unit
of energy property. This commenter noted
that the final regulations should define the
scope of energy property to allow the tax­

December 23, 2024 1396 Bulletin No. 2024–52
payer a section 48 credit based on the tax­
payer’s basis in energy property it owns.
Commenters also noted the use of
“equipment” in section 48(a)(3)(A)(iii)
and (vii) (for example) to refer to geother­
mal energy property is different from the
use of “system” used in other places to
refer to energy property (for example, sec­
tion 48(c)(1)(C), which defines a fuel cell
power plant). These commenters noted
that if the equipment is viewed individu­
ally as is suggested by the differing defini­
tions in section 48, then individual owners
should be allowed to qualify in contra­
vention of the coils/heat pump example
included in the proposed rules. Comment­
ers also made this point regarding use of
the term “equipment” with reference to
solar energy property.
The statutory language does not sup­
port providing a special ownership rule
for GHP property (or geothermal energy
property) as requested by the commenters.
In the case of GHP property, both the coils
in the ground and the heat pump equip­
ment are necessary for GHP property to
satisfy the definition in section 48(a)(3)
(A)(vii). Because both the coils and heat
pump are necessary to perform the func­
tion of the GHP property, ownership of
only the coils or only the heat pump is
not ownership of the entire unit of energy
property and therefore, is not ownership
of GHP property, as statutorily defined.
This analysis is consistent with the
definition of “geothermal energy prop­
erty” under section 48(a)(3)(A)(iii), which
includes as energy property equipment
used to produce, distribute, or use energy
derived from a geothermal deposit (within
the meaning of section 613(e)(2)), but
only, in the case of electricity generated by
geothermal power, up to (but not includ­
ing) the electrical transmission stage. That
is, this definition encompasses produc­
tion and disposition or use up to but not
including electrical transmission. Because
both the equipment that produces electric­
ity from a geothermal deposit and equip­
ment needed to either distribute or use
such energy are necessary to perform the
energy function of the geothermal energy
property, ownership of only components
of that equipment is not ownership of the
entire unit of energy property and there­
fore, is not ownership of geothermal
energy property, as statutorily defined.
In response to these comments, the
Treasury Department and the IRS have
provided an example of GHP property in
the final regulations to clarify that owner­
ship of every heat pump that is connected
to coils in the ground owned by the same
taxpayer is not required to qualify, but
that ownership of both coils and at least
one heat pump is required. Additionally,
other taxpayers may purchase heat pumps
that attach to existing coil systems. While
ownership of those heat pumps alone will
not satisfy section 48, it is possible that the
taxpayer may be eligible for a credit under
section 25D.
Commenters also requested an exemp­
tion for GHP property from the “limited
use property” doctrine. Property that is not
commercially usable by anyone other than
the lessee at the end of the lease term is
considered “limited use.” Section 5.02 of
Revenue Procedure 2001­28, 2001­1 C.B.
1156, provides an example of a leased
smokestack attached to a warehouse
owned by the lessee and concludes that
the smokestack is limited­use property
because it would not be commercially
feasible to disassemble the smokestack at
the end of the lease term and reconstruct it
at a new location. Commenters expressed
concern because, in one typical third­
party ownership arrangement, a third­
party owned ground loop is installed for
the benefit of a building and leased to the
building owner, with the building owner
owning the heat pump.
Under a longstanding body of case law
and IRS guidance, if property is leased for
substantially its entire useful life, then the
transaction is treated more properly as a
sale of the property for Federal income tax
purposes than a lease, because the party
designated as the lessee obtains the bene­
fits and burdens of ownership of the prop­
erty under the purported lease agreement.
Grodt & McKay Realty, Inc. v. Commis-
sioner, 77 T.C. 1221 (1981) (listing fac­
tors for determining whether the benefits
and burdens of ownership of property
have passed and a sale occurred); Revenue
Ruling 55­541, 1955­2 C.B. 19 (property
determined to be leased for substantially
its entire useful life and therefore results
in a transfer of equitable ownership). A
purported lease of limited­use property,
therefore, may be treated as a sale for
Federal income tax purposes because the
lessee is considered to have acquired the
benefits and burdens of ownership of the
property for substantially its entire useful
life. See Estate of Starr v. Commissioner,
274 F.2d 294 (9th Cir. 1959) (purported
lease of a fire sprinkler system); Mt. Man-
sfield Television v. United States, 239
F.Supp. 539 (D. Vermont 1964) aff’d 342
F.2d 994 (2d Cir. 1965) (purported lease
of microwave equipment installed in a
television station).
Under this analysis, a third­party own­
ership arrangement involving a lease of
a ground loop that cannot be removed at
the end of the lease and used somewhere
else may be characterized more properly
for Federal income tax purposes as a sale
(rather than a lease) of the ground loop to
the building owner at the inception of the
lease because the lessor must re­lease or
sell the property to the lessee at the end of
the lease term.
To claim the section 48 credit, the tax­
payer must own the energy property when
it is placed in service. Consequently, the
lessor of the ground loop in the lease
financing transaction above may not be
eligible for the section 48 credit for the
cost of the ground loop insofar as it is
treated as having transferred ownership of
the ground loop to the purported lessee for
Federal income tax purposes at the incep­
tion of the lease. This would be the case
even if the Proposed Regulations were
modified to permit separate ownership of
components of an energy property, or in
the absence of such a modification, even
if the nominal owner of the ground loop
owned a fractional ownership interest in
the other components of the GHP prop­
erty, which taken together constitutes an
energy property. Because of the “limited
use property” doctrine, the lessor of the
ground loop may not be regarded as the
tax owner of the ground loop when it is
placed in service and, therefore, would not
be eligible for the section 48 credit for its
basis in the ground loop.
Commenters presumed that it is within
the Treasury Department and the IRS’s
regulatory authority to revise the “lim­
ited use property” doctrine provided in
Revenue Procedure 2001­28, 2001­1 C.B.
1156, to provide an exception for GHP
property. However, Revenue Procedure
2001­28 (and its predecessors, which date
back to Revenue Procedure 75­21, 1975­1

Bulletin No. 2024–52 1397 December 23, 2024
C.B. 715) merely provides guidelines for
advance rulings on leveraged lease trans­
actions, and notes that these guidelines
“do not define, as a matter of law, whether
a transaction is or is not a lease for Federal
income tax purposes and are not intended
to be used for audit purposes.” Rather, the
“limited use property” doctrine reflects
the broader Federal income tax principle
that the characterization of a leasing trans­
action for Federal income tax purposes is
determined by its substance and not its
form. Helvering v. F. & R. Lazarus & Co.,
308 U.S. 252 (1939); Frank Lyon Co. v.
United States, 435 U.S. 561 (1978). Con­
sequently, explicit statutory authorization
would be needed to exempt leases of GHP
property from the “limited use property”
doctrine. The final regulations, therefore,
do not exempt GHP property from the
“limited use property” doctrine.
4. Application to Solar Energy Property
and Offshore Wind Facilities
Commenters also provided feedback
on the effect of the ownership rules in
the context of solar energy properties and
offshore wind facilities. A commenter
asserted that requiring a taxpayer to own a
direct interest in each component of a unit
of solar energy property is unreasonable.
This commenter provided an example of
a taxpayer that constructs and places in
service a solar facility that has 1,000 com­
ponents and qualifies for the section 48
credit. If the taxpayer owns 999 compo­
nents of the solar facility and another tax­
payer owns the remaining one component,
then the same solar facility that qualified
for the section 48 credit because the tax­
payer owned all components will no lon­
ger be energy property under the Proposed
Regulations. This commenter said there
does not seem to be any justification for
this rule. This commenter highlighted that
the facility is serving the same purpose
and would be eligible for the same amount
of section 48 credit. The commenter also
asserted that introducing and defining the
term “unit of energy property” in a way
that does not allow its components to be
owned by more than a single taxpayer
leads to an unreasonable result.
This commenter requested that the
Treasury Department and the IRS issue a
rule enabling taxpayers to claim the sec­
tion 48 credit for separate components
of energy property. Alternatively, the
commenter requested that the Treasury
Department and the IRS issue a rule to
limit the definition of unit of energy prop­
erty with respect to a particular taxpayer
to those components owned by that tax­
payer. As has been discussed previously
in part III.D.1 of this Summary of Com­
ments and Explanation of Revisions, the
statute requires the taxpayer to own an
interest in an energy property to claim a
section 48 credit.
Some commenters were particularly
concerned about the rule in the Proposed
Regulations that a taxpayer is eligible to
claim the credit for integral property only
if that same taxpayer owns the unit of
energy property. These commenters were
specifically concerned about the ability of
owners of power conditioning and trans­
fer equipment to claim the section 48 in
both the solar and offshore wind context.
In general, the commenters disagreed that
an integral property that would otherwise
qualify if owned by the same taxpayer that
owns the unit of energy property would
not qualify if owned by another taxpayer.
For example, a commenter asserted in the
case of a single energy property in which
energy property and integral parts are con­
structed together but owned by separate
taxpayers, both taxpayers should be able
to claim separate credits on the bases of
their respectively owned portions. Simi­
larly, the commenter noted that if a unit of
energy property is constructed and placed
in service by a taxpayer, and later another
taxpayer constructs and places in service
integral property, both taxpayers should
be able to claim credits.
A commenter made a similar point
specifically about offshore wind facil­
ities. This commenter noted that if the
power conditioning equipment is owned
by a taxpayer that has no ownership in the
offshore wind facility, the power condi­
tioning equipment would not qualify for
the section 48 credit without changing its
operation, character, or function but would
have qualified had that taxpayer had an
ownership interest in the offshore wind
facility. The commenter stated that the
power conditioning equipment continues
to serve the same purpose, is used directly
in the intended function of the offshore
wind facility, and is essential to the com­
pleteness of its intended function. This
commenter pointed out that offshore wind
facilities (such as those along the Atlan­
tic coast) will involve multiple States,
and it is unlikely that the same entity will
own both the offshore wind facility and
the integral supporting infrastructure, but
both should be eligible for the credit.
Another commenter made a similar
point stating that power conditioning and
transfer equipment has been established
by the Proposed Regulations as an inte­
gral part of the production of electricity
from an offshore wind facility, and that
in accordance with precedent, the Trea­
sury Department and the IRS should
establish in the final regulations that the
separate owner of this integral equip­
ment may qualify for the section 48
credit. This commenter stated that this is
essential to enabling the necessary flex­
ibility for offshore wind developers to
structure financially viable projects, and
ultimately achieve the Administration’s
goal of deploying 30 gigawatts (GW) of
offshore wind capacity by 2030. Another
commenter noted that the distinction in
the Proposed Regulations between func­
tionally interdependent property (needed
for generation of electricity) and other
“integral” property for purposes of section
48 is arbitrary, illogical, and unnecessary
for offshore wind properties involving
multiple owners, and there is no need for
an owner of an offshore wind delivery
system to have an artificial requirement
to own some portion of the turbines. This
commenter noted that permitting multi­
ple owners to share the section 48 credit
would not lead to overuse or “double
counting” of the section 48 credit.
Other commenters noted that allow­
ing third party ownership of power con­
ditioning and transfer equipment would
significantly decrease the financial burden
on developers and ratepayers, as well as
diversify investment in the industry. Com­
menters also stressed the benefits of sep­
arate ownership as a more cost effective
model of ownership, including efficiencies
that provide lower overall costs to con­
sumers; reduced environmental impacts
(for example, fewer cables traversing sen­
sitive marine ecosystems); efficient use of
constrained cable corridors; fewer disrup­
tions to communities than if each offshore
wind facility, develops its own offshore

December 23, 2024 1398 Bulletin No. 2024–52
wind power conditioning and transfer
equipment; and incentivizing competitive
solicitation of such equipment.
Generally, these commenters requested
that integral property, specifically power
conditioning equipment, be treated as a
separate unit of energy property that may
claim the section 48 credit. However, sec­
tion 48 provides a credit only for property
that satisfies the definitions of “energy
property” provided at section 48(a)(3) and
(c), and owners of only integral property
do not own “energy property” as defined
in section 48(a)(3) or (c). For example,
power conditioning and transfer equip­
ment does not alone generate electricity
or satisfy an intended function provided
by the statute. As a result, costs associated
with integral property owned by a taxpayer
that owns the related energy property may
be included in basis of the energy property
owned by the same taxpayer as provided
in these final regulations because integral
property is necessary for the intended use
for an energy property, but integral prop­
erty alone cannot qualify for the section
48 credit.
E. Calculation of basis
Proposed §1.48­14(e)(1) would provide
that for purposes of the section 48 credit,
a taxpayer that owns an energy property is
eligible for the credit only to the extent of
the taxpayer’s basis in the energy property.
Proposed 1.48­14(e)(1) also would provide
in the case of multiple taxpayers holding
direct ownership in an energy property,
each taxpayer determines its basis based
on its fractional ownership interest in the
energy property. A commenter supported
the fractional ownership rule for determin­
ing a taxpayer’s basis and requested the
extension of those rules to the credits under
sections 30C and 45W of the Code.
Other commenters, while opposing
the ownership rules, also requested clar­
ification of how to determine basis if the
fractional ownership rule is retained. A
commenter requested examples of the
application of these ownership rules in the
context of an animal waste­to­RNG quali­
fied biogas property in which the property
comprising the qualified biogas property
is owned by multiple taxpayers.
Another commenter requested clarifi­
cation regarding the allocation of a section
48 credit if taxpayers own different frac­
tional ownership interests in the unit of
energy property and related integral prop­
erty. A commenter requested that the final
regulations apply similar allocation rules
provided in proposed §1.48­9(f)(3)(i) and
(ii) to shared integral property in the con­
text of a qualified investment credit facil­
ity under section 48(a)(5).
Other commenters, while opposed to
the ownership rules, suggested alternative
ways to determine basis if there are multiple
owners. Two commenters suggested that
energy property that is integral to multiple
energy projects (for example, as part of a
“shared collector system” configuration)
should be eligible for the section 48 credit
based on the energy property’s capacity
allocable to each taxpayer’s energy project.
Another commenter supported the creation
of a rule that can be used to determine if
the primary use of a transmission line is
for renewable energy generation and, if so,
to allow it to qualify as a split ownership
component of the qualifying renewable
energy development (whether wind, solar,
or geothermal). This commenter pointed to
the use of the Open Access Transmission
Tariff as a model for such test. This com­
menter also noted that the initial dedicated
renewable connection capacity is likely to
be oversized and so the Treasury Depart­
ment and the IRS should be able to develop
partial section 48 credit qualification over
time if deemed necessary.
Proposed §1.48­14(e)(1) would provide
that a taxpayer determines its basis based
on the taxpayer’s fractional ownership
in the energy property. Proposed §1.48­
14(e)(4)(iii), Example 3, would provide
an example in which integral property has
two owners that each own one­half of the
integral property with each owner includ­
ing one­half of the basis of that property to
determine their basis for section 48 credit
purposes. The example does not look to
whether the use of the integral property
for qualifying uses corresponded to the
one­half split in ownership.
Proposed §1.48­9(f)(3) would provide
that multiple energy properties (whether
owned by one or more taxpayers) may
include shared property that may be con­
sidered an integral part of each energy
property so long as the cost basis for the
shared property is properly allocated to
each energy property. In that scenario, the
total cost basis of such shared property
divided among the energy properties may
not exceed 100 percent of the cost of such
shared property, but there is no require­
ment that the proportion of a taxpayer’s
ownership of the integral property must
correspond with the proportion of the tax­
payer’s fractional ownership of the energy
property.
Because the fractional ownership rules
applicable to multiple owners of integral
property must comport with the general
ownership rules, the Treasury Department
and the IRS decline to adopt commenters’
alternative suggestions on calculating the
credit for integral property. Section 48
requires that the taxpayer own property
that satisfies the statutory definition of an
energy property, and therefore the deter­
mination cannot be tied to an alternative
measure such as capacity. In response to
the comment on transmission lines, pro­
posed §1.48­9(f)(3)(ii), which is adopted
in these final regulations, makes clear
that energy property does not include
any electrical transmission equipment,
such as transmission lines and towers,
or any equipment beyond the electrical
transmission stage. Finally, in response
to comments requesting clarifications
with respect to the application of section
30C or 45W, such clarifications are more
appropriately addressed in guidance under
those provisions.
Commenters also submitted questions
concerning the specific costs that are capi­
talized and included in basis (for example,
consultant labor and expenses associated
with project/construction management,
planning, design, engineering, and envi­
ronmental services, contractor costs, legal
services, and permitting services). Issues
concerning what costs may be capitalized
and included in the basis of an energy
property are similarly beyond the scope of
these final regulations.
F. Election to treat qualified facilities as
energy property
Section 48(a)(5) generally provides an
election to treat a “qualified investment
credit facility” as energy property for
purposes of the section 48 credit. Section
48(a)(5)(B) provides that no section 45
credit is allowed for any taxable year with
respect to any qualified investment credit

Bulletin No. 2024–52 1399 December 23, 2024
facility. Section 48(a)(5)(C) provides, in
part, that the term “qualified investment
credit facility” means any qualified facil­
ity (within the meaning of section 45(d)
(1) through (4), (6), (7), (9), or (11)) with
respect to which no section 45 credit has
been allowed and for which the taxpayer
makes an irrevocable election under sec­
tion 48(a)(5). Accordingly, proposed
§1.48­9(d) would exclude from energy
property any property that is part of a
qualified facility with respect to which a
section 45 credit is allowed for any tax­
able year, including any prior taxable year.
Proposed §1.48­14(f) would provide
rules applicable to the election under sec­
tion 48(a)(5)(C) to treat certain facilities
as energy property eligible for a section
48 credit in lieu of a renewable electricity
production credit under section 45. Pro­
posed §1.48­14(f)(1) would provide that
if a taxpayer makes an election under sec­
tion 48(a)(5)(C) to treat qualified property
that is part of a qualified investment credit
facility as energy property with respect to
which a section 48 credit may be deter­
mined, such property will be treated as
energy property for purposes of section
48. Proposed §1.48­14(f)(1) would also
provide that no section 45 credit may be
determined with respect to any such qual­
ified investment credit facility and that
the requirements of section 45 are not
imposed on a qualified investment credit
facility. Additionally, proposed §1.48­
14(f)(1) would provide that no credit
under section 45Q or 45V may be deter­
mined with respect to either any carbon
capture equipment included in a qualified
investment credit facility or any specified
clean hydrogen production facility.
Proposed §1.48­14(f)(2) would define
the term “qualified property” for purposes
of proposed §1.48­14(f). Proposed §1.48­
14(f)(3) would provide definitions related
to requirements for qualified property.
Proposed §1.48­14(f)(4) would define the
term “qualified investment credit facil­
ity.” Proposed §1.48­14(f)(5) would pro­
vide that intangible property is excluded
from the definition of qualified property
for purposes of the election under section
48(a)(5).
Several commenters asked whether a
taxpayer may claim a section 48 credit for
energy storage technology co­located with
a qualified facility for which a taxpayer
claims the section 45 credit if the energy
storage technology is an integral part of
the qualified facility. As described in the
preamble to the Proposed Regulations, the
Treasury Department and the IRS under­
stand that energy storage technologies
eligible for the section 48 credit are often
co­located with qualified facilities eligible
for the section 45 credit and may share
power conditioning and transfer equip­
ment.
In consideration of this practice, pro­
posed §1.48­9(f)(3)(ii) would provide that
power conditioning and transfer equip­
ment that is shared by a qualified facility
(as defined in section 45(d)) and an energy
property may be treated as an integral part
of the section 48 energy property. Pro­
posed §1.48­9(d) would also clarify that
such shared property is not considered part
of a qualified facility and, therefore, the
sharing of such property will not impact
the ability of a taxpayer to claim the sec­
tion 48 credit for an energy property or the
section 45 credit for a qualified facility.
In the preamble to the Proposed Reg­
ulations, the Treasury Department and
the IRS requested comments regarding
whether additional guidance is needed
on this issue. After considering the com­
ments received, the Treasury Department
and the IRS confirm that even though
shared power conditioning and transfer
equipment is integral to a qualified facility
for which the section 45 credit is claimed,
co­located energy storage technology
remains a separate energy property under
section 48. Therefore, a section 48 credit
may be claimed for energy storage tech­
nology that is co­located with a qualified
facility and shares power conditioning
and transfer equipment with the qualified
facility for which a section 45 credit is
claimed.
In the context of the section 48(a)(5)
election, commenters requested that the
final regulations confirm that components
of property within a qualified hydropower
facility (for which a section 48(a)(5) elec­
tion is made) are eligible for the section 48
credit. A commenter asked that regulations
provide guidance regarding the scope of a
“qualified investment credit facility” and
“qualified property,” including examples
specific to a qualified hydropower facility.
Another commenter requested that the
final regulations confirm that the section
48 credit for energy storage technology
is available regardless of whether the
energy storage technology is part of a
qualified hydropower facility for which a
section 45 credit is allowed. This com­
menter requested that final regulations
confirm that any new investment in
property with respect to pumped stor­
age hydropower qualifies for the section
48 credit (as an energy storage technol­
ogy) regardless of whether the property
is shared with a qualified hydropower
facility that claims or has claimed the
section 45 credit. A section 48 credit may
be claimed for energy storage technology
that is co­located with a qualified facility
and shares power conditioning and trans­
fer equipment with the qualified facility
for which a section 45 credit is claimed.
These final regulations provide rules of
general applicability that taxpayers can
use to determine whether they are eli­
gible for a section 48 credit. The Trea­
sury Department and the IRS are not in a
position to determine credit eligibility in
specific fact scenarios in these final regu­
lations. Thus, the final regulations do not
provide the requested clarifications.
Commenters also requested clarifica­
tion concerning property that is included
in offshore wind facilities. A commenter
requested clarification that qualified prop­
erty in a marshaling or operation and
maintenance port that is an integral part
of an offshore wind energy facility should
qualify as energy property for the purposes
of the section 48 credit. The Proposed
Regulations would provide a rule for loca­
tion of energy property that addresses this
comment. Under proposed §1.48­9(f)(4),
any property that meets the requirements
of proposed §1.48­9(f)(2) (unit of energy
property rules) and proposed §1.48­9(f)(3)
(integral part rules) is a part of an energy
property regardless of where such prop­
erty is located. The final regulations adopt
this rule as proposed. However, these final
regulations have revised proposed §1.48­
14(f) to address only the election to treat
qualified facilities as energy property, and
several of the provisions in §1.48­14(f)
have been rearranged under that subsec­
tion in the final regulations. Additionally,
the coordination rule for the sections 42
and 48 credits has been moved from pro­
posed §1.48­14(f)(5) to §1.48­14(g) in the
final regulations.

December 23, 2024 1400 Bulletin No. 2024–52
Additionally, the final regulations
remove the references to “software” from
proposed §1.48­14(f)(3)(iii)(B) because
section 48(a)(5) limits “qualified prop­
erty” to tangible property. Software gen­
erally is not tangible property.
G. Lower-output energy properties and
qualified interconnection costs
1. Qualified Interconnection Property
Section 48(a)(8)(A) provides gener­
ally that for purposes of determining the
credit under section 48(a), energy prop­
erty includes amounts paid or incurred by
the taxpayer for qualified interconnection
property in connection with the installa­
tion of energy property that has a maxi­
mum net output of not greater than five
MW (as measured in alternating current),
to provide for the transmission or distribu­
tion of the electricity produced or stored
by such property, and that are properly
chargeable to the capital account of the
taxpayer (qualified interconnection costs).
Section 48(a)(8)(B) provides that the
term “qualified interconnection prop­
erty” means, with respect to an energy
project that is not a microgrid control­
ler, any tangible property (1) that is part
of an addition, modification, or upgrade
to a transmission or distribution system
that is required at or beyond the point at
which the energy project interconnects to
such transmission or distribution system
in order to accommodate such intercon­
nection, (2) that is either (i) constructed,
reconstructed, or erected by the taxpayer,
or (ii) for which the cost with respect to
the construction, reconstruction, or erec­
tion of such property is paid or incurred
by such taxpayer, and (3) the original use
of which, pursuant to an interconnection
agreement, commences with a utility.
Section 48(a)(8)(C) and (D) provide
additional definitions for purpose of this
rule. Section 48(a)(8)(C) provides that the
term “interconnection agreement” means
an agreement with a utility for the pur­
poses of interconnecting the energy prop­
erty owned by such taxpayer to the trans­
mission or distribution system of such
utility. Section 48(a)(8)(D) provides that
for purposes of section 48(a)(8), the term
“utility” means the owner or operator of
an electrical transmission or distribution
system that is subject to the regulatory
authority of a State or political subdivi­
sion thereof, any agency or instrumental­
ity of the United States, a public service or
public utility commission or other similar
body of any State or political subdivision
thereof, or the governing or ratemaking
body of an electric cooperative. Section
48(a)(8)(E) provides that in the case of
costs paid or incurred for interconnection
property, amounts otherwise chargeable to
capital account with respect to such costs
must be reduced under rules similar to the
rules of section 50(c).
Proposed §1.48­14(g)(1) would gen­
erally provide that for purposes of deter­
mining the section 48 credit, energy prop­
erty includes amounts paid or incurred
by the taxpayer for qualified intercon­
nection property, in connection with the
installation of energy property that has a
maximum net output of not greater than
five MW (as measured in alternating cur­
rent). The qualified interconnection prop­
erty must provide for the transmission or
distribution of the electricity produced
or stored by such energy property and
must be properly chargeable to the capi­
tal account of the taxpayer as reduced by
§1.48­14(g)(6).
Proposed §1.48­14(g)(2) would define
the term “qualified interconnection prop­
erty” to mean, with respect to an energy
project that is not a microgrid controller,
any tangible property that is part of an
addition, modification, or upgrade to a
transmission or distribution system that is
required at or beyond the point at which
the energy project interconnects to such
transmission or distribution system in
order to accommodate such interconnec­
tion; is either constructed, reconstructed,
or erected by the taxpayer, or for which
the cost with respect to the construction,
reconstruction, or erection of such prop­
erty is paid or incurred by such taxpayer;
and the original use of which, pursuant
to an interconnection agreement, com­
mences with a utility.
Proposed §1.48­14(g)(2) also would
provide that qualified interconnection
property is not part of an energy property
and that as a result, qualified interconnec­
tion property is not taken into account in
determining whether an energy property
satisfies the requirements for the domestic
content bonus credit amount referenced in
section 48(a)(12) and the increase in credit
rate for energy communities provided in
section 48(a)(14).
Some commenters requested that the
final regulations confirm that equipment
required to modify and upgrade transmis­
sion or distribution systems beyond the
point of interconnection would be con­
sidered qualified interconnection prop­
erty and eligible for inclusion in basis. As
already noted, proposed §1.48­14(g)(2)
would define the term “qualified intercon­
nection property” to mean, with respect
to an energy project that is not a micro­
grid controller, any tangible property that
is part of an addition, modification, or
upgrade to a transmission or distribution
system that is required at or beyond the
point at which the energy project inter­
connects to such transmission or distri­
bution system in order to accommodate
such interconnection. These final regula­
tions adopt this definition in renumbered
§1.48­14(h)(2). Therefore, the Treasury
Department and the IRS confirm that
tangible property required to modify and
upgrade transmission or distribution sys­
tems beyond the point of interconnection
would (provided the property satisfies the
other requirements of section 48(a)(8)(B))
be considered qualified interconnection
property and eligible for inclusion in basis
for purposes of the section 48 credit.
Some commenters requested that cer­
tain components or technologies be spe­
cifically listed as qualified interconnec­
tion property. For example, a commenter
asked for clarification that existing tech­
nologies that can be used to upgrade grid
infrastructure to allow for interconnection
of energy projects would be considered
qualified interconnection property. Two
commenters recommended including
equipment between “a customer’s distri­
bution system and the utility’s distribution
point of common coupling (POC).” These
commenters listed relays, switchgears
(including low­voltage assemblies, medi­
um­voltage assemblies, and circuit break­
ers), transformers, and voltage regulators.
The Proposed Regulations would
adopt the statutory requirements for qual­
ified interconnection property provided in
section 48(a)(8)(B). The final regulations
adopt these rules as proposed. Because a
definitive response to comments request­
ing greater specificity regarding equip­

Bulletin No. 2024–52 1401 December 23, 2024
ment that is considered qualified inter­
connection property would require the
Treasury Department and the IRS to con­
duct a complete factual analysis of the
property in question, the requested clari­
fications are not addressed in these final
regulations.
One commenter requested that the final
regulations include a detailed definition of
“point of interconnection” to distinguish
between energy property and qualified
interconnection property for purposes of
calculating the basis of the energy prop­
erty eligible for a section 48 credit. After
consultation with the DOE, the Treasury
Department and the IRS understand that
the “point of interconnection” is a term
of art well understood by the industry
and taxpayers seeking an interconnec­
tion agreement. At the transmission level,
interconnection procedures are, in most of
the United States, governed by the Federal
Energy Regulatory Commission (FERC).
Providing a further definition of “point
of interconnection” outside of the FERC
context risks creating confusion for gen­
erators and taxpayers. Therefore, no addi­
tional clarifications to define the “point of
interconnection” are included in the final
regulations.
a. Interaction with PWA requirements
Section 48(a)(9)(A)(i) (general rules
for the increased credit amount for energy
projects) provides that in the case of any
energy project that satisfies the require­
ments of section 48(a)(9)(B), the amount
of the credit determined under section
48(a) (determined after the application of
section 48(a)(1) through (8) and (15), and
without regard to this clause) is equal to
such amount multiplied by 5.
The Proposed Regulations did not
address the interaction between the rules
for qualified interconnection costs and
the PWA requirements. A commenter
requested that the final regulations con­
firm that the PWA requirements do not
apply to the construction, alteration, or
repair of interconnection property.
Section 48(a)(9) provides that the
increased credit amount (for satisfying
the PWA requirements) is determined
after the application of section 48(a)(8)
(rules for interconnection property) and
therefore, amounts paid or incurred by
the taxpayer for qualified interconnection
property in connection with the instal­
lation of energy property are eligible for
the increased credit amount. However, the
PWA requirements apply only to “energy
projects,” which is defined in a way that
excludes interconnection property. See
section 48(a)(9)(A)(ii) (defining “energy
project” as “a project consisting of one
or more energy properties that are part
of a single project”); section 48(a)(8)(B)
(i) (defining “interconnection property”
as required “at or beyond the point at
which the energy project interconnects
to” a transmission or distribution system,
implying that interconnection property is
distinct from the energy project). Thus,
interconnection property is not subject to
the PWA requirements.
In addition to not being part of an
energy project, interconnection property
generally is not within the control of the
taxpayer that owns the energy project
because it need not be owned by the same
taxpayer. Instead, qualified interconnec­
tion property may be owned by a utility
and is part of an addition, modification,
or upgrade to a transmission or distribu­
tion system that is required at or beyond
the point at which the energy project
interconnects to such transmission or
distribution system. It would be difficult
or impossible in such a case for the tax­
payer to control or monitor whether the
construction of the interconnection prop­
erty complies with PWA requirements.
This may explain why the statute permits
the increased credit amount for amounts
paid or incurred for qualified intercon­
nection property, without subjecting the
construction of such property to the PWA
requirements.
2. Interaction with Other Bonus Credit
Amounts
Section 48(a)(12)(A) provides gener­
ally that in the case of any energy proj­
ect that satisfies the domestic content
requirements, for purposes of computing
the section 48 credit with respect to such
property, the energy percentage is to be
increased by the applicable credit rate
increase, which is 2 percentage points in
the case of an energy project that does not
satisfy the requirements of section 48(a)
(9)(B), and 10 percentage points in the
case of any energy project that satisfies
those requirements.
Section 48(a)(14)(A) provides that
in the case of any energy project that is
placed in service within an energy com­
munity (as defined in section 45(b)(11)
(B), as applied by substituting “energy
project” for “qualified facility” each place
it appears), for purposes of computing the
section 48 credit with respect to energy
property that is part of such project, the
energy percentage is to be increased by
the applicable credit rate increase that
is 2 percentage points in the case of any
energy project that does not satisfy the
requirements of section 48(a)(9)(B), and
10 percentage points in the case of any
energy project that satisfies those require­
ments.
A commenter requested clarification
regarding the interaction between the
rules for qualified interconnection costs
and the computation of the domestic con­
tent bonus credit amount and the increased
credit amount for energy projects located
in an energy community. This commenter
stated that if a community solar project
seeks interconnection to the distribution
grid, usually there will be upgrades or
other investments necessary to support
the connection to the distribution system.
The commenter explained that the gener­
ator generally has little control or ability
to determine the components or design
of a distribution utility’s interconnection
requirements, and as a result, it is entirely
appropriate to exclude these investments
for the eligibility determination for the
domestic content bonus credit amount and
the increased credit amount for energy
projects located in an energy community.
According to the commenter, however,
because these qualified interconnection
costs are paid by the developer, they
would still be part of the basis not only
for the section 48 credit, but also for the
domestic content bonus credit amount and
the increased credit amount for energy
projects located in an energy community.
This commenter requested that the Trea­
sury Department and the IRS confirm that
this is the correct interpretation of the rule.
As highlighted by commenter and as
provided in proposed §1.48­14(g)(2),
qualified interconnection property is not
part of an energy property and as a result,
qualified interconnection property is not

December 23, 2024 1402 Bulletin No. 2024–52
taken into account in determining whether
an energy property satisfies the require­
ments for the domestic content bonus
credit amount and the increased credit
amount for energy projects located in an
energy community. However, the com­
menter requested clarification regarding
whether qualified interconnection costs
are eligible for these provisions.
Section 48(a)(8)(A) provides that for
purposes of determining the credit under
section 48(a), energy property includes
amounts paid or incurred by the taxpayer
for qualified interconnection property in
connection with the installation of certain
energy property (subject to certain addi­
tional requirements). Because the credit
under section 48(a) is calculated by mul­
tiplying the energy percentage – which
includes any domestic content bonus credit
amount and any increased credit amount
for energy projects located in an energy
community – by the basis of the energy
project – which includes amounts paid
or incurred by the taxpayer for qualified
interconnection property, qualified inter­
connection costs are taken into account
in calculating the domestic content bonus
credit amount and the increased credit
amount for energy projects located in an
energy community to the extent included
in the basis of the energy property.
3. Basis Reduction
Section 48(a)(8)(E) provides that in the
case of costs paid or incurred for inter­
connection property, amounts otherwise
chargeable to capital account with respect
to such costs are to be reduced under rules
similar to the rules of section 50(c). Sim­
ilarly, proposed §1.48­14(g)(6) would
provide that in the case of costs paid or
incurred for qualified interconnection
property as defined in proposed §1.48­
14(g)(2), amounts otherwise chargeable
to capital account with respect to such
costs must be reduced under rules simi­
lar to the rules of section 50(c). Neither
the statute nor the Proposed Regulations
specify whether the provisions of section
50(c)(1) or (3) apply. Section 48(a)(8)(A)
provides that energy property includes
amounts paid or incurred by the taxpayer
for qualified interconnection property in
connection with the installation of energy
property. Therefore, the special rule in
section 50(c)(3)(A), which provides for a
basis reduction of 50 percent in the case
of any energy credit, applies to qualified
interconnection property the costs of
which are included for purposes of the
section 48 credit.
Proposed §1.48­14(g)(6) would also
provide that the taxpayer must pay or incur
qualified interconnection property costs;
therefore, any reimbursement, including
by a utility, must be accounted for by
reducing taxpayers’ expenditure to deter­
mine eligible costs. As acknowledged in
the preamble to the Proposed Regula­
tions, and as raised by some commenters,
uncertainty exists regarding the inclusion
of qualified interconnection costs in situa­
tions in which the taxpayer that owns the
energy property does not fully bear the
qualified interconnection costs (for exam­
ple, cases in which the taxpayer is reim­
bursed). In the preamble to the Proposed
Regulations, the Treasury Department and
the IRS requested comments on whether
a payment, credit, or service received by
the owner of the energy property (first
taxpayer), as the result of subsequent pay­
ments made to a utility by other parties,
should be treated as a reimbursement to
the first taxpayer and impact the amount
of the qualified interconnection costs that
the first taxpayer may include in its basis
for purposes of the section 48 credit.
The Treasury Department and the IRS
also requested comments on whether the
costs paid by a second taxpayer should
be treated as amounts paid or incurred
for qualified interconnection property in
connection with the installation of the
second taxpayer’s energy property. Fur­
ther, the Treasury Department and the IRS
requested comments on industry practices
relevant to the determination of costs paid
or incurred for qualified interconnection
property, including the accounting treat­
ment of costs paid or incurred for qualified
interconnection property. Lastly, the Trea­
sury Department and the IRS requested
comments on whether any clarifications
are needed regarding the tax treatment
of amounts paid or incurred for qualified
interconnection property, including reim­
bursement of costs paid or incurred by
a taxpayer for qualified interconnection
property.
In response to these requests, com­
menters confirmed that future unforesee­
able reimbursements of qualified inter­
connection costs may occur. Commenters
also requested further guidance on these
issues and provided recommendations for
addressing these situations.
A commenter recommended that the
section 48 credit avoid accounting for any
reimbursements paid to the taxpayer for
qualified interconnection costs in a later
taxable year. This commenter also sug­
gested that the Treasury Department and
the IRS incorporate a mechanism, simi­
lar to a recapture mechanism, in the final
regulations to avoid a taxpayer receiving
a greater amount in reimbursements than
it paid for the qualified interconnection
costs net of the section 48 credit. This
commenter raised concerns with situa­
tions in which the owner of an energy
property receives reimbursement or reve­
nue for qualified interconnection property,
despite the energy project being situated in
a region of the country with a “participant
funding” mechanism (for example, gen­
erators must fully fund network upgrades
without reimbursement). Additionally,
this commenter cited the possibility that a
utility may reimburse the taxpayer for all
or a portion of the qualified interconnec­
tion costs, usually over a 20­year period.
Additionally, this commenter noted that
there are circumstances in which a future
interconnection customer pays for the use
of interconnection property by reimburs­
ing the taxpayer, who is the initial inter­
connecting customer. This commenter
noted that the first taxpayer would have
no ability to foresee future payments
from the second taxpayer at the time the
first taxpayer interconnects to the utility’s
transmission system.
Another commenter recommended
that the final regulations disregard utility
reimbursements, to the extent includible
in taxpayers’ gross income, to determine
taxpayers’ eligible qualified interconnec­
tion costs. This commenter also stated
that the final regulations should clarify
that unforeseeable payments for the use of
interconnection property that a taxpayer
has funded with no expectation of future
compensation should not be treated as a
reimbursement or as amounts paid toward
qualified interconnection costs but should
instead be treated as revenue.
The Treasury Department and the IRS
recognize that situations may arise in

Bulletin No. 2024–52 1403 December 23, 2024
which the cost of qualified interconnec­
tion property is reduced after the taxable
year in which the taxpayer claims the
section 48 credit. The Treasury Depart­
ment and the IRS also recognize that
other complicated situations may arise
in determining whether a taxpayer has
paid or incurred qualified interconnection
costs. The comments received confirmed
that these questions are not unique to
the reimbursement of qualified intercon­
nection costs and may also arise in the
context of other tax credits. Therefore,
the determination of whether qualified
interconnection costs have been paid or
incurred by the taxpayer and whether cost
is reduced by virtue of transactions with
the utility or with a third party should be
based on generally applicable Federal tax
principles.
In consideration of the comments, the
final regulations revise the rule regarding
reduction to amounts chargeable to capital
account to reflect the application of Fed­
eral tax principles to such transactions in
determining the amount a taxpayer paid
or incurred for qualified interconnection
costs. The final regulations, which are
now at §1.48­14(h)(1) (previously pro­
posed §1.48­14(g)(6)), explain that if the
costs borne by the taxpayer are reduced
by utility or non­utility payments, Federal
tax principles may require the taxpayer
to reduce the amount treated as paid or
incurred for qualified interconnection
property to determine a section 48 credit.
The final regulations also include two
examples.
4. Leases
A commenter requested clarification
regarding the treatment of qualified inter­
connection costs if an energy property is
subject to a lease. This commenter ques­
tioned the availability of the section 48
credit for qualified interconnection costs
incurred by small projects in a sale­lease­
back or any transaction in which the tax­
payer that initially incurred the qualified
interconnection costs is different than the
taxpayer that claims the section 48 credit.
The commenter noted that the Proposed
Regulations do not address this question
and made the issue worse in cases in
which the “three­month sale­leaseback”
rule or the “lease­passthrough” rule is
combined with the section 48 credit rules
regarding qualified interconnection costs.
The commenter also requested that the
final regulations address how the rule that
the “energy property shall include amounts
paid or incurred by the taxpayer for qual­
ified interconnection property” operates
if one taxpayer pays the interconnection
costs, then sells the project to another tax­
payer, and the second taxpayer claims the
section 48 credit. The commenter stated
that the language in the Proposed Regula­
tions seems to effectively deny companies
using the three­month sale­leaseback and
the lease­passthrough rules from claiming
a section 48 credit for qualified intercon­
nection costs. The commenter suggested
that the final regulations should add lan­
guage that expands the original use rule to
take into account the principles of section
50(d)(4), with original use determined on
the date of the sale­leaseback or lease.
The commenter also recommended that
the definition of “interconnection agree­
ment” in the final regulations be revised to
include an acknowledgement that energy
property can be leased if there is an elec­
tion under section 50(d)(5). Finally, the
commenter proposed designating and
identifying specifically a portion of the
purchase price for the sale of an energy
project as a reimbursement for qualified
interconnection costs.
The Treasury Department and the
IRS acknowledge that developers and
operators of energy properties may uti­
lize the existing sale­leaseback or lease­
passthrough structures in cases in which
they are seeking the section 48 credit.
Nothing in these final regulations prohib­
its the application of general principles,
including those in section 50(d). The spe­
cific applications of the sale­leaseback
or lease­passthrough rules, however, are
beyond the scope of these regulations.
The Treasury Department and the IRS
recognize that the section 48 credit attrib­
utable to interconnection costs for quali­
fied interconnection property is allowed
to a purchaser of energy property that
bears those costs in connection with the
purchase (for example, by adjusting the
purchase price or making a separate pay­
ment to account for them). Thus, in the
case of a purchase of energy property (or a
deemed purchase of energy property in the
case of a lease­passthrough transaction),
any amount paid or incurred by the buyer
attributable to the value of interconnection
costs associated with that energy property
is an amount paid or incurred with respect
to the construction, reconstruction, or
erection of that qualified interconnection
property.
Further, in the case of a sale­leaseback
transaction subject to the “three­month
rule” provided in section 50(d)(4), the
original use of the energy property is
deemed to commence with the buyer­les­
sor not earlier than the date on which the
property is used under the sale­leaseback
transaction, and in the case of a pass­
through lease transaction, with the lessee
as if the lessee actually purchased the
property in accordance with §1.48­4.
Accordingly, these final regulations
revise §1.48­14(h)(2) (previously pro­
posed §1.48­14(g)(2)) to provide “[f]or
purposes of determining the original use
of interconnection property in the context
of a sale­leaseback or lease transaction,
the principles of section 50(d)(4) must
be taken into account, as applicable, with
such original use determined on the date
of the sale­leaseback or lease.” Likewise,
these final regulations revise §1.48­14(h)
(4) (previously proposed §1.48­14(g)(4))
to provide “[i]n the case of the election
provided under section 50(d)(5) (relat­
ing to certain leased property), the term
includes an agreement regarding energy
property leased by such taxpayer.”
5. Five­Megawatt Limitation
Proposed §1.48­14(g)(3)(i) would pro­
vide that the Five­Megawatt Limitation is
measured at the level of the energy prop­
erty in accordance with section 48(a)(8)
(A). Further, proposed §1.48­14(g)(3)
(i) would provide that the maximum net
output of an energy property is measured
by the nameplate generating capacity of
the unit of energy property at the time the
energy property is placed in service.
Proposed §1.48­14(g)(3)(ii) would
describe nameplate capacity for purposes
of the Five­Megawatt Limitation. The
Proposed Regulations would provide that
the determination of whether an energy
property has a maximum net output of
not greater than five MW (as measured in
alternating current) is based on the name­
plate capacity for purposes of proposed

December 23, 2024 1404 Bulletin No. 2024–52
§1.48­14(g)(1). If applicable, taxpayers
should use the ISO conditions to measure
the maximum electrical generating output
or usable energy capacity of an energy
property. Proposed §1.48­14(g)(3)(ii)(A)
and (B) would provide rules for apply­
ing the Five­Megawatt Limitation (as
provided in proposed §1.48­14(g)(1)) to
electrical generating energy property and
electrical energy storage property, respec­
tively.
Proposed §1.48­14(g)(3)(ii)(A) would
provide that in the case of an electri­
cal generating energy property, the
Five­Megawatt Limitation is based on
the maximum electrical generating output
in MW that the unit of energy property
is capable of producing on a steady state
basis and during continuous operation
under standard conditions, as measured by
the manufacturer and consistent with the
definition of nameplate capacity provided
in 40 CFR 96.202.
Proposed §1.48­14(g)(3)(ii)(B) would
provide that in the case of electrical
energy storage property, the Five­Mega­
watt Limitation is determined by the stor­
age device’s maximum net output, which
is its nameplate capacity.
Generally, commenters agreed that the
Five­Megawatt Limitation measurement
should be done at the level of underlying
energy property, not the energy project.
The final regulations (now found in §1.48­
14(h)(3)) retain the proposed rule that the
Five­Megawatt Limitation is measured at
the level of the energy property in accor­
dance with section 48(a)(8)(A).
Other commenters expressed concerns
with applying the Five­Megawatt Limita­
tion based on nameplate capacity and by
the reference to alternating current output.
A commenter stated that the interchange­
able use of two distinct electrical concepts,
maximum net output in alternating current
and nameplate generating capacity, in the
Proposed Regulations could lead to mis­
interpretation and unintentionally exclude
otherwise qualifying interconnection
property. A commenter stated that pro­
posed §1.48­14(g)(3) must be modified to
clarify that interconnection property eligi­
ble for the credit is measured at the point
of output, that is, five MW (measured in
alternating current) at the inverter, and not
determined by the nameplate generation
capacity. This commenter stated that sec­
tion 48(a)(8) does not contain the words
“nameplate” or “capacity” and instead, it
refers to “output ... measured in alternat­
ing current,” which, for solar systems, can
only be measured after the inverter. This
commenter also stated that the definition
of “qualified interconnection property” at
proposed §1.48­14(g)(3)(ii)(A), as applied
to property that generates electricity in
direct current, such as solar panels, would
result in a nullity, with only energy prop­
erty that generates electricity in alternat­
ing current able to qualify for the credit.
Similarly, a commenter stated that
for purposes of claiming the section 48
credit for qualified interconnection prop­
erty, the final regulations should refer
only to energy property output in alter­
nating current, without presuming that
nameplate capacity perfectly corresponds
to alternating current output. This com­
menter asserted that the final regulations
should clarify that energy property is
defined at the inverter level (that is, the
source of alternating current output) for
the purposes of determining eligibility of
upstream network upgrades as qualified
interconnection property.
The Treasury Department and the IRS
understand commenters’ concerns and
agree that the rule provided in the Pro­
posed Regulations should be revised.
Section 48(a)(8) refers to a maximum net
output of not greater than five MW (as
measured in alternating current). The Pro­
posed Regulations provide for nameplate
capacity in alternating current, without
addressing types of energy property, such
as solar energy property, that generate
electricity in direct current. Nameplate
capacity for these types of energy prop­
erty is measured before the property’s
output is converted to alternating current
by an inverter. Because an inverter would
be considered property that is an integral
part of the energy property and not part of
the unit of property itself, measuring the
nameplate capacity of an energy property
that generates electricity in direct current
would be difficult under the Proposed
Regulations.
In consultation with the DOE, the Trea­
sury Department and the IRS conclude
that nameplate generating capacity is the
best and most practical measure of the
maximum net output of an energy prop­
erty. Therefore, the Treasury Department
and the IRS do not adopt comments sug­
gesting changes to the use of nameplate
capacity. The final regulations at §1.48­
14(h)(3)(ii) (previously proposed §1.48­
14(g)(3)(ii)) retain the rule that the deter­
mination of whether an energy property
has a maximum net output of not greater
than five MW (as measured in alternating
current) is based on the nameplate capac­
ity of the energy property.
However, in response to comments, the
Treasury Department and the IRS coordi­
nated with the DOE to provide a method
of measuring nameplate capacity for an
energy property that generates electricity
in direct current. The final regulations at
§1.48­14(h)(3)(iii) (previously proposed
§1.48­14(g)(3)(iii)) provide that, for
energy properties that generate electric­
ity in direct current, the taxpayer may
choose to determine whether an energy
property has a maximum net output of
not greater than five MW (in alternating
current) by using the lesser of: (i) the sum
of the nameplate generating capacities
within the unit of energy property in direct
current, which is deemed the nameplate
generating capacity of the unit of energy
property in alternating current; or (ii) the
nameplate capacity of the first component
of property that inverts the direct current
electricity generated into alternating cur­
rent. This rule provides flexibility for tax­
payers while ensuring that the maximum
net output (in alternating current) of an
energy property can be determined in an
administrable and reasonably accurate
manner for energy properties that generate
electricity in direct current.
A commenter recommended that the
Treasury Department and the IRS clarify
the size limitation for eligible properties
with a nameplate capacity exceeding
five MW. This commenter asserted that
further clarification is needed to ensure
that there is no gaming by projects that
attempt to get around the Five­Megawatt
Limitation, and to safeguard against the
possibility of multiple energy proper­
ties being improperly treated as a single
energy property. The commenter noted
that this has been done effectively in many
States by limiting the amount of capacity
that can be installed on a parcel of land
and precluding subdivisions that are per­
formed for the purpose of circumventing
a rule. The commenter also referenced

Bulletin No. 2024–52 1405 December 23, 2024
guidelines developed by the Massachu­
setts Department of Energy Resources,
which outline particular scenarios that
would qualify for an exception allow­
ing flexibility in the event that (i) there
are multiple energy properties that are
owned by separately regarded taxpayers;
(ii) the energy properties are placed in
service in a different tax year from other
portions of the project; or (iii) there is a
gap in time (for example, 6 to 12 months)
between different properties being placed
in service. As described in the preamble
to the Proposed Regulations, the addition
of amounts paid or incurred by the tax­
payer for qualified interconnection prop­
erty in section 48(a)(8)(A) is tied to the
installation of “energy property.’’ Since
the statute clearly ties the Five­Megawatt
Limitation to the energy property, as long
as an energy property is five MW or less,
the statute is satisfied.
A few commenters requested greater
clarity or examples regarding the appli­
cation of the Five­Megawatt Limitation.
For example, a commenter requested that
the final regulations confirm that multiple
energy properties each with a nameplate
capacity of less than five MW could uti­
lize common interconnection agreements
(versus separate agreements). Other com­
menters requested clarification for cases
in which multiple properties share inter­
connection property. Another commenter
requested clarification or an example of
multiple energy properties sharing inter­
connection property and the application
of the Five­Megawatt Limitation with
respect to various technologies and specif­
ically solar energy property.
In response to commenters that
requested additional clarification of the
Five­Megawatt Limitation, the final regu­
lations add an additional example as well
as provide clarifications to the existing
examples. These clarifications illustrate
the revised method of measuring name­
plate capacity for an energy property that
generates electricity in direct current. The
clarifications also demonstrate the appli­
cation of the Five­Megawatt Limitation in
cases in which the nameplate capacity dif­
fers from the maximum output provided
in the interconnection agreement. Specif­
ically, the newly added example describes
the application of the Five­Megawatt Lim­
itation to an interconnection agreement
for multiple energy properties owned by a
single taxpayer. In that example, although
the taxpayer has an interconnection agree­
ment with the utility that allows for a
maximum output of 10 MW (as measured
in alternating current), the taxpayer may
include the costs taxpayer paid or incurred
for qualified interconnection property,
subject to the terms of the interconnec­
tion agreement, to calculate the taxpayer’s
section 48 credits for each of the energy
properties because each has a maximum
net output of not greater than five MW
(alternating current).
A commenter proposed that the final
regulations treat interconnection prop­
erty as integral property by stating that in
circumstances in which multiple energy
properties (each with alternating cur­
rent output at or below five MW) utilize
higher­capacity interconnection property,
such interconnection property should be
deemed integral to multiple energy prop­
erties. Section 48(a)(8)(A) provides that
energy property includes amounts paid
for qualified interconnection property;
it does not provide that energy property
includes qualified interconnection prop­
erty. Because the statute makes clear that
interconnection property is distinct from
energy property, it also cannot be prop­
erty that is integral to an energy property.
The preamble to the Proposed Regulations
explains that qualified interconnection
property, which is most similar in function
to transmission and distribution property,
is neither property that is a functionally
interdependent component of an energy
property nor an integral part of an energy
property.
6. Non­Application to Certain Types of
Energy Properties
The preamble to the Proposed Regula­
tions clarified that the definition of quali­
fied interconnection property specifically
would exclude interconnection property
installed with respect to an energy project
that is a microgrid controller. Addition­
ally, taxpayers may not include the costs
of qualified interconnection property in
the basis of electrochromic glass prop­
erty and fiber optic solar energy property
because these types of energy property do
not require additions, modifications, or
upgrades to a transmission or distribution
system. Similarly, in the case of energy
properties that generate thermal energy,
such as certain geothermal property and
qualified biogas property, this provision
is inapplicable. Excluding certain proper­
ties from including interconnection costs
is required by the statute and the fact that
interconnection property is irrelevant to
these technologies. The rule, therefore, is
adopted as proposed.
However, the Treasury Department and
the IRS did receive a comment regarding
qualified interconnection property and
the application of the proposed rules to
microgrid controllers. Section 48(a)(8)
(B)(i) defines “qualified interconnection
property”, with respect to an energy proj­
ect that is not a microgrid controller. The
commenter noted that section 48(a)(8)(B)
(i) is not intended to disqualify an energy
project from including interconnection
property costs solely because such project
includes a microgrid controller. The Trea­
sury Department and the IRS agree with
this commenter’s view that if an energy
project includes both a microgrid control­
ler and another type of energy property,
then interconnection property costs for the
energy project may be included in calcu­
lating the section 48 credit for the other
energy property.
IV. Severability
If any provision in this rulemaking
is held to be invalid or unenforceable
facially, or as applied to any person or
circumstance, it shall be severable from
the remainder of this rulemaking, and
shall not affect the remainder thereof, or
the application of the provision to other
persons not similarly situated or to other
dissimilar circumstances.
Effect on Other Documents
Notice 2009­52, 2009­25 I.R.B. 1094,
will be obsoleted for tax years begin­
ning after the date of publication of the
final regulations in the Federal Register.
Notice 2009­52, in relevant part, provides
procedures for taxpayers to make an irre­
vocable election under section 48(a)(5)
to treat qualified property that is part of
a qualified investment credit facility as
energy property eligible for a section 48
credit in lieu of a section 45 credit.

December 23, 2024 1406 Bulletin No. 2024–52
Applicability Dates
The provisions of §§1.48­9 and 1.48­
14 apply with respect to property that is
placed in service during a taxable year
beginning after December 12, 2024. Sec­
tion 1.6418­5(f) applies to taxable years
ending on or after December 12, 2024.
Taxpayers may choose to apply §§1.48­
9, 1.48­14, and 1.6418­5(f) with respect
to property that is placed in service after
December 31, 2022, and during a taxable
year beginning on or before December 12,
2024, provided taxpayers follow §§1.48­9,
1.48­14, and 1.6418­5(f) in their entirety
and in a consistent manner.
Section 1.48­13 applies to energy proj­
ects placed in service in taxable years end­
ing after December 12, 2024, and the con­
struction of which begins after December
12, 2024. Taxpayers may choose to apply
§1.48­13 to energy projects placed in ser­
vice in taxable years ending on or before
December 12, 2024, and energy projects
placed in service in taxable years ending
after December 12, 2024, the construc­
tion of which begins before December
12, 2024, provided that taxpayers apply
§1.48­13 in its entirety and in a consistent
manner.
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Pursuant to the Memorandum of
Agreement, Review of Treasury Regula­
tions under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) (PRA) requires
that a Federal agency obtain the approval
of Office of Management and Budget
(OMB) before collecting information
from the public, whether such collection
of information is mandatory, voluntary,
or required to obtain or retain a benefit. A
Federal agency may not conduct or spon­
sor, and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.
The collections of information in
these final regulations contain reporting
and recordkeeping requirements that are
required to verify the eligibility of the
property for the credit. These collections
of information generally are used by the
IRS for tax compliance purposes and by
taxpayers to facilitate proper reporting
and compliance.
The reporting requirement mentioned
within these final regulations with respect
to section 48 are in §1.48­14(f)(5), which
provides the time and manner for a tax­
payer to make a section 48(a)(5)(C) elec­
tion to have qualified investment credit
facility property that was placed in ser­
vice after December 31, 2008, treated as
a qualified investment credit facility for
purposes of claiming the section 48 credit.
These requirements are considered gen­
eral tax records under §1.6001­1.
A taxpayer must make a section 48(a)
(5)(C) election on a completed Form 3468,
Investment Credit, (or successor forms, or
pursuant to instructions and other guid­
ance) with the taxpayer’s timely filed
return (including extensions) for the tax­
able year in which the energy property is
placed in service. The taxpayer must make
a separate section 48(a)(5)(C) election for
each qualified facility that is to be treated
as a qualified investment credit facility.
These collections are included on Form
3468, which is already approved in OMB
Control Numbers 1545­0155 for trust and
estate filers, 1545­0074 for individual
filers, and 1545­0123 for business filers.
These final regulations do not change the
collection requirements already approved
by OMB.
These final regulations also include
reporting requirements, in addition to the
general reporting requirements set forth
in §1.45­12, for taxpayers that claim an
increased credit amount under section
48(a)(9)(B)(iii). These final regulations
require taxpayers to verify compliance
with the Prevailing Wage Requirements
by providing information that includes
the aggregate information detailed in
§1.45­12 during the five­year recapture
period after an energy project is placed in
service. The Secretary may issue forms
and instructions in future guidance for
the purpose of meeting these reporting
requirements. As set forth in the preamble
to §1.45­12, these reporting requirements
are covered under OMB control numbers
1545­0074 for individuals/sole propri­
etors, 1545­0123 for business entities,
and 1545­2315 for trust and estate filers.
These final regulations are not changing
or creating new collection requirements
not already approved by OMB for §1.45­
12.
These final regulations also describe
recapture procedures as detailed in
§1.6418–5. The reporting of a section
48(a)(10)(C) recapture event will still be
required to be reported using Form 4255,
Recapture of Investment Credit. This form
is approved under OMB control numbers
1545–0074 for individuals, 1545–0123
for business entities, and 1545­0166 for
trust and estate filers. These final regula­
tions are not changing or creating new col­
lection requirements not already approved
by OMB.
III. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes certain
requirements with respect to Federal rules
that are subject to the notice and comment
requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C.
551 et seq.) and that are likely to have a
significant economic impact on a sub­
stantial number of small entities. Unless
an agency determines that a proposal is
not likely to have a significant economic
impact on a substantial number of small
entities, section 604 of the RFA requires
the agency to present a final regulatory
flexibility analysis (FRFA) of the final
regulations.
These final regulations affect taxpayers,
including small entities, that claim section
48 credits. Although data is not readily
available about the number of small enti­
ties that are potentially affected by these
rules, it is possible that a substantial num­
ber of small entities may be affected.
In connection with the Proposed Reg­
ulations, the Treasury Department and the
IRS presented an IRFA to invite comments
on both the number of entities affected and
the economic impact on small entities. No
comments were received specific to these
areas of inquiry. In the absence of com­

Bulletin No. 2024–52 1407 December 23, 2024
ments in response to the Proposed Regula­
tions, this FRFA is presented with the final
regulations.
In addition, pursuant to section
7805(f), the Proposed Regulations pre­
ceding these final regulations were
submitted to the Chief Counsel for the
Office of Advocacy of the Small Busi­
ness Administration for comment on its
impact on small business, and no com­
ments were received from the Chief
Counsel for the Office of Advocacy of the
Small Business Administration.
A. Need for and objectives of the rule
The final regulations will provide
greater clarity to taxpayers for purposes
of claiming the section 48 credit for
energy property. These final regulations
are expected to encourage taxpayers to
invest in developing new energy proper­
ties, including qualified facilities other­
wise eligible for the section 45 credit for
which a taxpayer makes a section 48(a)(5)
(C) election. Thus, the Treasury Depart­
ment and the IRS intend and expect that
the final regulations will deliver benefits
across the economy that will beneficially
impact various industries.
B. Affected small entities
The Small Business Administration
estimated in its 2018 Small Business
Profile that 99.9 percent of United States
businesses meet its definition of a small
business. The applicability of these final
regulations does not depend on the size
of the business, as defined by the Small
Business Administration. As described
more fully in the preamble to the Proposed
Regulations and in this FRFA, these rules
may affect a variety of different businesses
across several different industries.
The section 48 credit incentivizes the
development of energy property. Because
the potential credit claimants can vary
widely, it is difficult to estimate at this
time the impact of these final regulations,
if any, on small businesses.
The Treasury Department and the IRS
expect to receive more information on the
impact on small businesses once taxpayers
start to claim the section 48 credit using
the guidance and procedures provided in
these final regulations.
1. Impact of the rules
The final regulations will allow taxpay­
ers to plan investments and transactions
based on the ability to claim the section
48 credit. The increased use of the section
48 credit will incentivize the development
of technologies for energy generation and
storage. The use of the section 48 credit
may also lead to additional investment in
electrical grid infrastructure to transport
electricity.
Because the statutory changes that
are reflected in the final regulations have
already been accounted for by Form 3468,
the recordkeeping and reporting require­
ments should not increase for taxpayers
that already claim the section 48 credit.
The Form 3468 already provides the pro­
cedures for taxpayers to make a section
48(a)(5)(C) election. To make the election,
a taxpayer must claim the section 48 credit
with respect to a qualified investment
credit facility property on a completed
Form 3468, Investment Credit (or succes­
sor forms, or pursuant to instructions and
other guidance) and file such form with the
taxpayer’s timely filed return (including
extensions) for the taxable year in which
the property is placed in service. Although
the Treasury Department and the IRS do
not have sufficient data to precisely deter­
mine the likely extent of the increased
costs of compliance, the estimated burden
of complying with the recordkeeping and
reporting requirements are described in
the Paperwork Reduction Act section of
this Special Analyses.
2. Alternatives Considered
The Treasury Department and the IRS
considered alternatives to these final regu­
lations. Significant alternatives considered
include the definition of energy project in
§1.48­13(d). As described in more detail
in part II.C of the Summary of Comments
and Explanation of Revisions section
of this preamble, the Treasury Depart­
ment and the IRS considered comments
explaining that the energy project defini­
tion was too broad with only two factors
required to cause energy properties to be
considered an energy project. Comment­
ers suggested instead providing that three
or four factors should be met. Revising the
definition of energy project to require three
factors would resolve challenges for most
commenters on this issue, which were rep­
resented by solar developers. However,
section 48 encompasses many different
technologies in addition to solar photovol­
taic energy property. Accordingly, to pro­
vide taxpayers flexibility across the vari­
ous technologies eligible for the tax credit,
§1.48­13(d) requires that four factors be
met for energy properties to be considered
an energy project.
3. Duplicative, overlapping, or conflicting
Federal rules
The final regulations would not dupli­
cate, overlap, or conflict with any relevant
Federal rules. As discussed above, these
final regulations would merely provide
procedures and definitions to allow tax­
payers to claim the section 48 credit.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggre­
gate, or by the private sector, of $100
million (updated annually for inflation).
These final regulations do not include any
Federal mandate that may result in expen­
ditures by State, local, or Tribal govern­
ments or by the private sector in excess of
that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov­
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These final regulations do not have
federalism implications and do not impose
substantial, direct compliance costs on
State and local governments or preempt
State law within the meaning of the Exec­
utive order.

December 23, 2024 1408 Bulletin No. 2024–52
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consulta­
tion and Coordination With Indian Tribal
Governments) prohibits an agency from
publishing any rule that has Tribal impli­
cations if the rule either imposes substan­
tial, direct compliance costs on Indian
Tribal governments, and is not required
by statute, or preempts Tribal law, unless
the agency meets the consultation and
funding requirements of section 5 of the
Executive order. These final regulations
do not have substantial direct effects on
one or more Federally recognized Indian
Tribes and does not impose substantial
direct compliance costs on Indian Tribal
governments within the meaning of the
Executive order.
VII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs desig­
nated this rule as a major rule as defined
by 5 U.S.C. 804(2). Under section 801(3)
of the CRA, a major rule takes effect 60
days after the rule is published in the Fed-
eral Register.
Notwithstanding this requirement, sec­
tion 808(2) of the CRA allows agencies to
specify a different effective date when the
agency for good cause finds that such pro­
cedure would be impracticable, unneces­
sary, or contrary to the public interest and
the rule shall take effect at such time as the
agency promulgating the rule determines.
Pursuant to section 808(2) of the CRA,
the Treasury Department and the IRS find,
for good cause, that a 60­day delay in the
effective date is unnecessary and contrary
to the public interest.
The IRA amended section 48 in sev­
eral ways, including by making additional
types of energy property eligible for the
section 48 credit and provided, for many
such technologies, that construction must
begin before January 1, 2025. Further, the
IRA amendments included a special rule
to allow certain lower­output energy prop­
erties to include amounts paid for qualified
interconnection property in connection
with the installation of energy property,
and provided an increased credit amount
for energy projects that satisfy prevailing
wage and apprenticeship requirements,
a domestic content bonus credit amount,
and an increase in credit rate for energy
communities.
Following the IRA’s amendments to
section 48, the Treasury Department and
the IRS published the Proposed Regula­
tions. In response to the Proposed Regu­
lations, commenters continued to express
uncertainty regarding the proper applica­
tion of the statutory rules under section
48 and the need for timely final regula­
tions because in many cases taxpayers
must begin construction before January 1,
2025, in order to be eligible to claim the
section 48 credit.
Consistent with Executive Order
14008 (January 27, 2021), letters from
Members of Congress urging expeditious
publication of final regulations, and com­
menters’ request for finalized rules, the
Treasury Department and the IRS have
determined that an expedited effective
date of the final regulations is appropri­
ate here to provide certainty to taxpayers
placing in service energy property before
provisions expire and taxpayers seeking
to begin construction before January
1, 2025 to maintain eligibility for the
section 48 credit. The final regulations
provide needed rules on what the law
requires for taxpayers to begin job­gen­
erating construction of capital­intensive
projects qualifying for section 48 credits.
Accordingly, the Treasury Department
and the IRS have determined that the
rules in this Treasury decision will take
effect on the date of publication in the
Federal Register.
Statement of Availability of IRS
Documents
IRS notices and other guidance cited in
this preamble are published in the Internal
Revenue Bulletin (or Cumulative Bulletin)
and are available from the Superintendent
of Documents, U.S. Government Publish­
ing Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record­
keeping requirements.
Amendments to the Regulations
Accordingly, the Treasury Department
and the IRS amend 26 CFR part 1 as fol­
lows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by:
a. Revising the entry for §1.48­9;
b. Removing the entry for §§1.6418­0­
1.6418­5; and
c. Adding entries in numerical order for
§§1.48­13, 1.48­14, and 1.6418­1 through
1.6418­5.
The revision and additions read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.48­9 also issued under 26 U.S.C.
48(a)(3)(D)(i) and (16).
Section 1.48­13 also issued under 26
U.S.C. 48(a)(10)(C) and (16).
Section 1.48­14 also issued under 26
U.S.C. 48(a)(16).
* * * * *
Section 1.6418­1 also issued under 26
U.S.C. 6418(g) and (h).
Section 1.6418­2 also issued under 26
U.S.C. 6418(g) and (h).
Section 1.6418­3 also issued under 26
U.S.C. 6418(g) and (h).
Section 1.6418­4 also issued under 26
U.S.C. 6418(g) and (h).
Section 1.6418­5 also issued under 26
U.S.C. 48(a)(10)(C) and 6418(g) and (h).
* * * * *
Par. 2. Section 1.48­9 is revised to read
as follows:
§1.48-9 Definition of energy property.
(a) In general. For purposes of the
credit determined under section 48 of the
Internal Revenue Code (Code), the term
energy property means property that,
taking into account the definition of the
term unit of energy property (defined in
paragraph (f)(2)(i) of this section) and of
other terms defined in paragraph (b) and
other provisions of this section, meets
the requirements of paragraph (c) of this
section and is of a type of energy prop­

Bulletin No. 2024–52 1409 December 23, 2024
erty set forth in paragraph (e) of this sec­
tion. If a property is described more than
once in the types of energy property set
forth in paragraph (e), only a single sec­
tion 48 credit is allowed. Paragraph (d)
of this section provides rules for property
excluded from energy property. Paragraph
(f) of this section provides rules for com­
ponents included in an energy property.
Paragraph (g) of this section provides the
applicability date for this section.
(b) Definitions related to requirements
for energy property. For purposes of sec­
tion 48, this section, §§1.48­13 and 1.48­
14, and any provision of the Code or this
chapter that expressly refers to any of the
foregoing, the definitions in this paragraph
(b) apply:
(1) Construction, reconstruction, or
erection of energy property. The term con-
struction, reconstruction, or erection of
energy property means work performed
to construct, reconstruct, or erect energy
property either by the taxpayer or for the
taxpayer in accordance with the taxpay­
er’s specifications.
(2) Acquisition of energy property. The
term acquisition of energy property means
a transaction by which a taxpayer acquires
the rights and obligations to establish tax
ownership of an energy property for Fed­
eral income tax purposes.
(3) Original use of energy property—
(i) In general. The term original use of
energy property means the first use to
which a unit of energy property is put,
whether or not such use is by the taxpayer.
(ii) Retrofitted units of energy prop-
erty. A retrofitted unit of energy property
acquired by the taxpayer will be treated
as not being put to original use by the
taxpayer unless the rules in §1.48­14(a)
regarding retrofitted energy property
(80/20 Rule) or paragraph (e)(10)(v) of
this section regarding modifications of
certain energy storage technology apply.
The question of whether a unit of energy
property meets the 80/20 Rule or is mod­
ified (as described in paragraph (e)(10)
(v) of this section) is a facts and circum­
stances determination.
(4) Allowable—(i) In general. For
purposes of applying paragraph (c)(1)(ii)
of this section, depreciation or amortiza­
tion in lieu of depreciation (collectively,
depreciation) is allowable with respect
to energy property if such property is of
a character subject to the allowance for
depreciation under section 167 of the Code
and the basis or cost of such property is
recovered using a method of depreciation
(for example, the straight line method),
which includes any additional first year
depreciation deduction method of depre­
ciation (for example, under section 168(k)
of the Code). Further, if an Internal Rev­
enue Service adjustment with respect to
the Federal income tax or information
return for such taxable year requires the
basis or cost of such energy property to be
recovered using a method of depreciation,
depreciation is allowable to the taxpayer
with respect to energy property.
(ii) Exclusions from allowable. For pur­
poses of paragraph (b)(4)(i) of this section,
depreciation is not allowable with respect
to energy property if the basis or cost of
such property is not recovered through a
method of depreciation but, instead, such
basis or cost is recovered through a deduc­
tion of the full basis or cost of the energy
property in one taxable year (for example,
under section 179 of the Code).
(5) Placed in service—(i) In general.
Energy property is considered placed in
service in the earlier of:
(A) The taxable year in which, under
the taxpayer’s depreciation practice, the
period for depreciation with respect to
such energy property begins; or
(B) The taxable year in which the
energy property is placed in a condition
or state of readiness and availability for
a specifically assigned function, whether
in a trade or business or in the production
of income. Energy property in a condition
or state of readiness and availability for
a specifically assigned function includes,
but is not limited to, components that are
acquired and set aside during the taxable
year for use as replacements for a particu­
lar energy property (or energy properties)
to avoid operational time loss and equip­
ment that is acquired for a specifically
assigned function and is operational but
is undergoing testing to eliminate any
defects. However, components acquired
to be used in the construction of an energy
property will not be considered in a con­
dition or state of readiness and availability
for a specifically assigned function.
(ii) Energy property subject to §1.48-4
election to treat lessee as purchaser. Not­
withstanding paragraph (b)(5)(i) of this
section, energy property with respect to
which an election is made under §1.48­4
to treat the lessee as having purchased
such energy property is considered placed
in service by the lessor in the taxable year
in which possession is transferred to such
lessee.
(6) Unit of energy property. The term
unit of energy property is defined in para­
graph (f)(2)(i) of this section. No provi­
sion of this section or §1.48­13 or §1.48­
14 uses the term unit in respect of energy
property with any meaning other than that
provided in paragraph (f)(2)(i) of this sec­
tion.
(7) Claim. With respect to a section
48 credit determined with respect to
energy property of a taxpayer, the term
claim means filing a completing Form
3468, Investment Credit, or any successor
form(s) with the taxpayer’s timely filed
(including extensions) Federal income tax
return for the taxable year in which the
energy property is placed in service, and
includes the making of an election under
section 6417 or 6418 of the Code and
corresponding regulations with respect
to such section 48 credit and made on the
taxpayer’s Federal income tax return or
annual information return.
(c) Requirements for energy prop-
erty—(1) In general. Energy property
must satisfy each of the requirements of
paragraphs (c)(1)(i) through (v) of this
section:
(i) The taxpayer constructs, recon­
structs, or erects the property, or, if the
original use of the property commences
with the taxpayer, acquires the property;
(ii) Depreciation (or amortization in
lieu of depreciation) is allowable with
respect to the property;
(iii) The property meets the perfor­
mance and quality standards as provided
in paragraph (c)(2) of this section;
(iv) The construction of the property
begins before the date provided in section
48 (if any such date is provided); and
(v) The property is placed in service by
the taxpayer by the date provided in sec­
tion 48 (if any such date is provided).
(2) Performance and quality stan-
dards—(i) In general. Energy property
must meet performance and quality stan­
dards, if any, that have been prescribed by
the Secretary of the Treasury or her dele­
gate (after consultation with the Secretary

December 23, 2024 1410 Bulletin No. 2024–52
of Energy) and are in effect at the time of
acquisition of the energy property.
(ii) Special rules for performance and
quality standards—(A) Small wind energy
property—(1) Small wind energy property
must meet one of the following perfor­
mance and quality standards in effect at
the time of acquisition of the small wind
turbine:
(i) American Wind Energy Association
Small Wind Turbine Performance and
Safety Standard 9.1 (AWEA standards);
(ii) International Electrotechnical
Commission standards 61400­1, 61400­2,
61400­11, 61400­12 (IEC standards); or
(iii) ANSI/ACP Small Wind Turbine
Standard 101­1 (ACP standards).
(2) Taxpayers may rely on a certifi­
cation that the performance and quality
standards set forth in this paragraph (c)
(2)(ii)(A)(1) are met. Guidance published
in the Internal Revenue Bulletin sets forth
the requirements to certify that the per­
formance and quality standards provided
in this paragraph (c)(2)(ii)(A)(1) are met.
See §601.601 of this chapter.
(B) Electrochromic glass property.
To be eligible for the section 48 credit,
electrochromic windows must be rated
in accordance with the National Fenes­
tration Rating Council (NFRC) and sec­
ondary glazing systems must be rated in
accordance with the Attachments Energy
Rating Council (AERC) Rating and Certi­
fication Process, or subsequent revisions.
See paragraph (e)(2)(ii) of this section
for the definition of electrochromic glass
property.
(iii) Time of acquisition. For purposes
of applying performance and quality stan­
dards, the time of acquisition is the date
the taxpayer enters into a binding contract
(defined in paragraph (c)(2)(iv) of this sec­
tion) to acquire the property, or, in the case
of property constructed, reconstructed, or
erected by the taxpayer, the earlier of the
date that—
(A) The taxpayer begins construction,
reconstruction, or erection of the property,
or
(B) The taxpayer and another person
enter into a binding contract (as defined
in paragraph (c)(2)(iv) of this section)
requiring the other person to construct,
reconstruct, or erect property and to place
the property in service for an agreed upon
use.
(iv) Binding contract. For purposes of
this paragraph (c)(2), whether a contract is
binding is determined based on the rules
described in §1.168(k)­2(b)(5)(iii)(A).
(d) Property that is not energy prop-
erty—(1) Interaction with section 45.
Energy property does not include any
property that is part of a qualified facility
the production from which is allowed as a
credit determined under section 45 of the
Code (section 45 credit) for the taxable
year or any prior taxable year. However,
see paragraph (f)(3) of this section for
rules regarding property that is an integral
part of an energy property that is also used
by a qualified facility. See §1.48­14(f)(1)
for rules regarding making an election
under section 48(a)(5) to treat a qualified
facility as an energy property.
(2) Other property. Energy property
also does not include power purchase
agreements, goodwill, going concern
value, or renewable energy certificates.
(e) Types of energy property. The types
of energy property eligible for a section 48
credit are:
(1) Solar energy property—(i) In gen-
eral. Solar energy property is equipment
that uses solar energy to generate electric­
ity, to heat or cool (or provide hot water
for use in) a structure, or to provide solar
process heat, excepting property used to
generate energy for the purposes of heat­
ing a swimming pool. Solar energy prop­
erty includes solar electric generation
equipment (as defined in paragraph (e)
(1)(ii) of this section), solar process heat
equipment (as defined in paragraph (e)(1)
(iii) of this section), and equipment that
uses solar energy to heat or cool a struc­
ture or provide hot water for use in a struc­
ture, and parts related to the functioning of
all such equipment.
(ii) Solar electric generation equip-
ment. Solar electric generation equipment
is equipment that converts sunlight into
electricity through the use of devices such
as solar cells or other collectors.
(iii) Solar process heat equipment.
Solar process heat equipment is equip­
ment that uses solar energy to generate
steam at high temperatures for use in
industrial or commercial processes.
(2) Fiber-optic solar energy property
and electrochromic glass property—
(i) Fiber-optic solar energy property.
Fiber-optic solar energy property is equip­
ment that uses solar energy to illuminate
the inside of a structure using fiber­optic
distributed sunlight.
(ii) Electrochromic glass property.
Electrochromic glass energy property
uses electricity to change its light trans­
mittance properties (both visible and near
infrared light) in order to heat or cool a
structure. For purposes of section 48,
windows, including secondary windows
(also referred to as secondary glazings),
that incorporate electrochromic glass are
treated as electrochromic glass property.
(3) Geothermal energy property—(i)
In general. Geothermal energy property
is equipment used to produce, distribute,
or use energy derived from a geothermal
deposit (within the meaning of section
613(e)(2) of the Code), but only, in the
case of electricity generated by geother­
mal power, up to (but not including) the
electrical transmission stage. Geothermal
equipment includes production equipment
(as defined in paragraph (e)(3)(ii) of this
section) and distribution equipment (as
defined in paragraph (e)(3)(iii) of this sec­
tion).
(ii) Production equipment. For pur­
poses of paragraph (e)(3)(i) of this section,
production equipment is equipment nec­
essary to bring geothermal energy from
the subterranean deposit to the surface,
including well­head and downhole equip­
ment (such as screening or slotting liners,
tubing, downhole pumps, and associated
equipment). Production, injection, and
monitoring wells required for production
of the geothermal deposit qualify as pro­
duction equipment. If geothermal energy
is used to generate electricity, production
equipment also includes the property nec­
essary to produce electricity. Production
equipment does not include equipment
used for exploration and development
of geothermal deposits, such as drilling
wells.
(iii) Distribution equipment. For pur­
poses of paragraph (e)(3)(i) of this sec­
tion, distribution equipment is equipment
that transports geothermal energy from a
geothermal deposit to the site of ultimate
use. If geothermal energy is used to gen­
erate electricity, distribution equipment
includes equipment that transports geo­
thermal fluids between the geothermal
deposit and the power plant. Distribution
equipment also includes components of a

Bulletin No. 2024–52 1411 December 23, 2024
building’s heating and/or cooling system,
such as pipes and ductwork that distribute
within a building the energy derived from
the geothermal deposit.
(4) Qualified fuel cell property. Quali-
fied fuel cell property is a fuel cell power
plant that has a nameplate capacity of at
least 0.5 kilowatts (kW) (1 kW in the case
of a fuel cell power plant with a linear
generator assembly) of electricity using
an electrochemical or electromechanical
process, and an electricity­only genera­
tion efficiency greater than 30 percent. For
this purpose, electricity­only generation
efficiency may be calculated by dividing
the heat rate of the fuel cell (for example,
kilowatt­hours (kWh) electricity produced
per kilogram (kg) of fuel consumed) by
the higher heating value of the fuel (for
example, kWh per kg). A fuel cell power
plant is an integrated system comprised of
a fuel cell stack assembly, or linear gener­
ator assembly, and associated balance of
plant components that converts a fuel into
electricity using electrochemical or elec­
tromechanical means. A linear generator
assembly does not include any assembly
that contains rotating parts.
(5) Qualified microturbine property.
Qualified microturbine property is a sta­
tionary microturbine power plant that has
a nameplate capacity of less than 2,000
kW and an electricity­only generation
efficiency of not less than 26 percent at
International Standard Organization con­
ditions. A stationary microturbine power
plant is an integrated system comprised
of a gas turbine engine, a combustor, a
recuperator or regenerator, a generator or
alternator, and associated balance of plant
components that converts a fuel into elec­
tricity and thermal energy. A stationary
microturbine power plant also includes all
secondary components located between
the existing infrastructure for fuel deliv­
ery and the existing infrastructure for
power distribution, including equipment
and controls for meeting relevant power
standards, such as voltage, frequency, and
power factors.
(6) Combined heat and power system
(CHP) property—(i) In general. CHP
property is property comprising a system
that uses the same energy source for the
simultaneous or sequential generation of
electrical power, mechanical shaft power,
or both, in combination with the genera­
tion of steam or other forms of useful ther­
mal energy (including heating and cooling
applications). CHP property must produce
at least 20 percent of its total useful energy
in the form of thermal energy that is not
used to produce electrical or mechanical
power (or combination thereof), and at
least 20 percent of its total useful energy in
the form of electrical or mechanical power
(or combination thereof). The energy effi­
ciency percentage of CHP property must
exceed 60 percent (except in the case of
CHP systems that use biomass within the
meaning of section 45). CHP property
does not include any property comprising
a system if such system has a capacity in
excess of 50 MW or a mechanical energy
capacity in excess of 67,000 horsepower
or an equivalent combination of electrical
and mechanical energy capacities.
(ii) Components excluded. CHP prop­
erty does not include property used to
transport the energy source to the gener­
ating facility or to distribute energy pro­
duced by the facility.
(7) Qualified small wind energy prop-
erty. Qualified small wind energy prop-
erty is property that uses a qualifying
small wind turbine to generate electricity.
A qualifying small wind turbine means a
wind turbine that has a nameplate capacity
of not more than 100 kW.
(8) Geothermal heat pump (GHP)
property. GHP property is equipment that
uses the ground, ground water, or other
underground fluids as a thermal energy
source to heat a structure or as a thermal
energy sink to cool a structure.
(9) Waste energy recovery property
(WERP)—(i) In general. WERP is prop­
erty that generates electricity solely from
heat from buildings or equipment if the
primary purpose of such building or equip­
ment is not the generation of electricity.
Examples of buildings or equipment the
primary purpose of which is not the gen­
eration of electricity include, but are not
limited to, manufacturing plants, medical
care facilities, facilities on college cam­
puses, pipeline compressor stations, and
associated equipment. WERP does not
include any property that has a capacity in
excess of 50 MW.
(ii) Coordination with CHP property.
Any WERP that is part of a system that is
a CHP property is not treated as WERP for
purposes of section 48 unless the taxpayer
elects to not treat such system as a CHP
property for purposes of section 48.
(10) Energy storage technology—(i)
In general. Energy storage technology
includes electrical energy storage prop­
erty described in paragraph (e)(10)(ii) of
this section, thermal energy storage prop­
erty described in paragraph (e)(10)(iii) of
this section, and hydrogen energy storage
property described in paragraph (e)(10)
(iv) of this section.
(ii) Electrical energy storage property.
Electrical energy storage property is prop­
erty (other than property primarily used in
the transportation of goods or individuals
and not for the production of electricity)
that receives, stores, and delivers energy
for conversion to electricity, and has a
nameplate capacity of not less than 5 kWh.
For example, subject to the exclusion for
property primarily used in the transpor­
tation of goods or individuals, electrical
energy storage property includes, but is
not limited to, rechargeable electrochem­
ical batteries of all types (such as lithium
ion, vanadium flow, sodium sulfur, and
lead­acid), ultracapacitors, physical stor­
age such as pumped storage hydropower,
compressed air storage, flywheels, and
reversible fuel cells.
(iii) Thermal energy storage prop-
erty—(A) In general. Thermal energy
storage property is property comprising
a system that is directly connected to a
heating, ventilation, or air conditioning
(HVAC) system; removes heat from, or
adds heat to, a storage medium for sub­
sequent use; and provides energy for the
heating or cooling of the interior of a res­
idential or commercial building. Thermal
energy storage property includes equip­
ment and materials, and parts related to
the functioning of such equipment, to
store thermal energy for later use to heat
or cool, or to provide hot water for use
in heating, a residential or commercial
building. It does not include property that
transforms other forms of energy into
heat in the first instance. Property that
removes heat from, or adds heat to, a stor-
age medium for subsequent use is prop­
erty that is designed with the particular
purpose of substantially altering the time
profile of when heat added to or removed
from the thermal storage medium can be
used for heating or cooling of the interior
of a residential or commercial building.

December 23, 2024 1412 Bulletin No. 2024–52
Paragraph (e)(10)(iii)(B) of this section
provides a safe harbor for determining
whether a thermal energy storage property
has such a purpose. Thermal energy stor­
age property does not include a swimming
pool, CHP property, or a building or its
structural components. For example, ther­
mal energy storage property includes, but
is not limited to, a system that adds heat
to bricks heated to high temperatures that
later use this stored energy to heat a build­
ing through the HVAC system; thermal ice
storage systems that use electricity to run
a refrigeration cycle to produce ice that is
later connected to the HVAC system as
an exchange medium for air conditioning
the building; heat pump systems that store
thermal energy in an underground tank, an
artificial pit, an aqueous solution, a bore­
hole field, or a solid­liquid phase change
material to be extracted for later use for
heating and/or cooling; and air­to­water
heat pump systems with a water storage
tank. However, consistent with §1.48­
14(d), if thermal energy storage property,
such as a heat pump system, includes
equipment, such as a heat pump, that also
serves a purpose in an HVAC system that
is installed in connection with the thermal
energy storage property, the taxpayer’s
basis in the thermal energy storage prop­
erty includes the total cost of the ther­
mal energy storage property and HVAC
system less the cost of an HVAC system
without thermal storage capacity that
would meet the same functional heating
or cooling needs as the heat pump system
with a storage medium, other than time
shifting of heating or cooling.
(B) Safe harbor. A thermal energy stor­
age property will be deemed to have the
purpose of substantially altering the time
profile of when heat added to or removed
from the thermal storage medium can be
used to heat or cool the interior of a res­
idential or commercial building if that
thermal energy storage property is capa­
ble of storing energy that is sufficient to
provide heating or cooling of the interior
of a residential or commercial building for
a minimum of one hour.
(iv) Hydrogen energy storage property.
Hydrogen energy storage property is prop­
erty (other than property primarily used in
the transportation of goods or individuals
and not for the production of electricity)
that stores hydrogen and has a nameplate
capacity of not less than 5 kWh, equiva­
lent to 0.127 kg of hydrogen or 52.7 stan­
dard cubic feet (scf) of hydrogen. Hydro­
gen energy storage property includes, but
is not limited to, above ground storage
tanks, underground storage facilities, and
associated compressors. Property that is
an integral part of hydrogen energy stor­
age property includes, but is not limited
to, hydrogen liquefaction equipment and
gathering and distribution lines within a
hydrogen energy storage property.
(v) Modifications of energy storage
energy property. With respect to electri­
cal energy storage property and hydrogen
energy storage property placed in service
after December 31, 2022, energy storage
technology that is modified as set forth in
this paragraph (e)(10)(v) is treated as elec­
trical energy storage property described
in paragraph (e)(10)(ii) of this section
or hydrogen energy storage property
described in paragraph (e)(10)(iv) of this
section, except that the basis of any exist­
ing property prior to such modification is
not taken into account for purposes of this
section and section 48. This paragraph (e)
(10)(v) applies to any electrical energy
storage property and hydrogen energy
storage property that either:
(A) Was placed in service before
August 16, 2022, and would be described
in section 48(c)(6)(A)(i), except that such
property had a nameplate capacity of less
than 5 kWh and is modified in a manner
that such property (after such modifica­
tion) has a nameplate capacity (after such
modification) of not less than 5 kWh; or
(B) Is described in section 48(c)(6)(A)
(i) and is modified in a manner that such
property (after such modification) has an
increase in nameplate capacity of not less
than 5 kWh.
(11) Qualified biogas property—(i) In
general. Qualified biogas property is prop­
erty comprising a system that converts
biomass (as defined in section 45K(c)(3),
as in effect on August 16, 2022) into a gas
that consists of not less than 52 percent
methane by volume (tested at the point
described in paragraph (e)(11)(ii) of this
section), or is concentrated by such sys­
tem into a gas that consists of not less than
52 percent methane (tested at the point
described in paragraph (e)(11)(ii) of this
section), and captures such gas for sale
or productive use and not for disposal via
combustion. Qualified biogas property
also includes any property that is part of
such system that cleans or conditions such
gas, including gas upgrading equipment,
to make the gas suitable for sale or pro­
ductive use. For example, qualified biogas
property includes, but is not limited to,
an anaerobic digester. Property that is an
integral part of qualified biogas property
includes, but is not limited to, a waste
feedstock collection system, a landfill gas
collection system and mixing or pumping
equipment.
(ii) Methane content requirement. The
methane content requirement described in
section 48(c)(7)(A)(i) and paragraph (e)
(11)(i) of this section is measured at the
point at which the biogas exits the quali­
fied biogas property.
(iii) Flaring Allowance. While a qual­
ified biogas property generally may not
capture biogas for disposal via combus­
tion, combustion in the form of flaring
will not disqualify a qualified biogas
property provided the primary purpose
of the qualified biogas property is sale or
productive use of biogas and any flaring
is in compliance with all relevant Federal,
State, regional, Tribal, and local laws and
regulations.
(12) Microgrid controllers—(i) In gen-
eral. A microgrid controller is equipment
that is part of a qualified microgrid and is
designed and used to monitor and control
the energy resources and loads on such
microgrid. A qualified microgrid is an
electrical system that includes equipment
that is capable of generating not less than
4 kW and not greater than 20 MW of elec­
tricity; is capable of operating in connec­
tion with the electrical grid and as a single
controllable entity with respect to such
electrical grid, and independently (and
disconnected) from such electrical grid;
and is not part of a bulk­power system
(as defined in section 215 of the Federal
Power Act (16 U.S.C. 824o)).
(ii) Capable of operating in connec-
tion with the electrical grid. For purposes
of this paragraph, a qualified microg­
rid includes an electrical system that is
capable of operating in connection with
the larger electrical grid, regardless of
whether a connection to the larger electri­
cal grid exists.
(13) Other property included in sec-
tion 48. Any other property specified by

Bulletin No. 2024–52 1413 December 23, 2024
section 48 as energy property is energy
property for purposes of this section and
§§1.48­13 and 1.48­14.
(f) Property included in energy prop-
erty—(1) In general. An energy property
includes a unit of energy property (defined
in paragraph (f)(2)(i) of this section) that
meets the requirements of paragraph (c)
of this section, that is not excluded from
energy property as provided in paragraph
(d) of this section, and that is of a type of
energy property included in paragraph (e)
of this section. Property owned by the tax­
payer that is an integral part of an energy
property (as defined in paragraph (f)(3)
of this section) is treated as part of that
energy property. Energy property does
not include any electrical transmission
equipment, such as transmission lines and
towers, or any equipment beyond the elec­
trical transmission stage. Energy property
also generally does not include equipment
that is an addition or modification to an
existing energy property. However, see
§1.48­14(a) for rules regarding retrofitted
energy property (80/20 Rule) and para­
graph (e)(10)(v) of this section for rules
regarding modifications of certain types of
energy storage technology.
(2) Unit of energy property—(i) Defini-
tion. The term unit of energy property means
all functionally interdependent components
of property (as defined in paragraph (f)(2)
(ii) of this section) owned by the taxpayer
that are operated together and that can oper­
ate apart from other energy properties within
a larger energy project (as defined in §1.48­
13(d)). For rooftop solar energy property,
all components of energy property that are
installed on a single rooftop are treated as
a single unit of energy property. See §1.48­
13(d) for rules regarding the treatment of
multiple energy properties as an energy
project for certain purposes.
(ii) Functionally interdependent—(A)
In general. Except as provided in para­
graph (f)(3)(ii)(B) of this section, with
respect to components of a unit of energy
property, the term functionally interde-
pendent means that the placing in service
of each component is dependent upon the
placing in service of each of the other
components in order to generate or store
electricity, thermal energy, or hydrogen as
provided by section 48(a)(3) and (c) and
as described in paragraph (e) of this sec­
tion.
(B) Components of certain energy
property. In the case of solar process
heat equipment, fiber­optic solar energy
property, electrochromic glass property,
GHP property, qualified biogas property,
and microgrid controllers, with respect
to components of such property, the term
functionally interdependent means that
the placing in service of each component
is dependent upon the placing in service
of each of the other components in order
to perform the intended function of the
energy property as provided by section
48(a)(3) and (c) and as described in para­
graph (e) of this section.
(3) Integral part—(i) In general. For
purposes of the section 48 credit, property
owned by a taxpayer is an integral part of
an energy property owned by the same tax­
payer if it is used directly in the intended
function of the energy property as pro­
vided by section 48(a)(3) and (c) and as
described in paragraph (e) of this section
and is essential to the completeness of the
intended function. Property that is an inte­
gral part of an energy property is treated
as part of that energy property. A taxpayer
may not claim the section 48 credit for
any property not owned by the taxpayer
that is an integral part of energy property
owned by the taxpayer. Multiple energy
properties (whether owned by one or more
taxpayers) may include shared property
that may be considered an integral part of
each energy property so long as the cost
basis for the shared property is properly
allocated to each energy property. The
total cost basis of such shared property
divided among the energy properties may
not exceed 100 percent of the cost of such
shared property. In addition, the exclusion
in paragraph (d)(1) of this section does not
apply to property that is shared by a qual­
ified facility (as defined in section 45(d))
and an energy property if it is an integral
part of that energy property. The basis of
any such property must be properly allo­
cated across the energy property and qual­
ified facility that share such property.
(ii) Power conditioning and transfer
equipment. Property that is an integral part
of energy property includes power condi­
tioning equipment and transfer equipment
used to perform the intended function of
the energy property as provided by section
48(a)(3) and (c) and as described in para­
graph (e) of this section. Power condition­
ing equipment includes, but is not limited
to, transformers, inverters, and converters,
which modify the characteristics of elec­
tricity or thermal energy into a form suit­
able for use or transmission or distribution.
Parts related to the functioning or protec­
tion of power conditioning equipment are
also treated as power conditioning equip­
ment and include, but are not limited to,
switches, circuit breakers, arrestors, and
hardware and software used to monitor,
operate, and protect power conditioning
equipment. Transfer equipment includes
equipment that permits the aggregation of
energy generated by components of energy
properties and equipment that alters volt­
age to permit transfer to a transmission
or distribution line. Transfer equipment
does not include transmission or distri­
bution lines. Examples of transfer equip­
ment include, but are not limited to, wires,
cables, and combiner boxes that conduct
electricity. Parts related to the function­
ing or protection of transfer equipment
are also treated as transfer equipment
and may include items such as current
transformers used for metering, electri­
cal interrupters (such as circuit breakers,
fuses, and other switches), and hardware
and software used to monitor, operate, and
protect transfer equipment. Power condi­
tioning equipment and transfer equipment
that are integral to an energy property may
be integral to another energy property or
used by a qualified facility (as defined in
section 45(d)), so long as the total cost
basis of the integral property is properly
allocated across the energy property and
qualified facility that share such property.
(iii) Roads. Roads that are an integral
part of an energy property are integral to the
activity performed by the energy property
such as onsite roads that are used for equip­
ment to operate and maintain the energy
property. Roads primarily for access to the
site, or roads used primarily for employee
or visitor vehicles, are not integral to the
activity performed by an energy property.
(iv) Fences. Fencing is not an integral
part of an energy property because it is not
integral to the activity performed by the
energy property.
(v) Buildings. Generally, buildings are
not integral parts of an energy property
because they are not integral to the activ­
ity of the energy property. However, the
structures described in paragraphs (f)(3)

December 23, 2024 1414 Bulletin No. 2024–52
(vi) and (vii) of this section are not treated
as buildings for this purpose.
(vi) Structures essentially items of
machinery or equipment. A structure that is
essentially an item of machinery or equip­
ment is not treated as a building for pur­
poses of paragraph (f)(3)(v) of this section.
(vii) Structures that house certain
property. A structure that houses property
that is integral to the activity of an energy
property is not treated as a building for
purposes of paragraph (f)(3)(v) of this sec­
tion if the use of the structure is so closely
related to the use of the housed energy
property that the structure clearly can be
expected to be replaced if the energy prop­
erty it initially houses is replaced.
(4) Location of energy property. Any
property that meets the requirements of
paragraphs (f)(2) and (3) of this section
is part of an energy property regardless of
where such property is located.
(5) Examples. This paragraph provides
examples illustrating property included in
energy property.
(i) Example 1. Solar energy property. X con­
structs a solar energy property (Solar Property) com­
prised of 500 separate solar panels. The solar panels
are connected by wires, cables, and combiner boxes.
Generated electricity is conditioned for subsequent
use through one inverter and eventually carried to a
substation that houses a transformer where the elec­
tricity is stepped up to electrical grid voltage before
being transmitted to the electrical grid through an
intertie. All components of the Solar Property up to
the inverter are functionally interdependent compo­
nents of the Solar Property. The inverter and up to
and including the transformer are integral parts of
the Solar Property. Therefore, the Solar Property is
an energy property for purposes of the section 48
credit. When X places the Solar Property in service,
the cost of the components up to and including the
transformer is included in the basis of the Solar Prop­
erty for purposes of computing the section 48 credit.
(ii) Example 2. Co-located energy properties.
Assume the same facts as in paragraph (f)(5)(i) of
this section (Example 1), except that Y constructs a
wind energy property (Wind Property) near X’s solar
energy property (Solar Property). X’s Solar Property
and Y’s Wind Property each connect to a substa­
tion that houses a transformer where the electricity
is stepped up to electrical grid voltage before being
transmitted to the electrical grid through an intertie.
X and Y each pay 50% of the cost of, and own a 50%
undivided interest in, the transformer and related
power conditioning equipment housed in the substa­
tion. X’s Solar Property and Y’s Wind Property are
separate energy properties. When X and Y place their
respective energy properties in service, the cost of
the components up to and including 50% of the cost
of the transformer and related power conditioning
equipment is included in X’s and Y’s basis in their
respective energy properties for purposes of comput­
ing the section 48 credit.
(iii) Example 3. Qualified offshore wind energy
project. Z constructs an offshore wind farm (Off­
shore Wind Energy Project) comprised of 150 tur­
bines (energy properties) for which Z makes a valid
election under section 48(a)(5) to claim the section
48 credit in lieu of the section 45 credit. The alter­
nating current electricity generated by the individual
wind turbines will be carried by inter­array cables to
an offshore substation where a transformer will step
up the voltage of the electricity and a converter will
convert it to direct current so it may be transported
by subsea export cables to an onshore substation
adjacent to the point of interconnection with the elec­
trical grid. When the electricity reaches the onshore
substation, it will flow into another converter where
it will be converted back to alternating current, and
then through a transformer and associated switch­
gear where it will be converted to electrical grid
voltage and where the Offshore Wind Energy Proj­
ect can be electrically isolated from the grid. The
electricity will then pass through an intertie that will
take the electricity from the substation to the point of
interconnection with the electrical grid. All compo­
nents of the Offshore Wind Energy Project, up to and
including the transformer and switchgear housed in
the onshore substation, are either functionally inter­
dependent components or integral parts of the energy
properties that comprise the Offshore Wind Energy
Project. Therefore, when Z places the Offshore Wind
Energy Project in service, the cost of the components
up to and including the transformer and switchgear
housed in the onshore substation are included in the
aggregate basis of the energy properties that com­
prise the Offshore Wind Energy Project for purposes
of computing the section 48 credit.
(iv) Example 4. Co-located energy property and
qualified facility. X constructs a wind facility (Wind
Facility) that is co­located with an energy storage
technology (Energy Storage). The Wind Facility and
Energy Storage share power conditioning and trans­
fer equipment. The power conditioning and transfer
equipment are integral parts of the Energy Storage,
and are therefore considered energy property. There­
fore, X will include a properly allocated share of
the shared power conditioning and transfer equip­
ment costs to determine the section 48 credit for
the Energy Storage. If the Wind Facility otherwise
satisfies the requirements of the section 45 credit, X
may claim the section 45 credit with respect to the
Wind Facility.
(g) Applicability date. This section
applies with respect to property placed
in service after December 31, 2022, and
during a taxable year beginning after
December 12, 2024.
Par. 3. Sections 1.48­13 and 1.48­14
are added to read as follows:
§1.48-13 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.
(a) In general. If a qualified energy
project satisfies the requirements in para­
graph (b) of this section, the amount of the
credit determined under section 48(a) of
the Internal Revenue Code (Code), after
the application of section 48(a)(1) through
(8), and (15), is equal to the credit deter­
mined under section 48(a) (section 48
credit) multiplied by five.
(b) Requirements. A qualified energy
project satisfies the requirements of this
paragraph (b) if it is one of the follow­
ing—
(1) A project with a maximum net out­
put of less than one megawatt (MW) of
electrical (as measured in alternating cur­
rent) or thermal energy determined based
on the nameplate capacity as provided in
paragraph (e) of this section (One Mega­
watt Exception);
(2) A project the construction of which
began prior to January 29, 2023; or
(3) A project that meets the prevailing
wage requirements of section 48(a)(10)
(A), §1.45­7(a)(2) and (3) and (b) through
(d), and paragraph (c) of this section, the
apprenticeship requirements of section
45(b)(8) and §1.45­8, and the recordkeep­
ing and reporting requirements of §1.45­
12.
(c) Special rule applicable to general
prevailing wage requirements—(1) In
general. In addition to satisfying the pre­
vailing wage requirements under §1.45­
7(a)(2) and (3) and (b) through (d), a tax­
payer must ensure that any laborers and
mechanics employed (within the meaning
of §1.45­7) by the taxpayer or any contrac­
tor or subcontractor in the construction of
such energy project, and for the five­year
period beginning on the date such project
is placed in service, the alteration or repair
of such project, are paid wages at rates not
less than the prevailing rates for construc­
tion, alteration, or repair of a similar char­
acter in the locality in which such project
is located as most recently determined
by the Secretary of Labor, in accordance
with 40 U.S.C. chapter 31, subchapter IV.
Subject to section 48(a)(10)(C) and this
paragraph (c), for purposes of determining
the increased credit amount under section
48(a)(9)(B)(iii), the taxpayer is deemed to
satisfy the prevailing wage requirements
of section 48(a)(10)(A)(ii) at the time
such project is placed in service.
(2) Transition waiver of penalty for
prevailing wage requirements. For pur­
poses of the transition waiver described
in §1.45­7(c)(6)(iii), the penalty payment

Bulletin No. 2024–52 1415 December 23, 2024
required by §1.45­7(c)(1)(ii) to cure a
failure to satisfy the Prevailing Wage
Requirements in paragraph (b)(3) of this
section is waived with respect to a laborer
or mechanic who performed work in the
construction, alteration, or repair of an
energy project on or after January 29,
2023, and prior to December 12, 2024, if
the taxpayer relied upon Notice 2022­61,
2022­52 I.R.B. 560, or the Proposed Regu­
lations (REG­132569­17) (88 FR 82188),
corrected in 89 FR 13293 (Feb. 22, 2024),
to determine when the activities of any
laborer or mechanic became subject to
the prevailing wage requirements, and the
taxpayer makes the correction payments
required by §1.45­7(c)(1)(i) with respect
to such laborer and mechanics within 180
days of December 12, 2024.
(3) Exception. For purposes of satis­
fying the prevailing wage requirements
of paragraph (b)(3) of this section, §1.45­
7(a)(1) does not apply.
(4) Recapture—(i) In general. In the
case of an energy project that receives the
increased credit amount under paragraph
(a) of this section by reason of satisfying
the requirements of paragraph (b)(3) of
this section, the increased credit amount
is subject to recapture for any project
that does not satisfy the prevailing wage
requirements in §1.45­7(b) through (d)
and paragraph (c)(1) of this section for
any period with respect to an alteration or
repair of such project during the five­year
period beginning on the date such project
is originally placed in service (five­year
recapture period) (but that does not cease
to be investment credit property within the
meaning of section 50(a) of the Code).
(ii) Recapture event—(A) In general.
Any failure to satisfy the prevailing wage
requirements in §1.45­7(b) through (d)
and paragraph (c)(1) of this section for
any period with respect to the alteration
or repair of any project during the five­
year recapture period is a recapture event.
Any failure to satisfy the prevailing wage
requirements in §1.45­7(b) through (d)
and paragraph (c)(1) of this section with
respect to the alteration or repair of any
project during the five­year recapture
period described in paragraph (c)(6) of
this section remains subject to the cor­
rection and penalty provisions in §1.45­
7(c), including the waiver provisions
in §1.45­7(c)(6). Subject to §1.45­7(c)
(5) and (6), if the correction and penalty
payments described in §1.45­7(c) are not
made by the taxpayer on or before the
date that is 180 days after the date of a
final determination by the IRS (as defined
in §1.45­7(c)(4)(ii)), the cure provision
described in §1.45­7(c) does not apply and
the increased credit amount is subject to
recapture.
(B) Yearly determination. A determi­
nation of whether a recapture event has
occurred under paragraph (c)(3)(ii) of this
section must be made for each taxable year
(or portion thereof) occurring within the
five­year recapture period, beginning with
the taxable year ending after the date the
energy project is placed in service. Thus,
for each taxable year beginning or end­
ing within the five­year recapture period,
the taxpayer must determine whether the
prevailing wage requirements of section
48(a)(10)(A), §1.45­7(b) through (d), and
paragraph (c)(1) of this section are satis­
fied for the recapture year(s) occurring
during each taxable year. If no alteration
or repair work occurs during the five­year
recapture period, the taxpayer is deemed
to satisfy the Prevailing Wage Require­
ments described in paragraph (b)(3) of this
section with respect to such taxable year.
(C) Carrybacks and carryforward
adjusted. In the case of any recapture
event described in paragraph (c)(3)(ii)(A)
of this section, the carrybacks and car­
ryforwards under section 39 of the Code
must be adjusted by reason of such recap­
ture event.
(iii) Correction and penalty payments
not required if taxpayer is subject to
recapture under section 48(a)(10)(C).
If the IRS determines that a taxpayer
that claimed the increased credit amount
under section 48(a)(9)(B)(iii) or trans­
ferred a specified credit portion under
section 6418 of the Code that includes
the increased credit amount under section
48(a)(9)(B)(iii) failed to satisfy the pre­
vailing wage requirements in §1.45­7(b)
through (d) and paragraph (c)(1) of this
section for any period with respect to the
alteration or repair of any project during
the five­year recapture period and the tax­
payer does not make the correction and
penalty payments provided in §1.45­7(c),
then no penalty is assessed under §1.45­7,
and the increased credit amount is subject
to recapture. Taxpayers whose increased
credit amount is subject to recapture under
this section may retain the amount of the
section 48(a) credit (base credit) deter­
mined under section 48(a) of this section
provided all requirements were met in the
year of determination.
(5) Recapture amount—(i) In gen-
eral. If a recapture event has occurred as
described in paragraph (c)(3)(ii) of this
section, the tax under chapter 1 of the Code
for the taxable year in which the recapture
event occurs is increased by the applica­
ble recapture percentage multiplied by the
increased credit amount allowed to the
taxpayer pursuant to paragraphs (a) and
(b)(3) of this section.
(ii) Applicable recapture percentage. If
the recapture event occurs:
(A) Within one full year after the prop­
erty is placed in service, the recapture per­
centage is 100;
(B) Within one full year after the close
of the period described in paragraph (c)(4)
(ii)(A) of this section, the recapture per­
centage is 80;
(C) Within one full year after the close
of the period described in paragraph (c)(4)
(ii)(B) of this section, the recapture per­
centage is 60;
(D) Within one full year after the close
of the period described in paragraph (c)(4)
(ii)(C) of this section, the recapture per­
centage is 40; or
(E) Within one full year after the close
of the period described in paragraph (c)(4)
(ii)(D) of this section, the recapture per­
centage is 20.
(6) Recapture period. The five­year
recapture period begins on the date the
project is placed in service and ends on
the date that is five full years after the
placed­in­service date. Each 365­day
period (366­day period in case of a leap
year) within the five­year recapture period
is a separate recapture year for recapture
purposes.
(7) Increase in tax for recapture. The
increase in tax under chapter 1 of the Code
for the recapture of an increased credit
amount claimed under paragraph (a) of
this section occurs in the year of the recap­
ture event.
(8) Annual prevailing wage compli-
ance report. In addition to the general
reporting requirements in §1.45­12, a tax­
payer that has claimed an increased credit
amount under paragraph (a) of this sec­

December 23, 2024 1416 Bulletin No. 2024–52
tion or transferred a specified credit por­
tion under section 6418 that includes an
increased credit amount under paragraph
(a) of this section is required to provide
to the IRS information on the payment
of prevailing wages with respect to any
alteration or repair of the project during
the recapture period at the time and in the
form and manner prescribed in IRS forms
or instructions or in publications or guid­
ance published in the Internal Revenue
Bulletin. See §601.601 of this chapter.
(9) Transferred specified credit por-
tions. In the case of a transferred spec­
ified credit portion under section 6418,
to which recapture of an increased credit
amount under this paragraph (c) applies,
the eligible taxpayer is required to notify
the transferee taxpayer of the recapture
event in accordance with the provisions
of §1.6418­5(f)(2) and the transferee tax­
payer is responsible for any amount of
increase in tax under section 48(a)(10)(C)
and this paragraph (c) in accordance with
the provisions of §1.6418­5(f)(3).
(d) Energy project defined—(1) In gen-
eral. For purposes of the increased credit
amount provided by section 48(a)(9) and
paragraphs (b) and (c) of this section, the
domestic content bonus credit amount
provided by section 48(a)(12), and the
increase in credit rate for energy commu­
nities provided in section 48(a)(14), the
term energy project means one or more
energy properties (multiple energy prop­
erties) that are operated as part of a single
energy project. Multiple energy proper­
ties will be treated as one energy project
if they are owned by a taxpayer (subject
to the related taxpayer rule provided in
paragraph (d)(2) of this section) and any
four or more of the following factors are
present:
(i) The energy properties are con­
structed on contiguous pieces of land;
(ii) The energy properties are described
in a common power purchase, thermal
energy, or other off­take agreement or
agreements;
(iii) The energy properties have a com­
mon intertie;
(iv) The energy properties share a com­
mon substation, or thermal energy off­take
point;
(v) The energy properties are described
in one or more common environmental or
other regulatory permits;
(vi) The energy properties are con­
structed pursuant to a single master con­
struction contract; or
(vii) The construction of the energy
properties is financed pursuant to the same
loan agreement.
(2) Time of determination—(i) Energy
project. A taxpayer may make the deter­
mination that multiple energy properties
are an energy project either—
(A) At any point during the construc­
tion of the multiple energy properties, or
(B) During the taxable year in which
the last such energy property is placed in
service.
(ii) Placed in Service. An energy proj­
ect (as defined in §1.48­13(d)) is consid­
ered placed in service on the date the last
of the energy properties within the energy
project is placed in service.
(3) Related taxpayers—(i) Defini-
tion. For purposes of this section, the
term related taxpayers means members
of a group of trades or businesses that
are under common control (as defined in
§1.52­1(b)).
(ii) Related taxpayer rule. For pur­
poses of this section, related taxpayers
are treated as one taxpayer in determining
whether multiple energy properties are
treated as an energy project with respect
to which a section 48 credit may be deter­
mined.
(4) Separate reporting for energy prop-
erties within an energy project. While
multiple energy properties may be treated
as a single energy project for specified
purposes, this information must be sep­
arately reported for each energy prop­
erty within an energy project on Form
3468, Investment Credit, or any succes­
sor form(s), and such form must be filed
with the taxpayer’s timely filed (including
extensions) Federal income tax return for
the taxable year in which the energy prop­
erty is placed in service.
(e) Nameplate capacity for purposes of
the One Megawatt Exception—(1) In gen-
eral. For purposes of paragraph (b)(1) of
this section, whether an energy project has
a maximum net output of less than 1 MW
of electrical (as measured in alternating
current) or thermal energy is determined
based on the nameplate capacity. If an
energy project is comprised of more than
one energy property, the energy project’s
maximum net output is calculated as the
sum of the nameplate capacity of each
energy property. If applicable, taxpay­
ers should use the International Standard
Organization (ISO) conditions to mea­
sure the maximum electrical generating
output or usable energy capacity of an
energy project. Paragraphs (e)(2) through
(7) of this section provide rules for mea­
suring output for different types of energy
properties to determine whether the One
Megawatt Exception (as provided in
paragraph (b)(1) of this section) applies.
Because electrochromic glass property (as
defined in §1.48­9(e)(2)(ii)), fiber­optic
solar energy property (as defined in §1.48­
9(e)(2)(i)), and microgrid controllers (as
defined in §1.48­9(e)(12)) do not generate
electricity or thermal energy, these energy
properties are not eligible for the One
Megawatt Exception.
(2) Nameplate capacity for energy
properties that generate in direct cur-
rent for purposes of the One Megawatt
Exception. Only for energy properties
that generate electricity in direct current,
the taxpayer may choose to determine the
maximum net output (in alternating cur­
rent) of each energy property that is part of
the energy project by using the lesser of:
(i) The sum of the nameplate generating
capacities within the unit of energy prop­
erty in direct current, which is deemed the
nameplate generating capacity of the unit
of energy property in alternating current;
or
(ii) The nameplate capacity of the first
component of property that inverts the
direct current electricity into alternating
current.
(3) Electrical generating energy prop-
erty. In the case of an electrical generat­
ing energy property, the One Megawatt
Exception is determined by using max­
imum electrical generating output in
megawatts that the unit of energy property
is capable of producing on a steady state
basis and during continuous operation
under standard conditions, as measured by
the manufacturer and consistent with the
definition of nameplate capacity provided
in 40 CFR 96.202.
(4) Electrical energy storage prop-
erty. In the case of electrical energy stor­
age property (as defined in §1.48­9(e)
(10)(ii)), the One Megawatt Exception is
determined by using the storage device’s
maximum net output. If the output of elec­

Bulletin No. 2024–52 1417 December 23, 2024
trical energy storage property is in direct
current, apply the rules of paragraph (2)
of this section.
(5) Thermal energy storage property
and other property generating or distrib-
uting thermal energy. In the case of ther­
mal energy storage property (as defined
in §1.48­9(e)(10)(iii)) and other energy
property that generates or distributes ther­
mal energy for productive use (for exam­
ple, geothermal energy property, GHP
property, solar process heat property), the
One Megawatt Exception is determined
by using the property’s maximum net out­
put. The maximum net output in MW is
calculated by using a conversion whereby
one MW is equal to 3.4 million British
Thermal Units per hour (mmBtu/hour) for
heating and 284 tons for cooling (Btu per
hour/3,412,140 = MW). The maximum
net output is the maximum instantaneous
rate of discharge and is determined based
on the nameplate capacity of the equip­
ment that generates or distributes thermal
energy for productive use (including dis­
tributing the thermal energy from the stor­
age medium). For purposes of determin­
ing the maximum net output of thermal
energy storage property, if the nameplate
capacity of the thermal energy storage is
not available, the nameplate capacity of
the equipment delivering thermal energy
to the thermal energy storage may be used.
For thermal energy storage property and
other energy property distributing ther­
mal energy to a building or buildings,
the nameplate capacity can be assessed
as either the aggregate maximum thermal
output of all individual heating or cooling
elements within the building or buildings,
or as the maximum thermal output that
the entire project is capable of delivering
to a building or buildings at any given
moment. The maximum thermal output
an entire project is capable of delivering
at any given moment does not take into
account the capacity of redundant equip­
ment if such equipment is not operated
when the system is at maximum output
during normal operation. For thermal
energy storage property and other energy
property that generates or distributes
thermal energy for a productive use, the
maximum thermal output that the entire
system is capable of delivering is consid­
ered to be the greater of the rate of cooling
or the rate of heating of the aggregate of
the nameplate capacity of the equipment
distributing energy for productive use,
including distributing the thermal energy
from the thermal energy storage medium
to the building or buildings. If such name­
plate capacity is unavailable, in the case of
thermal energy storage property only, the
maximum thermal output may instead be
considered to be the greater of the rate of
cooling or the rate of heating of the aggre­
gate of the nameplate capacity of all the
equipment delivering energy to the ther­
mal energy storage property in the project.
(6) Hydrogen energy storage property
and specified clean hydrogen production
facilities. In the case of a hydrogen energy
storage property (as defined in §1.48­9(e)
(10)(iv)) or a specified clean hydrogen
production facility (as defined in section
48(a)(15)(C)), the One Megawatt Excep­
tion is determined by using the property’s
or facility’s maximum net output. The
maximum net output in MW is calculated
by using a conversion whereby one MW
is equal to 3.4 mmBtu/hour of hydrogen
or equivalently 10,500 standard cubic feet
(scf) per hour of hydrogen.
(7) Qualified biogas property. In the
case of qualified biogas property, the One
Megawatt Exception is determined by the
property’s maximum net output. The max­
imum net output in MW is calculated by
using a conversion whereby one MW is
equal to 3.4 mmBtu/hour. Taxpayers may
convert the maximum net output of 3.4
mmBtu/hour into an equivalent maximum
net volume flow in scf per hour using the
appropriate high heat value conversion
factors found in the Environmental Pro­
tection Agency (EPA) Greenhouse Gas
Reporting Rule (GHGRR) at table C­1
to subpart C of part 98 (40 CFR part 98).
Otherwise, taxpayers may calculate their
own equivalent volumetric flow if the heat
content of the gas is known.
(f) Applicability date. This section
applies to energy projects placed in ser­
vice in taxable years ending on or after
December 12, 2024, and the construction
of which begins after December 12, 2024.
§1.48-14 Rules applicable to energy
property.
(a) Retrofitted energy property—(1) In
general. For purposes of section 48(a)(3)
(B)(ii), (5)(D)(iv), and (8)(B)(iii) of the
Internal Revenue Code (Code), a retro­
fitted energy property may be originally
placed in service even though it contains
some used components of the unit of
energy property only if the fair market
value of the used components of the unit
of energy property is not more than 20 per­
cent of the total value of the unit of energy
property taking into account the cost of
the new components of property plus the
value of the used components of the unit
of energy property (80/20 Rule). Only
the cost of new components of the unit of
energy property is taken into account for
purposes of computing the credit deter­
mined under section 48 (section 48 credit)
with respect to the unit of energy property.
The cost of new components of the unit
of energy property includes all costs prop­
erly included in the depreciable basis of
the new components. If the taxpayer sat­
isfies the 80/20 Rule with regard to the
unit of energy property and the taxpayer
pays or incurs new costs for property that
is an integral part of the energy property
(as defined in §1.48­9(f)(3)(i)), then the
taxpayer may include the new costs paid
or incurred for the property that is an
integral part of the energy property in the
basis of the energy property for purpose
of the section 48 credit. In the case of an
energy project (as defined in §1.48­13(d)),
the 80/20 Rule is applied to each unit of
energy property comprising an energy
project.
(2) Excluded costs. Costs incurred for
new components of property added to
used components of a unit of energy prop­
erty may not be taken into account for pur­
poses of the section 48 credit unless the
taxpayer satisfies the 80/20 Rule (as pro­
vided in paragraph (a)(1) of this section)
by placing into service a unit of energy
property for which the fair market value
of the used components of property is not
more than 20 percent of the total value
of the unit of energy property taking into
account the cost of the new components of
property plus the value of the used compo­
nents of property.
(3) Examples. This paragraph (a)(3)
provides examples illustrating the provi­
sions of this paragraph (a):
(i) Example 1. Retrofitted solar energy property
that satisfies the 80/20 Rule. Z owns an existing solar
energy property for which the section 48 credit has
been claimed and the recapture period for the section
48 credit has elapsed. Z replaces used components

December 23, 2024 1418 Bulletin No. 2024–52
of the solar energy property with new components
of property at a cost of $1.4 million. The retrofitted
solar energy property constitutes a unit of energy
property. The fair market value of the remaining
original components of the retrofitted solar energy
property is $100,000, which is not more than 20 per­
cent of the retrofitted solar energy property’s total
value of $1.5 million (that is, the cost of the new
components ($1.4 million) + the value of the remain­
ing original components ($100,000)). The value of
the old components of the retrofitted solar energy
property is 7 percent of the value of total value of the
retrofitted solar energy property ($100,000/$1.5 mil­
lion), thus the retrofitted solar energy property will
be considered newly placed in service for purposes
of section 48, and Z will be able to claim a section
48 credit based on the cost of the new components
($1.4 million).
(ii) Example 2. Capital improvements to an exist-
ing energy property that do not satisfy the 80/20
Rule. X owns an existing unit of energy property for
which the section 48 credit has been claimed and the
recapture period for the section 48 credit has elapsed.
The fair market value of the unit of energy property
is $1 million. During the tax year, X makes capital
improvements to the unit of energy property. The
expenditures for such capital improvements total
$300,000. X may not claim a section 48 credit for
the $300,000 spent on capital improvements during
the tax year because the capital improvements did
not satisfy the 80/20 Rule.
(iii) Example 3. Upgrades to a qualified hydro-
power production facility that satisfies the 80/20
Rule: Y owns a qualified hydropower production
facility (hydropower facility) as defined under
section 45 and no taxpayer, including Y, has ever
claimed a section 45 credit for the hydropower facil­
ity. The hydropower facility consists of a unit of
energy property including water intake, water isola­
tion mechanisms, turbine, pump, motor, and genera­
tor. The associated impoundment (dam) and power
conditioning equipment are integral parts of the unit
of energy property. Y makes upgrades to the unit
of energy property by replacing the turbine, pump,
motor, and generator with new components at a cost
of $1.5 million. Y does not make any upgrades to the
property that is an integral part of the unit of energy
property. The remaining original components of the
unit of energy property have a fair market value of
$100,000, which is not more than 20 percent of the
retrofitted hydropower facility’s total value of $1.6
million (that is, the cost of the new components
($1.5 million) + the value of the remaining original
components ($100,000)). Thus, the retrofitted hydro­
power facility will be considered newly placed in
service for purposes of section 48, and Y will be able
to make a valid section 48(a)(5) election and claim a
section 48 credit based on the cost of the new com­
ponents ($1.5 million).
(b) Dual use property—(1) Definition.
For purposes of section 48, the term dual
use property means property that uses
energy derived from both a qualifying
source (that is, from an energy property
defined in §1.48­9(a) (including a qual­
ified facility for which an election has
been made as provided by paragraph (f)
of this section)) and from a non­qualify­
ing source (that is, sources other than an
energy property defined in §1.48­9(a)
(including a qualified facility for which
an election has been made as provided by
paragraph (f) of this section)).
(2) Qualification as energy property—
(i) In general. Dual use property quali­
fies as energy property if its use of energy
from non­qualifying sources does not
exceed 50 percent of its total energy input
(as determined under the rules of para­
graph (b)(2)(ii) of this section) during an
annual measuring period (as defined in
paragraph (b)(2)(iii) of this section). If
the energy used from qualifying sources is
between 50 percent and 100 percent, only
a proportionate amount of the basis of the
energy property will be taken into account
in computing the amount of the section 48
credit (for example, if 80 percent of the
energy used by a dual use property is from
qualifying sources, 80 percent of the basis
of the dual use property will be taken into
account in computing the amount of the
section 48 credit).
(ii) Aggregation of energy inputs. The
measurement of energy use required for
purposes of paragraph (b)(2)(i) of this
section may be made by comparing, on
the basis of British thermal units (Btus),
energy input to dual use property from all
qualifying sources with energy input from
all non­qualifying sources. To convert the
energy inputs for CHP into Btus, the lower
heating value of the fuel is used for CHP
property and the higher heating value of
the hydrogen is used for fuel cells. The
Commissioner may also accept any other
method that accurately establishes the rel­
ative annual use of energy derived from
all qualifying sources and of energy input
from all non­qualifying sources by dual
use property.
(iii) Annual measuring period. For pur­
poses of paragraph (b)(2)(i) of this section,
the term annual measuring period means
with respect to an item of dual use prop­
erty the 365­day period (366­day period in
case of a leap year) beginning with the day
the dual use property is placed in service
(initial annual measuring period) or a 365­
day period (366­day period in case of a
leap year) beginning the day after the last
day of the immediately preceding annual
measuring period (subsequent annual
measuring period).
(iv) Recapture. If, for any subsequent
annual measuring period (within the recap­
ture period specified in section 50(a) of the
Code), the equipment’s use of energy from
all qualifying sources is reduced below 50
percent of its total energy input (as deter­
mined under the rules of paragraph (b)(2)
(ii) of this section), then recapture of the
section 48 credit is required under section
50(a).
(v) Example. On October 1, 2021, X, a
calendar year taxpayer, places in service a
unit of energy property that includes a sys­
tem that heats its office building by circu­
lating hot water heated by energy derived
from a geothermal deposit through the
building. The water heated by energy
derived from a geothermal deposit is
not hot enough to provide sufficient heat
for the building. The circulation system
includes an electric boiler in which the
water is further heated before being circu­
lated in the heating system. Energy from
the electric boiler is not from a qualifying
source and therefore the system is dual
use property. On a Btu basis, sixty percent
of the total energy input to the circulating
system during the initial annual measuring
period (the 365­day period beginning on
October 1, 2021) is energy derived from a
geothermal deposit. Accordingly, the cir­
culation system, including the pumps and
pipes that circulate the hot water through
the building, are part of the unit of energy
property and eligible for a section 48
credit. Sixty percent of the basis of the
circulation system is taken into account
in determining the section 48 credit for
X’s unit of energy property. During the
365­day period beginning on October 1,
2023, forty­five percent of the total energy
input to the circulating system (on a Btu
basis) is energy derived from a geothermal
deposit. X’s section 48 credit is therefore
subject to recapture under section 50.
(c) Energy property eligible for mul-
tiple Federal income tax credits—(1) In
general. The basis of energy property may
be eligible for calculating both the section
48 credit and another Federal income tax
credit, subject to the limitation provided in
paragraph (c)(2) of this section.
(2) Limitation. Except as provided in
paragraph (g) of this section, a taxpayer
may not claim both a section 48 credit and
another Federal income tax credit with
respect to the same basis in an energy

Bulletin No. 2024–52 1419 December 23, 2024
property. See paragraph (e) of this section
for special rules regarding ownership of
energy property.
(d) Incremental cost—(1) In general.
For purposes of section 48, if a component
of energy property is also used for a pur­
pose other than the intended function of
the energy property, only the incremental
cost of a component of energy property is
included in the basis of the energy prop­
erty. The term incremental cost means
the excess of the total cost of a compo­
nent over the amount that would have
been expended for the component if that
component were used for a non­qualifying
purpose.
(2) Example. A installs solar energy
property above the surface of an existing
roof of a building that A owns. The solar
energy property uses bifacial panels that
convert to energy the light that strikes
both the front and back of the panels.
Therefore, along with installing the bifa­
cial panels, A is reroofing their building
with a reflective roof that has a highly
reflective surface. Because the reflective
roof enables the panels’ generation of
significant amounts of electricity from
reflected sunlight, when installed in con­
nection with the solar energy property, it
constitutes part of that energy property
to the extent that the cost of the reflec­
tive roof exceeds the cost of reroofing A’s
building with a non­reflective roof. The
cost of reroofing with the reflective roof
is $15,000 whereas the cost of a reroof­
ing with a standard roof for the building
would be $10,000. The incremental cost
of the reflective roof is $5,000, and that
amount is included in A’s basis in the solar
energy property for purposes of the sec­
tion 48 credit.
(e) Special rules concerning owner-
ship—(1) Basis. For purposes of section
48, a taxpayer that owns an energy prop­
erty is eligible for the section 48 credit
only to the extent of the taxpayer’s basis
in the energy property. In the case of
multiple taxpayers holding direct owner­
ship in an energy property, each taxpayer
determines its basis based on its fractional
ownership interest in the energy property.
(2) Multiple owners. A taxpayer must
directly own at least a fractional interest
in the entire unit of energy property for
a section 48 credit to be determined with
respect to such taxpayer’s interest. No
section 48 credit may be determined with
respect to a taxpayer’s ownership of one
or more separate components of an energy
property if the components do not consti­
tute a unit of energy property. However,
the use of property owned by one taxpayer
that is an integral part of an energy prop­
erty owned by a second taxpayer will not
prevent a section 48 credit from being
determined with respect to the second tax­
payer’s energy property (though neither
taxpayer would be eligible for a section 48
credit with respect to the first taxpayer’s
property).
(3) Related taxpayers—(i) Defini-
tion. For purposes of this section, the
term related taxpayers means members
of a group of trades or businesses that
are under common control (as defined in
§1.52­1(b)).
(ii) Related taxpayer rule. For pur­
poses of this section, related taxpayers
are treated as one taxpayer in determining
whether a taxpayer has made an invest­
ment in an energy property with respect
to which a section 48 credit may be deter­
mined.
(4) Examples. The following examples
illustrate the rules in this paragraph (e). In
each example, X and Y are unrelated tax­
payers.
(i) Example 1. Fractional ownership required to
satisfy section 48. X and Y own fractional ownership
interests in a GHP property that is a unit of energy
property. Because X and Y each own a fractional
ownership interest in a unit of energy property, a sec­
tion 48 credit may be determined with respect to X’s
and Y’s fractional ownership interests in the unit of
energy property.
(ii) Example 2. Separate ownership of GHP
property. A GHP property is comprised of coils in
the ground and several individual heat pumps used in
conjunction with those coils. X owns both the coils
in the ground and one of the individual heat pumps
used in conjunction with the coils. Y owns one or
more of the individual heat pump(s) used in con­
junction with the coils. No section 48 credit may be
determined with respect to Y because Y owns merely
a component of energy property rather than a unit
of energy property as defined in §1.48­9(f)(2). How­
ever, while X does not own all of the individual heat
pumps used in conjunction with the coils, X does
own both the coils in the ground and one heat pump
used in conjunction with the coils and thus owns an
entire unit of energy property. Accordingly, X may
compute a section 48 credit with respect to this unit
of energy property.
(iii) Example 3. Shared ownership of property
that is an integral part of separate energy proper-
ties. X owns a wind energy property that is a unit
of energy property and Y owns a solar energy prop­
erty that is a unit of energy property that are co­lo­
cated. Both X’s wind energy property and Y’s solar
energy property connect to a substation that houses
a step­up transformer where the electricity is stepped
up to electrical grid voltage before being transmit­
ted to the electrical grid through an intertie. X and Y
each own a 50 percent fractional ownership interest
in the step­up transformer. The step­up transformer
is an integral part of both the wind energy property
and the solar energy property (as defined in §1.48­
9(f)(3)(i)). As a result, X and Y may both compute a
section 48 credit for their respective energy proper­
ties by including their respective bases in the step­up
transformer.
(iv) Example 4. Separate ownership of property
that is an integral part of separate energy property. X
owns a wind energy property that is a unit of energy
property and property that is an integral part of the
wind energy property, specifically a transformer
where the electricity is stepped up to electrical grid
voltage before being transmitted to the electrical grid
through an intertie. Y owns a solar energy property
that is a unit of energy property that connects to X’s
transformer. X and Y are not related persons within
the meaning of paragraph (e)(3)(i) of this section.
Because Y does not hold an ownership interest in the
transformer, Y may compute its section 48 credit for
its solar energy property, but it cannot include any
basis relating to the transformer.
(v) Example 5. X owns a wind energy property
that is a unit of energy property and a solar energy
property that is a unit of energy property. Both the
wind energy property and the solar energy property
are connected to a transformer where the electricity
is stepped up to electrical grid voltage before being
transmitted to the electrical grid through an inter­
tie. The transformer is an integral part of both the
wind energy property and the solar energy prop­
erty (within the meaning of §1.48­9(f)(3)(i)) and is
owned by Y. X and Y are related persons within the
meaning of paragraph (e)(3)(i) of this section. X and
Y are treated as one taxpayer under paragraph (e)(3)
(ii) of this section. X may include the basis of the
transformer in computing its section 48 credit with
respect to the wind energy and the solar energy prop­
erty (but may not include more than 100% of that
basis in the aggregate).
(f) Election to treat qualified facilities
as energy property—(1) In general. If a
taxpayer makes an election under sec­
tion 48(a)(5)(C) (pursuant to paragraph
(f)(5) of this section) to treat qualified
property that is part of a qualified invest­
ment credit facility as energy property
with respect to which a section 48 credit
may be determined, such property will
be treated as energy property for pur­
poses of section 48. No section 45 credit
may be determined with respect to any
qualified investment credit facility and
the requirements of section 45 are not
imposed on a qualified investment credit
facility.
(2) Qualified investment credit facility.
The term qualified investment credit facil­
ity means any facility—

December 23, 2024 1420 Bulletin No. 2024–52
(i) That is a qualified facility (within
the meaning of section 45) described in
section 45(d)(1) through (4), (6), (7), (9)
or (11);
(ii) That meets the placed in service and
beginning of construction requirements (if
any) provided in section 48;
(iii) With respect to which no credit has
been allowed under section 45; and
(iv) For which the taxpayer makes an
irrevocable election under section 48(a)
(5) and paragraph (f)(5) of this section.
(3) Qualified property. The term qual-
ified property means property that meets
each of the requirements of paragraphs
(f)(3)(i) through (iv) of this section.
Regardless of where qualified property is
located, any qualified property that meets
the requirements of this paragraph (f)(3)
is part of a qualified investment credit
facility with respect to which a section 48
credit may be determined.
(i) The property is tangible personal
property or other tangible property (not
including a building or its structural com­
ponents), but only if such other tangible
property is an integral part of the qualified
investment credit facility.
(ii) Depreciation (or amortization in
lieu of depreciation) is allowable (as
defined in §1.48­9(b)(4)) with respect to
the property.
(iii) The taxpayer constructs, recon­
structs, or erects the property (as defined
in §1.48­9(b)(1)) or acquires the property
(as defined in §1.48­9(b)(2)) if the original
use of the property (as defined in §1.48­
9(b)(3)) commences with the taxpayer.
(iv) The property is not intangible
property.
(4) Definitions related to requirements
for qualified property.
(i) Tangible personal property. The
term tangible personal property means
any tangible property except land and
improvements thereto, such as buildings
or other inherently permanent structures
(including items that are structural com­
ponents of such buildings or structures).
Tangible personal property includes all
property (other than structural compo­
nents) that is contained in or attached to a
building. Further, all property that is in the
nature of machinery (other than structural
components of a building or other inher­
ently permanent structure) is considered
tangible personal property even though
located outside a building. Local law is
not controlling for purposes of determin­
ing whether property is or is not tangible
property or tangible personal property.
Thus, tangible property may be personal
property for purposes of the section 48
credit even though under local law the
property is considered to be a fixture and
therefore real property.
(ii) Other tangible property. The term
other tangible property means tangible
property other than tangible personal
property (not including a building and
its structural components), that is used
as an integral part of furnishing electrical
energy by a person engaged in a trade or
business of furnishing any such service.
(iii) Integral part—(A) In general.
Property owned by a taxpayer is an inte­
gral part of a qualified investment credit
facility owned by the same taxpayer if it
is used directly in the intended function
of the qualified investment credit facility
and is essential to the completeness of the
intended function of the qualified invest­
ment credit facility. A taxpayer may not
claim the section 48 credit for any prop­
erty that is not owned by the taxpayer,
regardless of whether that property is oth­
erwise an integral part of the taxpayer’s
qualified investment credit facility.
(B) Power conditioning and transfer
equipment. Property that is an integral part
of a qualified investment credit facility
includes power conditioning equipment
and transfer equipment used to perform the
intended function of the qualified invest­
ment credit facility. Power conditioning
equipment includes, but is not limited to,
transformers, inverters, and converters,
which modify the characteristics of elec­
tricity or thermal energy into a form suit­
able for use or transmission or distribution.
Parts related to the functioning or protec­
tion of power conditioning equipment are
also treated as power conditioning equip­
ment and include, but are not limited to,
switches, circuit breakers, arrestors, and
hardware used to monitor, operate, and
protect power conditioning equipment.
Transfer equipment includes equipment
that permits the aggregation of energy
generated by components of energy prop­
erties and equipment that alters voltage in
order to permit transfer to a transmission
or distribution line. Transfer equipment
does not include transmission or distri­
bution lines. Examples of transfer equip­
ment include, but are not limited to, wires,
cables, and combiner boxes that conduct
electricity. Parts related to the functioning
or protection of transfer equipment are
also treated as transfer equipment and may
include items such as current transformers
used for metering, electrical interrupters
(such as circuit breakers, fuses, and other
switches), and hardware used to monitor,
operate, and protect transfer equipment.
(C) Roads. Roads that are an integral
part of a qualified investment credit facil­
ity are integral to the activity performed
by the qualified investment credit facility;
these include onsite roads that are used
for equipment to operate and maintain the
qualified investment credit facility. Roads
primarily for access to the site, or roads
used primarily for employee or visitor
vehicles, are not integral to the activity
performed by a qualified investment credit
facility.
(D) Fences. Fencing is not an integral
part of a qualified investment credit facil­
ity because it is not integral to the activity
performed by the energy property.
(E) Buildings. Generally, buildings are
not integral parts of a qualified investment
credit facility because they are not integral
to the activity of the qualified investment
credit facility. However, the structures
described in paragraphs (f)(4)(iii)(F) and
(G) of this section are not treated as build­
ings for this purpose.
(F) Structures essentially items of
machinery or equipment. A structure that
is essentially an item of machinery or
equipment is not treated as a building for
purposes of paragraph (f)(4)(iii)(E) of this
section.
(G) Structures that house certain prop-
erty. A structure that houses property that
is integral to the activity of a qualified
investment credit facility is not treated
as a building for purposes of paragraph
(f)(4)(iii)(E) of this section if the use of
the structure is so closely related to the
use of the housed qualified investment
credit facility that the structure clearly
can be expected to be replaced if the qual­
ified investment credit facility it initially
houses is replaced.
(5) Time and manner of making elec-
tion—(i) In general. To make an election
under section 48(a)(5) and paragraph (f)
of this section to treat a qualified facility

Bulletin No. 2024–52 1421 December 23, 2024
as a qualified investment credit facility, a
taxpayer must claim the section 48 credit
with respect to such qualified invest­
ment credit facility on a completed Form
3468, Investment Credit, or any successor
form(s), and file such form with the tax­
payer’s timely filed (including extensions)
Federal income tax return for the taxable
year in which the qualified investment
credit facility is placed in service. The
taxpayer must also attach a statement to
its Form 3468, or any successor form(s),
filed with its timely filed Federal income
tax return (including extensions) that
includes all of the information required by
the instructions to Form 3468, or any suc­
cessor form(s) for each qualified invest­
ment credit facility subject to an election
under section 48(a)(5) and paragraph (f)
of this section. A separate election must be
made for each qualified facility that meets
the requirements provided in paragraph
(f)(2)of this section to be treated as a
qualified investment credit facility. If any
taxpayer owning an interest in a qualified
facility makes an election with respect
to such qualified facility, that election is
binding on all taxpayers that directly or
indirectly own an interest in the qualified
facility.
(ii) Special rule for partnerships and
S corporations. In the case of a qualified
facility owned by a partnership or an S
corporation, the election under paragraph
(f) of this section is made by the partner­
ship or S corporation and is binding on all
ultimate credit claimants (as defined in
§1.50­1(b)(3)(ii)) of a section 48 credit.
The partnership or S corporation must
file a Form 3468, Investment Credit, or
any successor form(s), with its timely
filed partnership or S corporation return
(including extensions) with respect to
Federal income tax for the taxable year
in which the qualified investment credit
facility is placed in service to indicate
that it is making the election and attach a
statement that includes all of the informa­
tion required by the instructions to Form
3468, or any successor form(s) for each
qualified facility subject to the election.
The ultimate credit claimants must claim
the section 48 credit on a completed Form
3468, or any successor form(s), and file
such form with a timely filed (including
extensions) Federal income tax return
for the taxable year in which the ultimate
credit claimant’s distributive share or pro
rata share of the section 48 credit is taken
into account under section 706(a) of the
Code or section 1366(a) of the Code,
respectively. The partnership or S corpo­
ration making the election must provide
the ultimate credit claimants with the
necessary information to complete Form
3468, or any successor form(s), to claim
the section 48 credit.
(6) Election irrevocable. The election
under section 48(a)(5) and paragraph (f)
of this section to treat a qualified facility
as an energy property is irrevocable.
(g) Coordination rule for sections 42
and 48 credits. As provided under sec­
tion 50(c)(3)(C), in determining eligible
basis for purposes of calculating a section
42 credit, a taxpayer is not required to
reduce its basis in an energy property by
the amount of the section 48 credit deter­
mined with respect to the property. The
basis of an energy property may be used
to determine a section 48 credit and may
also be included in eligible basis to deter­
mine a section 42 credit. See paragraph (e)
of this section for special rules regarding
ownership of energy property.
(h) Qualified interconnection costs
included in certain lower-output energy
properties—(1) In general. For purposes
of determining the section 48 credit,
energy property includes amounts paid
or incurred by the taxpayer for qualified
interconnection property (as defined in
paragraph (h)(2) of this section) in con­
nection with the installation of energy
property (as defined in §1.48­9(a)) that
has a maximum net output of not greater
than five megawatts (MW) (as measured
in alternating current) (as described in
paragraph (h)(3) of this section). The
qualified interconnection property must
provide for the transmission or distribu­
tion of the electricity produced or stored
by such energy property and must be
properly chargeable to the capital account
of the taxpayer as reduced by paragraph
(h)(6) of this section. If the costs borne
by the taxpayer are reduced by utility or
non­utility payments, Federal income tax
principles may require the taxpayer to
reduce the amounts of costs treated as paid
or incurred for qualified interconnection
property to determine a section 48 credit.
(2) Qualified interconnection prop-
erty. The term qualified interconnection
property means, with respect to an energy
project that is not a microgrid controller,
any tangible property that is part of an
addition, modification, or upgrade to a
transmission or distribution system that is
required at or beyond the point at which
the energy project interconnects to such
transmission or distribution system in
order to accommodate such interconnec­
tion; is either constructed, reconstructed,
or erected by the taxpayer, (as defined
in §1.48­9(b)(1)), or for which the cost
with respect to the construction, recon­
struction, or erection of such property is
paid or incurred by such taxpayer; and the
original use (as defined in §1.48­9(b)(3)),
of which, pursuant to an interconnection
agreement (as defined in paragraph (h)(4)
of this section), commences with a util­
ity (as defined in paragraph (h)(5) of this
section). For purposes of determining the
original use of interconnection property
in the context of a sale­leaseback or lease
transaction, the principles of section 50(d)
(4) must be taken into account, as appli­
cable, with such original use determined
on the date of the sale­leaseback or lease.
Qualified interconnection property is not
part of an energy property. As a result,
qualified interconnection property is not
taken into account in determining whether
an energy project satisfies the prevailing
wage and apprenticeship requirements in
section 48(a)(10)(A) and (11), the require­
ments for the domestic content bonus
credit amount referenced in section 48(a)
(12), or the increase in credit rate for
energy communities provided in section
48(a)(14).
(3) Five-Megawatt Limitation—(i) In
general. The Five­Megawatt Limitation is
measured at the level of the energy prop­
erty in accordance with section 48(a)(8)
(A). The maximum net output of an energy
property is measured only by nameplate
generating capacity (in alternating cur­
rent) of the unit of energy property, which
does not include the nameplate capac­
ity of any integral property, at the time
the energy property is placed in service.
The nameplate generating capacity of the
unit of energy property is measured inde­
pendently from any other energy proper­
ties that share the same integral property.
(ii) Nameplate capacity for purposes
of the Five-Megawatt Limitation. For pur­
poses of paragraph (h)(1) of this section,

December 23, 2024 1422 Bulletin No. 2024–52
the determination of whether an energy
property has a maximum net output of
not greater than five MW (as measured in
alternating current) is based on the name­
plate capacity for purposes of paragraph
(h)(1) of this section. If applicable, tax­
payers should use the International Stan­
dard Organization (ISO) conditions to
measure the maximum electrical gener­
ating output or usable energy capacity of
an energy property. Paragraphs (h)(3)(iv)
and (v) of this section provide rules for
applying the Five­Megawatt Limitation
(as provided in paragraph (h)(1) of this
section) to electrical generating energy
property and electrical energy storage
property, respectively.
(iii) Nameplate capacity for energy
properties that generate in direct current
for purposes of the Five-Megawatt Lim-
itation. For energy properties that gener­
ate electricity in direct current, the tax­
payer may choose to determine whether
an energy property has a maximum net
output of not greater than five MW (in
alternating current) by using the lesser of:
(A) The sum of the nameplate gener­
ating capacities within the unit of energy
property in direct current, which is deemed
the nameplate generating capacity of the
unit of energy property in alternating cur­
rent; or
(B) The nameplate capacity of the first
component of property that inverts the
direct current electricity into alternating
current.
(iv) Electrical generating energy
property. In the case of an electrical gen­
erating energy property, the Five­Mega­
watt Limitation is determined by using
the maximum electrical generating out­
put in MW that the unit of energy prop­
erty is capable of producing on a steady
state basis and during continuous opera­
tion under standard conditions, as mea­
sured by the manufacturer and consistent
with the definition of nameplate capacity
provided in 40 CFR 96.202. If applica­
ble, taxpayers should use the ISO condi­
tions to measure the maximum electrical
generating output of a unit of energy
property.
(v) Electrical energy storage property.
In the case of electrical energy storage
property (as defined in §1.48­9(e)(10)(ii)),
the Five­Megawatt Limitation is deter­
mined by using the energy storage proper­
ty’s maximum net output as its nameplate
capacity.
(4) Interconnection agreement. The
term interconnection agreement means an
agreement with a utility for the purposes
of interconnecting the energy property
owned by such taxpayer to the transmis­
sion or distribution system of the utility.
In the case of the election provided under
section 50(d)(5) (relating to certain leased
property), the term includes an agreement
regarding energy property leased by such
taxpayer.
(5) Utility. For purposes of section
48(a)(8) and this paragraph (h), the term
utility means the owner or operator of
an electrical transmission or distribution
system that is subject to the regulatory
authority of a State or political subdivi­
sion thereof, any agency or instrumental­
ity of the United States, a public service or
public utility commission or other similar
body of any State or political subdivision
thereof, or the governing or ratemaking
body of an electric cooperative.
(6) Reduction to amounts chargeable
to capital account. In the case of costs
paid or incurred for qualified intercon­
nection property as defined in paragraph
(h)(2) of this section, amounts otherwise
chargeable to capital account with respect
to such costs must be reduced under
rules similar to the rules of section 50(c)
(including section 50(c)(3)).
(7) Examples. This subparagraph pro­
vides examples illustrating the application
of the general rules provided in paragraph
(h)(1) of this section and the Five­Megawatt
Limitation provided in this paragraph (h).
(i) Example 1. Application of Five-Megawatt
Limitation to an interconnection agreement for
energy properties owned by taxpayer. X places in
service two solar energy properties (Solar Prop­
erties) each with a maximum net output of 4 MW
(as measured in alternating current by using the
nameplate capacity of an inverter, which is the first
component of property attached to each of the Solar
Properties that inverts the direct current electricity
into alternating current). Each inverter is an inte­
gral part of each Solar Property but is not shared
by the Solar Properties. The Solar Properties share
a step­up transformer, which is an integral part of
both Solar Properties. As part of the development
of the Solar Properties, payment of qualified inter­
connection costs is required by the utility to modify
and upgrade the utility’s transmission system at or
beyond the point of interconnection to accommo­
date such interconnection. X has an interconnection
agreement with the utility that allows for a maxi­
mum output of 10 MW (as measured in alternating
current). The interconnection agreement provides
the total cost to X of the qualified interconnection
property. X may include the costs X paid or incurred
for qualified interconnection property subject to the
terms of the interconnection agreement, to calculate
X’s section 48 credits for each of the Solar Proper­
ties because each has a maximum net output of not
greater than five MW (alternating current). X cannot
include more than the total costs X paid or incurred
for the qualified interconnection property in calculat­
ing the aggregate section 48 credit amount for both
Solar Properties.
(ii) Example 2. Application of Five-Megawatt
Limitation to an interconnection agreement for
energy properties owned by separate taxpayers. X
places in service a solar energy property (Solar Prop­
erty) with a maximum net output of 3 MW (as mea­
sured in alternating current by using the nameplate
capacity of the first component of property attached
to the Solar Property that inverts the direct current
electricity into alternating current). Y places in ser­
vice a wind facility (Wind Facility), for which Y has
made a valid election under section 48(a)(5), with a
maximum net output of 4 MW (as measured in alter­
nating current). The Solar Property and the Wind
Facility share a step­up transformer, which is an inte­
gral part of both facilities. As part of the development
of the Solar Property and the Wind Facility, payment
of qualified interconnection costs is required by
the utility to modify and upgrade the transmission
system at or beyond the point of interconnection
to accommodate that interconnection. X and Y are
party to the same interconnection agreement with
the utility that allows for a maximum output of 10
MW (as measured in alternating current). The inter­
connection agreement provides the total cost of the
qualified interconnection property to X and Y. X and
Y may include the costs paid or incurred by X and Y,
respectively, for qualified interconnection property
subject to the terms of the interconnection agree­
ment, to calculate their respective section 48 credits
for the Solar Property and the Wind Facility because
each has a maximum net output of not greater than
five MW (in alternating current).
(iii) Example 3. Application of Five-Megawatt
Limitation to an interconnection agreement for a
single energy property. X develops three solar prop­
erties (Solar Properties) located in close proximity.
The Solar Properties are not considered an energy
project pursuant to the definition in §1.48­13(d).
Each of the Solar Properties is a unit of energy prop­
erty that has a maximum net output of 4 MW. The
nameplate capacity of each Solar Property is deter­
mined by using the sum of the nameplate generating
capacities within the unit of each Solar Property in
direct current, which is deemed the nameplate gen­
erating capacity of each Solar Property in alternating
current. Electricity from the three Solar Properties
feeds into a single gen­tie line and a common point
of interconnection with the transmission system.
X is party to a separate interconnection agreement
with the utility for each of the Solar Properties and
each interconnection agreement allows for a maxi­
mum output of 10 MW (as measured in alternating
current). X may include the costs it paid or incurred
for qualified interconnection property for each of the
Solar Properties to calculate its section 48 credit for
each of the Solar Properties, subject to the terms of
each interconnection agreement, because each of

Bulletin No. 2024–52 1423 December 23, 2024
the Solar Properties has a maximum net output of
not greater than five MW (in alternating current). X
cannot include more than the total costs X paid or
incurred for the qualified interconnection property in
calculating the aggregate section 48 credit amount
for both Solar Properties.
(iv) Example 4. Application of Five-Megawatt
Limitation to a single interconnection agreement for
multiple energy properties. The facts are the same
as in paragraph (h)(7)(iii) of this section (Example
3), except that X is party to one interconnection
agreement with the utility with respect to the three
solar energy properties (Solar Properties) and the
interconnection agreement allows for a maximum
output of 12 MW (as measured in alternating cur­
rent). With respect to each of the three Solar Prop­
erties, X may include the costs it paid or incurred
for qualified interconnection property for each Solar
Property to calculate its section 48 credit for each
Solar Property, subject to the terms of the intercon­
nection agreement, because each Solar Property has
a maximum net output of not greater than five MW
(in alternating current).
(v) Example 5. Application of Five-Megawatt
Limitation to an Energy Project. The facts are the
same as in paragraph (h)(7)(iv) of this section
(Example 4), except that the three solar energy prop­
erties (Solar Properties) are also subject to a common
power purchase agreement, and as a result are con­
sidered an energy project (as defined in §1.48­13(d)).
With respect to each of the three Solar Properties, X
may include the costs it paid or incurred for quali­
fied interconnection property to calculate its section
48 credit for each of the three Solar Properties, sub­
ject to the terms of the interconnection agreement,
because each of the Solar Properties has a maximum
net output of not greater than five MW (in alternating
current).
(vi) Example 6. Utility payment reducing costs
borne by taxpayer. In year 1, X places in service a
solar energy property (Solar Property) with a maxi­
mum net output of 3 MW (as measured in alternat­
ing current by using the nameplate capacity of the
inverter attached to the solar energy property, which
is the first component of property attached to each
of the Solar Properties that inverts the direct current
electricity into alternating current). X is party to an
interconnection agreement with a utility for the pur­
pose of connecting the Solar Property to the trans­
mission or distribution system of the utility. Pursuant
to the interconnection agreement, X pays $1 million
to the utility, and the utility places in service qual­
ified interconnection property. In year 1, X had no
reasonable expectation of any payment from the
utility or other parties with respect to the qualified
interconnection property. The $1 million is properly
chargeable to the capital account of X, subject to
paragraph (h)(6) of this section. X properly includes
the $1 million paid to the utility in determining its
credit under section 48 for Year 1. In Year 4, tax­
payer Y enters into an agreement with the utility
under which Y pays the utility $100,000 for the use
of qualified interconnection property placed in ser­
vice by the utility pursuant to the interconnection
agreement between X and the utility. The utility pays
$100,000 to X. Under these circumstances, the pay­
ment from the utility in year 4 would not require X to
reduce the amount treated as paid or incurred for the
qualified interconnection property for the purpose of
determining the section 48 credit in year 1.
(vii) Example 7. Non-utility payment reducing
costs borne by taxpayer. The facts in year 1 are the
same as in paragraph (h)(7)(vi) of this section (Exam-
ple 6). In Year 4, taxpayer Y enters into an agreement
with the utility under which Y pays X $100,000
for the use of qualified interconnection property
placed in service by the utility pursuant to the inter­
connection agreement between X and the utility. Y
pays $100,000 to X. In year 1, X had no reasonable
expectation of any payment from Y for subsequent
agreements with Y or other parties with respect to
the qualified interconnection property. Under these
circumstances, the payment from Y in year 4 would
not require X to reduce the amount treated as paid
or incurred for the qualified interconnection property
for the purpose of determining the section 48 credit
in year 1.
(i) Cross references. (1) For rules
regarding the coordination of the section
42 credit and section 48 credit, see section
50(c)(3).
(2) For rules regarding the denial of
double benefit for qualified biogas prop­
erty, see section 45(e).
(3) For applicable recapture rules, see
section 50(a).
(4) For rules regarding the credit eligi­
bility of property used outside the United
States, see section 50(b)(1).
(5) For rules regarding the credit eligi­
bility of property used by certain tax­ex­
empt organizations, see section 50(b)(3).
See section 6417(d)(2) of the Code for
an exception to this rule in the case of an
applicable entity making an elective pay­
ment election.
(6) For application of the normalization
rules to determine the section 48 credit
taken by certain regulated companies,
including rules regarding the election not
to apply the normalization rules to energy
storage technology (as defined in section
48(c)(6)), see section 50(d)(2).
(j) Applicability date. This section
applies with respect to property placed
in service after December 31, 2022, and
during a taxable year beginning after
December 12, 2024.
Par. 4. Section 1.6418­5 is amended
by adding paragraph (f) and revising para­
graph (j) to read as follows:
§1.6418-5 Special rules.
* * * * *
(f) Notification and impact of recap-
ture under section 48(a)(10)(C)—(1) In
general. In the case of any election under
§1.6418­2 or §1.6418­3 with respect to
any specified credit portion described in
§1.6418­1(c)(2)(ix), if, during any tax­
able year, there is recapture under section
48(a)(10)(C) of the Code and §1.48­13(c)
(4) of any increased credit amount under
section 48(a)(9)(B)(iii) before the close
of the recapture period (as described in
§1.48­13(c)(6)), such eligible taxpayer
and the transferee taxpayer must follow
the notification process in paragraph (f)(2)
of this section with the Federal income tax
consequences of recapture impacting the
transferee taxpayer as described in para­
graph (f)(3) of this section.
(2) Notification requirements. The noti­
fication requirements for the eligible tax­
payer are the same as for an eligible tax­
payer that must report a recapture event
as described in paragraph (d)(2)(i) of this
section, except that the recapture amount
that must be computed is defined in §1.48­
13(c)(5).
(3) Impact of recapture—(i) Section
48(a)(10)(C) recapture event. The trans­
feree taxpayer is responsible for any
amount of tax increase under section
48(a)(10)(C) and §1.48­13(c)(5) upon
the occurrence of a recapture event under
§1.48­13(c)(4), provided that if an eli­
gible taxpayer retains any amount of an
eligible credit determined with respect to
an energy property directly held by the
eligible taxpayer, the amount of the tax
increase under section 48(a)(10)(C) and
§1.48­13(c)(5) that the eligible taxpayer
is responsible for is equal to the recap­
ture amount multiplied by a fraction, the
numerator of which is the total credit
amount that the eligible taxpayer retained,
and the denominator of which is the total
credit amount determined for the energy
property. The amount of the tax increase
under section 48(a)(10)(C) that the trans­
feree taxpayer is responsible for is equal
to the recapture amount multiplied by a
fraction, the numerator of which is the
specified credit portion transferred to the
transferee taxpayer, and the denominator
of which is the total credit amount deter­
mined for the energy property.
(ii) Impact of section 48(a)(10)(C)
recapture event on basis of energy prop-
erty held by eligible taxpayer. The eligi­
ble taxpayer must increase the basis of
the energy property (as of the first day of
the taxable year in which the recapture

December 23, 2024 1424 Bulletin No. 2024–52
event occurs) by an amount equal to the
recapture amount provided to the eligible
taxpayer by the transferee taxpayer pur­
suant to the notification required under
paragraph (f)(2) of this section and the
recapture amount on any credit amounts
retained by the eligible taxpayer in accor­
dance with section 48(a)(10)(C) and
§1.48­13(c)(4).
* * * * *
(j) Applicability dates—(1) In gen-
eral. Except as provided in paragraph (j)
(2) of this section, this section applies to
taxable years ending on or after April 30,
2024. For taxable years ending before
April 30, 2024, taxpayers, however, may
choose to apply the rules of this section
and §§1.6418­1 through 1.6418­3 pro­
vided the taxpayers apply the rules in their
entirety and in a consistent manner.
(2) Paragraph (f) of this section. Para­
graph (f) of this section applies to taxable
years ending on or after December 12,
2024.
Douglas W. O’Donnell,
Deputy Commissioner.
Approved: November 25, 2024.
Aviva R. Aron-Dine,
Deputy Assistant Secretary of the Trea-
sury (Tax Policy).
(Filed by the Office of the Federal Register TBD,
TBD, and published in the issue of the Federal Reg­
ister for TBD, TBD FR TBD)

Bulletin No. 2024–52 1425 December 23, 2024
Part III
2024 Required
Amendments List
for Qualified and
Section 403(b) Plans
Notice 2024-82
I. PURPOSE
This notice sets forth the 2024 Required
Amendments List (2024 RA List). The
Required Amendments List (RA List)
applies to individually designed plans
qualified under section 401(a) of the Inter­
nal Revenue Code (Code) (qualified indi­
vidually designed plans) and individually
designed plans that satisfy the require­
ments of section 403(b) (section 403(b)
individually designed plans). The RA List
also applies to pre­approved plans with
respect to interim amendments.
II. BACKGROUND
Section 401(b) provides a remedial
amendment period during which a plan
may be amended retroactively to comply
with the qualification requirements under
section 401(a). Treas. Reg. § 1.401(b)­1
describes the disqualifying provisions that
may be amended retroactively and the
remedial amendment period during which
retroactive amendments may be adopted.
That regulation also grants the Commis­
sioner of Internal Revenue the discretion
to designate certain plan provisions as
disqualifying provisions and to extend the
remedial amendment period in guidance
published in the Internal Revenue Bulletin
(IRB).
Section 5 of Rev. Proc. 2019­39,
2019­42 IRB 945, as modified by section
III.B.2(e) of Notice 2020­35, 2020­25
IRB 948, establishes a system of recurring
remedial amendment periods for section
403(b) individually designed plan form
defects first occurring after June 30, 2020.
Section 5.03(1)(c) of Rev. Proc. 2022­
40, 2022­47 IRB 487, provides generally
that, except as otherwise provided by stat­
ute or in regulations or other guidance
published in the IRB, in the case of a qual­
ified or section 403(b) plan that is individ­
ually designed and is not a governmental
plan within the meaning of section 414(d)
of the Code, the remedial amendment
period for (1) a disqualifying provision or
(2) a form defect first occurring after June
30, 2020, that arises as a result of a change
in qualification requirements or sec­
tion 403(b) requirements, as applicable,
expires on the last day of the second cal­
endar year that begins after the issuance of
the RA List on which the change in qual­
ification requirements or section 403(b)
requirements appears. Section 5.03(2)(c)
provides a special rule for governmental
plans that may further extend the remedial
amendment period in some cases.
Section 6.01 of Rev. Proc. 2022­40 pro­
vides that the plan amendment deadline
with respect to (1) a disqualifying provi­
sion in a qualified individually designed
plan, or (2) a form defect first occurring
after June 30, 2020, in a section 403(b)
individually designed plan is the date on
which the remedial amendment period
expires in accordance with section 5 of
Rev. Proc. 2022­40 with respect to that
disqualifying provision or form defect.
Section 7 of Rev. Proc. 2022­40 pro­
vides that the Department of the Treasury
(Treasury Department) and the Internal
Revenue Service (IRS) publish an annual
RA List.
1
In general, a change in quali­
fication requirements or section 403(b)
requirements will not appear on an RA
List until guidance with respect to that
change (including, any model amend­
ment, if applicable) has been provided, in
regulations or in other guidance published
in the IRB. However, in the discretion
of the Treasury Department and the IRS,
a change in qualification requirements
or section 403(b) requirements may be
included on an RA List in other circum­
stances, such as in cases in which a stat­
utory change is enacted and the Treasury
Department and the IRS anticipate that no
guidance will be issued.
Section 7.01(1)(a) of Rev. Proc. 2023­
37, 2023­51 IRB 1491, provides that for
a pre­approved plan that is not a govern­
mental plan, a provider (or the adopting
employer, if applicable) adopts an interim
amendment (as defined in section 4.01(9)
of Rev. Proc. 2023­37) timely if the plan
amendment is adopted by the last day of
the second calendar year that begins after
the issuance of the RA List in which the
change in qualification requirements or
section 403(b) requirements appears.
The remedial amendment period appli­
cable to a disqualifying provision or form
defect arising as a result of a change in
qualification requirements or section
403(b) requirements may be extended
beyond the date that normally would
apply to an item included on an RA List,
if a statute, regulation, or other guidance
published in the IRB provides for a later
deadline.
Section 501 of the SECURE 2.0 Act
2

provides, in general, that a retirement plan
or annuity contract will be treated as being
operated in accordance with the terms of
the plan during a specified period and,
except as provided by the Secretary of
the Treasury (or the Secretary’s delegate),
a retirement plan will not fail to satisfy
the anti­cutback requirements of section
411(d)(6) of the Code or section 204(g) of
the Employee Retirement Income Secu­
rity Act of 1974, Pub. L. 93­406, 88 Stat.
829, as amended (ERISA), by reason of
a plan amendment made pursuant to any
amendment made by the SECURE 2.0 Act
or pursuant to any regulation issued by the
Secretary of the Treasury or the Secretary
of Labor (or a delegate of either such Sec­
retary) under the SECURE 2.0 Act, pro­
vided that:
(1) the amendment is adopted no later
than the last day of the first plan year
beginning on or after January 1, 2025, or,
1
In order to help plan sponsors achieve operational compliance with changes in requirements, the IRS also provides the Operational Compliance List, which is a list of changes in both
qualification requirements and section 403(b) requirements that are effective during a calendar year, on the IRS website at https://www.irs.gov/retirement­plans/operational­compliance­list.
See generally section 8 of Rev. Proc. 2022­40.
2
Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117­328, 136 Stat. 4459 (2022), known as the SECURE 2.0 Act of 2022 (SECURE 2.0 Act).

December 23, 2024 1426 Bulletin No. 2024–52
for an applicable collectively bargained
plan (a plan maintained pursuant to one
or more collective bargaining agreements
between employee representatives and
one or more employers ratified before
December 29, 2022), or for a governmen­
tal plan (within the meaning of section
414(d) of the Code), the last day of the
first plan year beginning on or after Janu­
ary 1, 2027, or such later date as the Secre­
tary may prescribe (the section 501 date);
(2) the amendment applies retroac­
tively to the effective date of the SECURE
2.0 Act provision or the regulations there­
under (or, in the case of an amendment not
required by a provision of the SECURE
2.0 Act or the regulations thereunder, the
effective date specified by the plan); and
(3) the plan or contract is operated as
if the amendment were in effect during
the period beginning on the effective date
of the SECURE 2.0 Act provision or the
regulations thereunder (or, in the case of
an amendment not required by a provision
of the SECURE 2.0 Act or the regulations
thereunder, the effective date specified by
the plan or contract) and ending on the
section 501 date or, if earlier, the date the
amendment is adopted.
Section 501(c) of the SECURE 2.0 Act
modifies section 601(b)(1) of the Setting
Every Community Up for Retirement
Enhancement Act of 2019 (SECURE
Act),
3
sections 2202(c)(2)(A) and 2203(c)
(2)(B)(i) of the Coronavirus Aid, Relief,
and Economic Security Act (CARES
Act),
4
and section 302(d)(2)(A) of Title III
of the Taxpayer Certainty and Disaster Tax
Relief Act of 2020 (Relief Act)
5
to extend
plan amendment deadlines with respect to
these sections to coordinate with the plan
amendment deadlines under section 501
of the SECURE 2.0 Act, as applicable.
6
Notice 2024­2, 2024­2 IRB 316, Q&A
J­1, provides the deadlines by which a
retirement plan must be amended to reflect
the provisions of the SECURE Act, sec­
tion 104 of the Miners Act, section 2202
or 2203 of the CARES Act, section 302 of
the Relief Act, and the SECURE 2.0 Act
(the Acts) and the regulations thereunder.
7

In general, the deadline for a qualified
plan: (1) that is not a governmental plan
within the meaning of section 414(d) of
the Code or an applicable collectively bar­
gained plan is December 31, 2026; (2) that
is an applicable collectively bargained
plan is December 31, 2028; or (3) that is
a governmental plan within the meaning
of section 414(d) is December 31, 2029.
In general, the deadline to amend a sec­
tion 403(b) plan: (1) that is not maintained
by a public school, as described in section
403(b)(1)(A)(ii), is December 31, 2026;
(2) that is an applicable collectively bar­
gained plan of a tax­exempt organization
described in section 501(c)(3) is Decem­
ber 31, 2028; or (3) that is maintained by
a public school, as described in section
403(b)(1)(A)(ii), is December 31, 2029.
III. REMEDIAL AMENDMENT
PERIOD AND PLAN AMENDMENT
DEADLINE
For individually designed plans,
December 31, 2026, is generally both the
last day of the remedial amendment period
and the plan amendment deadline with
respect to (1) a disqualifying provision
arising as a result of a change in qualifica­
tion requirements that appears on the 2024
RA List, and (2) a form defect arising as
a result of a change in section 403(b)
requirements that appears on the 2024 RA
List. For pre­approved plans, December
31, 2026, is also generally the last day
for a provider (or the adopting employer,
if applicable) to timely adopt an interim
amendment. Later dates may apply to a
governmental plan within the meaning of
section 414(d) pursuant to section 5.03(2)
(c) of Rev. Proc. 2022­40 for individually
designed plans and section 7.01(2) of Rev.
Proc. 2023­37 for pre­approved plans.
IV. CONTENT AND
ORGANIZATION OF RA LIST
In general, an RA List includes changes
to statutory and administrative qualifi­
cation requirements and section 403(b)
requirements
8
with which the plan must
comply in operation during the calendar
year in which the list is published.
9
How­
ever, an RA List does not include:
• Guidance issued or legislation enacted
after the list has been prepared;
• Changes in requirements that can­
not reasonably be reflected in plan
language without guidance and with
respect to which the Treasury Depart­
ment and the IRS expect to issue
guidance that would be included on
an RA List issued in a future year;
• Changes in requirements that per­
mit (but do not require) optional plan
provisions, in contrast to changes in
requirements that cause existing plan
provisions (which may include optional
plan provisions previously adopted) to
become disqualifying provisions or
section 403(b) form defects;
10
or
• Changes in the tax laws affecting
qualified plans or section 403(b)
plans that do not cause plan provi­
sions to become disqualifying provi­
sions or section 403(b) form defects
(such as changes to the tax treatment
of plan distributions or changes to the
plan funding requirements).
The RA List is divided into three parts.
Part A includes changes in requirements
that (1) generally would require an amend­
ment to most plans or to most plans of the
3
Division O of the Further Consolidated Appropriations Act, 2020, Pub. L. 116­94, 133 Stat. 2534 (2019).
4
Pub. L. 116­136, 134 Stat. 281 (2020).
5
Division EE of the Consolidated Appropriations Act, 2021, Pub. L. 116­260, 134 Stat. 1182 (2020).
6
Section G of Notice 2020­68, 2020­38 IRB 567, extended the deadline to amend a plan to reflect section 104 of Division M of the Further Consolidated Appropriations Act, known as the
Bipartisan American Miners Act of 2019 (Miners Act), to coordinate with the plan amendment deadlines provided in section 601 of the SECURE Act.
7
See section II.H of Notice 2024­2 relating to section 348 of the SECURE 2.0 Act for guidance that (1) addresses which cash balance plan amendments are made pursuant to section 348
of the SECURE 2.0 Act for purposes of applying section 501, and (2) sets forth the application of the exception under section 411(d)(6) for those plan amendments changing the interest
crediting rate under the plan.
8
References to qualification requirements and to section 403(b) requirements in Parts IV and V of this notice are referred to as “requirements.”
9
RA Lists also may include changes in requirements that were first effective in a prior year that were not included on a prior RA List under certain circumstances, such as changes in require­
ments that were issued or enacted after the prior year’s RA List was prepared.
10
The remedial amendment period and plan amendment deadline for discretionary changes to the terms of an individually designed qualified or section 403(b) plan are governed by sections
5.03(1)(b), 5.03(2)(b), and 6.02 of Rev. Proc. 2022­40. The remedial amendment period and plan amendment deadline for discretionary changes are not affected by the inclusion of a change
in requirements on an RA List.

Bulletin No. 2024–52 1427 December 23, 2024
type affected by the changes, and (2) do
not relate to optional plan provisions pre­
viously adopted.
Part B includes changes in require­
ments that (1) the Treasury Department
and the IRS anticipate will not require
amendments to most plans but might
require an amendment because of an
unusual plan provision in a particular plan,
and (2) do not relate to optional plan pro­
visions previously adopted. For example,
if a change affects a particular requirement
that most plans incorporate by reference,
Part B would include that change because
a particular plan might not incorporate the
requirement by reference and, thus, might
include language inconsistent with the
change.
Part C includes changes in requirements
that relate to optional plan provisions pre­
viously adopted. For example, changes
in requirements included in section L of
Notice 2024­2 relating to the treatment
of employer contributions or nonelective
contributions as Roth contributions under
section 604 of the SECURE 2.0 Act are
included in Part C. This placement is
because plans are not required to include
terms providing for that Roth treatment
(so that section 604 of the SECURE 2.0
Act will not be listed on any RA List) but
plans that were amended to provide for
the treatment of employer contributions
as Roth contributions prior to the release
of section L of Notice 2024­2 are required
to comply with administrative guidance
relating to that treatment.
Amendments to an eligible retirement
plan (including an annuity contract) made
pursuant to a provision of the Acts, or any
regulations or other guidance published
in the IRB under the Acts, that are made
on or before the plan amendment deadline
established under the RA List in which
the provision is included will not cause
the plan to fail to satisfy the anti­cutback
requirements of section 411(d)(6) of the
Code or section 204(g) of ERISA, if appli­
cable, by reason of the amendments.
Annual, monthly, or other periodic
changes to (1) the various dollar limits that
are adjusted for cost of living increases as
provided in section 415(d) or other Code
provisions, (2) the spot segment rates used
to determine the applicable interest rate
under section 417(e)(3), and (3) the appli­
cable mortality table under section 417(e)
(3), are treated as included on the RA List
for the year in which such changes are
effective even though they are not directly
referenced on that RA List. The Treasury
Department and the IRS anticipate that
few plans have language that will need to
be amended on account of these changes.
The fact that a change in a requirement
is included on the RA List does not neces­
sarily mean that a plan must be amended
as a result of that change. Each plan spon­
sor must determine whether a particu­
lar change in a requirement requires an
amendment to its plan.
V. 2024 REQUIRED AMENDMENTS
LIST
Part A. Changes in requirements that gen-
erally would require an amend-
ment to most plans or to most plans
of the type affected by the change
and do not relate to optional plan
provisions previously adopted.
• None
Part B. Changes in requirements that may
require an amendment because
of an unusual plan provision in a
particular plan and do not relate
to optional plan provisions previ-
ously adopted.
• Application of section 415 limit
for certain employees of rural
electric cooperatives (SECURE
2.0 Act section 119). Under sec­
tion 415(b)(12) of the Code,
rural electric cooperative retire­
ment plans no longer have a
compensation­based limit for
participants who are non­highly
compensated employees.
• Reform of family attribution
rule (SECURE 2.0 Act section
315). Section 414 of the Code
is amended to eliminate auto­
matic attribution of ownership
between spouses with sepa­
rate businesses in community
property states, and to modify
the attribution rules regarding
ownership between parents and
minor children, for purposes of
applying the rules relating to a
controlled group of corpora­
tions under section 414(b) or an
affiliated service group under
section 414(m).
Part C. Changes in requirements that
relate to optional plan provisions
previously adopted.
• Guidance for Coronavirus-Re-
lated Distributions from Retire-
ment Plans Under the CARES
Act (Notice 2020­50, 2020­28
IRB 35). Under section 2202
of the CARES Act, plans may
provide for in­service coronavi­
rus­related distributions. Notice
2020­50 provides guidance with
respect to this optional provi­
sion.
• Guidance on Waiver of 2020
Required Minimum Distribu-
tions (Notice 2020­51, 2020­29
IRB 73), Transition Relief and
Guidance Relating to Certain
Required Minimum Distribu-
tions (Notice 2023­54, 2023­31
IRB 382), and Certain Required
Minimum Distributions for
2024 (Notice 2024­35, 2024­19
IRB 1051). Guidance is pro­
vided with respect to optional
required minimum distribution
provisions.
• Miscellaneous Changes Under
the SECURE Act and the Min-
ers Act (Notice 2020­68, 2020­
38 IRB 567):
 SECURE Act section 113.
Under section 113 of the
SECURE Act, certain plans
may permit qualified birth or
adoption distributions. Sec­
tion D of Notice 2020­68 pro­
vides guidance with respect
to this optional provision.
 Miners Act section 104.
Under section 104 of the
Miners Act, the minimum
age is reduced for allowable
in­service distributions. Sec­
tion F of Notice 2020­68 pro­
vides guidance with respect
to this optional provision.
• Guidance on Sections 102 and
103 of the SECURE Act with
Respect to Safe Harbor Plans
(Notice 2020­86, 2020­53 IRB
1786). Under sections 102 and
103 of the SECURE Act, the
10­percent cap for automatic
enrollment safe harbor plans
is increased and certain other

December 23, 2024 1428 Bulletin No. 2024–52
changes with respect to safe
harbor plans are made. Guid­
ance is provided with respect to
optional safe harbor plan provi­
sions.
 Repayment of qualified birth
or adoption distribution lim-
ited to 3 years (SECURE 2.0
Act section 311). Under sec­
tion 113 of the SECURE Act,
plans may permit qualified
birth or adoption distributions
and those distributions may
be repaid to an applicable eli­
gible retirement plan. Under
section 311 of the SECURE
2.0 Act, repayment of quali­
fied birth or adoption distri­
butions is limited to a 3­year
period beginning on the day
after the date on which the
distribution was received.
• Amendments relating to Setting
Every Community Up for Retire-
ment Enhancement Act of 2019
(SECURE 2.0 Act section 401).
Section 103 of the SECURE Act
provides rules relating to elec­
tion of safe harbor 401(k) status.
Section 401 of the SECURE 2.0
Act provides a technical amend­
ment with respect to optional
safe harbor plan provisions.
• Miscellaneous Changes Under
the SECURE 2.0 Act of 2022
(Notice 2024­2, 2024­2 IRB
316):
 Section 113 of the SECURE
2.0 Act. Under section 113
of the SECURE 2.0 Act,
employers may offer small
immediate financial incen­
tives for contributing to a
plan. Section D of Notice
2024­2 provides guidance
with respect to this optional
provision.
11
 Section 117 of the SECURE
2.0 Act. Under section 117
of the SECURE 2.0 Act, the
contribution limit for SIM­
PLE 401(k) plans is increased
for certain eligible employ­
ers. Section E of Notice
2024­2 provides guidance
with respect to this optional
provision.
 Section 332 of the SECURE
2.0 Act. Under section 332
of the SECURE 2.0 Act,
employers are allowed to
replace SIMPLE retirement
accounts with safe harbor
401(k) plans during a year.
Section G of Notice 2024­2
provides guidance with
respect to this optional provi­
sion.
 Section 348 of the SECURE
2.0 Act. Under section 348 of
the SECURE 2.0 Act, a cash
balance plan that provides
for pay credits to participants
that increase with a partici­
pant’s age or service and pro­
vides for a variable interest
crediting rate no longer risks
violating the accrual require­
ments of section 411(b)(1) of
the Code if that interest cred­
iting rate falls below a certain
point. Section H of Notice
2024­2 provides guidance
with respect to the applica­
tion of section 501 of the
SECURE 2.0 Act for amend­
ments made pursuant to this
optional provision.
 Section 604 of the SECURE
2.0 Act. Under section 604 of
the SECURE 2.0 Act, a plan
may permit certain matching
contributions or nonelective
contributions to be desig­
nated as Roth contributions.
Section L of Notice 2024­2
provides guidance with
respect to this optional provi­
sion.
• Guidance on Anti-Abuse
Rules Under Section 127 of
the SECURE 2.0 Act of 2022
and Certain Other Issues with
Respect to Pension-Linked
Emergency Savings Accounts
(Notice 2024­22, 2024­6 IRB
662). Under section 127 of the
SECURE 2.0 Act, plans may
implement pension­linked
emergency savings accounts.
Notice 2024­22 provides guid­
ance regarding anti­abuse rules
with respect to this optional pro­
vision.
• Certain Exceptions to the 10
Percent Additional Tax Under
Code Section 72(t) (Notice
2024­55, 2024­28 IRB 31).
Under section 115 of the
SECURE 2.0 Act, certain plans
may permit emergency personal
expense distributions. Under
section 314 of the SECURE 2.0
Act, certain plans may permit
domestic abuse victim distribu­
tions. Notice 2024­55 provides
guidance with respect to these
optional provisions.
VI. DRAFTING INFORMATION
The principal author of this notice
is Tom Morgan of the Office of Associ­
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). For further information regard­
ing this notice, contact Mr. Morgan at
(202) 317­6700 (not a toll­free number).
11
A plan sponsor that does not offer small immediate financial incentives outside of the plan, based on contributions to the plan, would not need to adopt plan language with respect to small
immediate financial incentives. In addition, even if the plan sponsor were to offer small immediate financial incentives outside of the plan, it is anticipated that the plan generally would not
include language with respect to those small immediate financial incentives (so that amendments to comply with section D of Notice 2024­2 would not be required).

Bulletin No. 2024–52 1429 December 23, 2024
Extension of Certain
Timeframes for Employee
Benefit Plans, Participants,
Beneficiaries, Qualified
Beneficiaries, and
Claimants Affected by
Hurricane Helene, Tropical
Storm Helene, or Hurricane
Milton.
Notice 2024-86
SUMMARY: This document announces
the extension of certain timeframes under
the Employee Retirement Income Secu­
rity Act and the Internal Revenue Code
for group health plans, disability and other
welfare plans, pension plans, and partic­
ipants, beneficiaries, qualified beneficia­
ries, and claimants of these plans affected
by Hurricane Helene, Tropical Storm
Helene, or Hurricane Milton.
DATES: November 8, 2024
FOR FURTHER INFORMATION
CONTACT: Department of Labor, Eliz­
abeth Schumacher or David Sydlik, Office
of Health Plan Standards and Compliance
Assistance, Employee Benefits Secu­
rity Administration, at 202–693–8335,
and Thomas Hindmarch, Office of Reg­
ulations and Interpretations, Employee
Benefits Security Administration, at 202­
693­8500; or William Fischer, Internal
Revenue Service, Department of the Trea­
sury at 202–317–5500.
SUPPLEMENTARY INFORMATION:
I. Purpose
In this notice, the Employee Bene­
fits Security Administration, Department
of Labor, Internal Revenue Service, and
Department of the Treasury (the Agen­
cies) are extending certain timeframes
otherwise applicable to group health
plans, disability and other welfare bene­
fit plans, pension plans, and their partic­
ipants, beneficiaries, qualified beneficia­
ries, and claimants under the Employee
Retirement Income Security Act of 1974
(ERISA) and the Internal Revenue Code
of 1986 (the Code), under the author­
ity of section 518 of ERISA and section
7508A(b) of the Code.
1,2
In order to ensure
that plans, participants, beneficiaries,
qualified beneficiaries, and claimants in
disaster areas are not further adversely
affected by Hurricane Helene, Tropical
Storm Helene, and Hurricane Milton with
respect to their employee benefit plans,
certain timeframes are extended during the
Relief Period established by this notice, as
explained in further detail below.
As a result of Hurricane Helene, Trop­
ical Storm Helene, and Hurricane Milton,
participants, beneficiaries, qualified bene­
ficiaries, and claimants covered by group
health plans, disability or other employee
welfare benefit plans, and employee pen­
sion benefit plans may encounter prob­
lems in exercising their health coverage
portability and continuation coverage
rights, or in filing or perfecting their ben­
efit claims. Recognizing the numerous
challenges such individuals already face
as a result of these natural disasters, it is
important that the Agencies take steps to
minimize the possibility of such individ­
uals losing benefits because of a failure to
comply with certain pre­established time­
frames. Similarly, the Agencies recognize
that affected group health plans may have
difficulty in complying with the timing of
certain notice obligations.
The Agencies believe the relief estab­
lished by this notice is immediately
needed to preserve and protect the bene­
fits of participants, beneficiaries, qualified
beneficiaries, and claimants in affected
plans. Accordingly, the Agencies have
determined, pursuant to section 553 of the
Administrative Procedure Act, 5 U.S.C.
553(b)(A), (B) and 553(d), that there is
good cause for granting the relief pro­
vided by this notice effective immediately
upon publication, and that notice and pub­
lic participation may result in undue delay
and, therefore, be contrary to the public
interest.
This document has been reviewed by
the Department of Health and Human Ser­
vices (HHS), which has advised the Agen­
cies that HHS concurs with the relief spec­
ified in this document in the application of
the laws under its jurisdiction.
3

HHS has advised the Agencies that HHS
encourages plan sponsors of non­Federal
governmental plans and health insurance
issuers offering group or individual health
insurance coverage to extend otherwise
applicable timeframes under titles XXII
and XXVII of the Public Health Service
Act (PHS Act)
4
for participants, beneficia­
ries, and enrollees in a manner consistent
with the relief provided in this notice.
1
ERISA section 518 and Code section 7508A(b) generally provide that, in the case of an employee benefit plan, sponsor, administrator, participant, beneficiary, or other person with respect
to such a plan affected by a federally declared disaster (as defined in section 162(i)(5) of the Code), a terroristic or military action, or a public health emergency declared by the Secretary of
Health and Human Services pursuant to section 319 of the Public Health Service Act, notwithstanding any other provision of law, the Secretaries of Labor and the Treasury may prescribe (by
notice or otherwise) a period of up to 1 year that may be disregarded in determining the date by which any action is required or permitted to be completed. Section 518 of ERISA and section
7508A(b) of the Code further provide that no plan shall be treated as failing to be operated in accordance with the terms of the plan solely as a result of complying with the postponement of
a deadline under those sections.
2
See, e.g., Hurricane Helene Recovery: Brief Overview of FEMA Programs and Resources, (October 3, 2024), available at https://crsreports.congress.gov/product/pdf/IN/IN12429; 89 FR 84908
(October 24, 2024); 89 FR 84923 (October 24, 2024); 89 FR 84919 (October 24, 2024); 89 FR 84914 (October 24, 2024); 89 FR 84912 (October 24, 2024); 89 FR 84920 (October 24, 2024).
3
Section 104 of Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires that the Secretaries of Labor, the Treasury, and Health and Human Services (the
Departments) ensure through an interagency Memorandum of Understanding (MOU) that regulations, rulings, and interpretations issued by each of the Departments relating to the same
matter over which two or more departments have jurisdiction, are administered so as to have the same effect at all times. Under section 104 of HIPAA, the Departments, through the MOU,
are to provide for coordination of policies relating to enforcement of the same requirements in order to have a coordinated enforcement strategy that avoids duplication of enforcement efforts
and assigns priorities in enforcement. See section 104 of HIPAA and Memorandum of Understanding applicable to Title XXVII of the PHS Act, Part 7 of ERISA, and Chapter 100 of the
Code, published at 64 FR 70164, December 15, 1999.
4
The applicable PHS Act provisions are (1) the 30­day period (or 60­day period, if applicable) to request special enrollment under PHS Act section 2704(f); (2) the 60­day election period for
COBRA continuation coverage under PHS Act section 2205; (3) the date for making COBRA premium payments pursuant to PHS Act section 2202(2)(C) and (3); (4) the date for individuals
to notify the plan of a qualifying event or determination of disability under PHS Act section 2206(3); (5) the date within which individuals may file a benefit claim under the plan’s claims
procedure pursuant to 45 CFR 147.136(b) (incorporating 29 CFR 2560.503–1); (6) the date within which claimants may file an appeal of an adverse benefit determination under the plan’s
claims procedure pursuant to 45 CFR 147.136(b) (incorporating 29 CFR 2560.503–1(h)); (7) the date within which claimants may file a request for an external review after receipt of an
adverse benefit determination or final internal adverse benefit determination pursuant to 45 CFR 147.136(c)(2)(vi) and (d)(2)(i), and (8) the date within which a claimant may file information
to perfect a request for external review upon a finding that the request was not complete pursuant to 45 CFR 147.136(d)(2)(ii).

December 23, 2024 1430 Bulletin No. 2024–52
The relief provided by this notice
supplements other disaster relief guid­
ance issued by the Agencies, which can
be accessed at: https://www.dol.gov/
agencies/ebsa/employers­and­advisers/
plan­administration­and­compliance/
disaster­relief and https://www.irs.gov/
newsroom/tax­relief­in­disaster­situa­
tions.
II. Background
Title I of the Health Insurance Por­
tability and Accountability Act of 1996
(HIPAA) provides portability of health
coverage by, among other things, requir­
ing special enrollment rights into group
health plans upon the loss of eligibility
for other coverage or gaining a depen­
dent through marriage, birth, adoption
or placement for adoption. ERISA sec­
tion 701, Code section 9801, 29 CFR
2590.701–6, 26 CFR 54.9801–6. Title
X of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA)
permits certain qualified beneficiaries
who lose coverage under a group health
plan to elect continuation health cover­
age. ERISA section 601, Code section
4980B, 26 CFR 54.4980B–1. Section
503 of ERISA and 29 CFR 2560.503–1
require employee benefit plans subject to
Title I of ERISA to establish and main­
tain reasonable procedures governing the
determination and appeal of claims for
benefits under the plan. Section 2719 of
the PHS Act, incorporated into ERISA by
ERISA section 715, and into the Code by
Code section 9815, imposes additional
rights and obligations with respect to
internal claims and appeals and exter­
nal review for non­grandfathered group
health plans and health insurance issuers
offering non­grandfathered group or indi­
vidual health insurance coverage. See
also 29 CFR 2590.715–2719 and 26 CFR
54.9815–2719. All of the foregoing pro­
visions include timing requirements for
certain acts in connection with employee
benefit plans, some of which are being
temporarily modified by this notice.
A. Special Enrollment Timeframes
In general, HIPAA requires a special
enrollment period in certain circum­
stances, including when an employee or
dependent loses eligibility for any group
health plan or other health insurance
coverage in which the employee or the
employee’s dependents were previously
enrolled (including coverage under Med­
icaid and the Children’s Health Insurance
Program), and when a person becomes
a dependent of an eligible employee by
birth, marriage, adoption, or placement
for adoption. ERISA section 701(f), Code
section 9801(f), 29 CFR 2590.701–6,
and 26 CFR 54.9801–6. Generally, group
health plans must allow such individ­
uals to enroll in the group health plan if
they are otherwise eligible and if enroll­
ment is requested within 30 days after
the occurrence of the event (or within 60
days, in the case of termination of Med­
icaid or CHIP coverage, or eligibility for
employment assistance under Medicaid or
CHIP). ERISA section 701(f), Code sec­
tion 9801(f), 29 CFR 2590.701–6, and 26
CFR 54.9801–6.
B. COBRA Timeframes
The COBRA continuation coverage
provisions generally provide a qualified
beneficiary a period of at least 60 days
to elect COBRA continuation coverage
under a group health plan. ERISA sec­
tion 605 and Code section 4980B(f)(5).
Plans are required to allow payment of
premiums in monthly installments, and
plans cannot require payment of premi­
ums before 45 days after the day of the
initial COBRA election. ERISA section
602(3) and Code section 4980B(f)(2)(C).
COBRA continuation coverage may be
terminated for failure to pay premiums
timely. ERISA section 602(2)(C) and
Code section 4980B(f)(2)(B)(iii). Under
the COBRA rules, a premium is consid­
ered paid timely if it is made not later than
30 days after the first day of the period for
which payment is being made. ERISA sec­
tion 602(2)(C), Code section 4980B(f)(2)
(B)(iii), and 26 CFR 54.4980B–8 Q&A–
5(a). Notice requirements prescribe time
periods for employers to notify the plan of
certain qualifying events and for individ­
uals to notify the plan of certain qualify­
ing events or a determination of disability.
Notice requirements also prescribe a time
period for plans to notify qualified benefi­
ciaries of their rights to elect COBRA con­
tinuation coverage. ERISA section 606,
Code section 4980B(f)(6), and 29 CFR
2590.606–3.
C. Claims Procedure Timeframes
Section 503 of ERISA and 29 CFR
2560.503–1, as well as section 2719 of
the PHS Act, incorporated into ERISA by
ERISA section 715 and 29 CFR 2590.715–
2719, and into the Code by Code section
9815 and 26 CFR 54.9815–2719, require
ERISA­covered employee benefit plans
and non­grandfathered group health plans
and health insurance issuers offering
non­grandfathered group or individual
health insurance coverage to establish and
maintain a procedure governing the filing
and initial disposition of benefit claims,
and to provide claimants with a reason­
able opportunity to appeal an adverse ben­
efit determination to an appropriate named
fiduciary. Plans may not have provisions
that unduly inhibit or hamper the initia­
tion or processing of claims for benefits.
Further, group health plans and disability
plans must provide claimants at least 180
days following receipt of an adverse bene­
fit determination to appeal (60 days in the
case of pension plans and other welfare
benefit plans). 29 CFR 2560.503–1(h)(2)
(i), 29 CFR 2560.503–1(h)(3)(i), 29 CFR
2560.503­1(h)(4), 29 CFR 2590.715–
2719(b)(2)(ii)(C), and 26 CFR 54.9815–
2719(b)(2)(ii)(C).
D. External Review Process Timeframes
PHS Act section 2719, incorporated
into ERISA by ERISA section 715 and
into the Code by Code section 9815, sets
out standards for external review that
apply to non­grandfathered group health
plans and health insurance issuers offer­
ing non­grandfathered group or individual
health insurance coverage and provides
for either a State external review pro­
cess or a Federal external review process.
Standards for external review processes
and timeframes for submitting claims to
the independent reviewer for group health
plans or health insurance issuers may vary
depending on whether a plan uses a State
or Federal external review process. For
plans or issuers that use the Federal exter­
nal review process, the process must allow
at least 4 months after the receipt of a
notice of an adverse benefit determination

Bulletin No. 2024–52 1431 December 23, 2024
or final internal adverse benefit determi­
nation for a request for an external review
to be filed. 29 CFR 2590.715–2719(d)
(2)(i) and 26 CFR 54.9815–2719(d)(2)
(i). The Federal external review process
also provides for a preliminary review of
a request for external review. The regu­
lation provides that if such request is not
complete, the Federal external review
process must provide for a notification
that describes the information or materials
needed to make the request complete, and
the plan or issuer must allow a claimant
to perfect the request for external review
within the 4­month filing period or within
the 48­hour period following the receipt
of the notification, whichever is later. 29
CFR 2590.715–2719(d)(2)(ii)(B) and 26
CFR 54.9815–2719(d)(2)(ii)(B).
III. Relief
A. Relief for Plan Participants,
Beneficiaries, Qualified Beneficiaries,
and Claimants
With respect to plan participants,
beneficiaries, qualified beneficiaries, or
claimants directly affected by Hurricane
Helene, Tropical Storm Helene, or Hur­
ricane Milton (as defined in paragraph
III.C.(1)), group health plans, disability
and other employee welfare benefit plans,
and employee pension benefit plans sub­
ject to ERISA or the Code must disregard
the relevant Relief Period (as defined in
paragraph II.C.(4)) for plan participants,
beneficiaries, qualified beneficiaries, or
claimants located in Florida, Georgia,
North Carolina, South Carolina, Tennes­
see, and Virginia in determining the fol­
lowing periods and dates—
(1) The 30­day period (or 60­day
period, if applicable) to request special
enrollment under ERISA section 701(f)
and Code section 9801(f),
(2) The 60­day election period for
COBRA continuation coverage under
ERISA section 605 and Code section
4980B(f)(5),
4

(3) The date for making COBRA pre­
mium payments pursuant to ERISA sec­
tion 602(2)(C) and (3) and Code section
4980B(f)(2)(B)(iii) and (C),
5

(4) The date for individuals to notify
the plan of a qualifying event or determi­
nation of disability under ERISA section
606(a)(3) and Code section 4980B(f)(6)
(C),
(5) The date within which individuals
may file a benefit claim under the plan’s
claims procedure pursuant to 29 CFR
2560.503–1,
(6) The date within which claimants
may file an appeal of an adverse bene­
fit determination under the plan’s claims
procedure pursuant to 29 CFR 2560.503–
1(h),
(7) The date within which claimants
may file a request for an external review
after receipt of an adverse benefit deter­
mination or final internal adverse ben­
efit determination pursuant to 29 CFR
2590.715–2719(d)(2)(i) and 26 CFR
54.9815–2719(d)(2)(i), and
(8) The date within which a claimant
may file information to perfect a request
for external review upon a finding that
the request was not complete pursuant to
29 CFR 2590.715–2719(d)(2)(ii) and 26
CFR 54.9815–2719(d)(2)(ii).
B. Relief for Group Health Plans
With respect to group health plans
subject to ERISA or the Code, and their
sponsors and administrators affected by
Hurricane Helene, Tropical Storm Helene,
or Hurricane Milton, the relevant Relief
Period shall be disregarded when deter­
mining the date for providing a COBRA
election notice under ERISA section
606(c) and Code section 4980B(f)(6)(D).
C. Definitions
For purposes of this notice—
(1) A participant, beneficiary, qualified
beneficiary, or claimant directly affected
by Hurricane Helene, Tropical Storm
Helene, or Hurricane Milton means an
individual who resided, lived, or worked
in one of the disaster areas (as defined in
paragraph III.C.(2)) at the time of the hur­
ricane or tropical storm; or whose cover­
age was under an employee benefit plan
that was directly affected (as defined in
paragraph III.C.(3)).
(2) The term disaster areas means the
counties or tribal areas in Florida, Geor­
gia, North Carolina, South Carolina, Ten­
nessee, and Virginia that have been or are
later designated as disaster areas eligible
for Individual Assistance by the Federal
Emergency Management Agency (FEMA)
because of the devastation caused by Hur­
ricane Helene, Tropical Storm Helene, or
Hurricane Milton.
(3) An employee benefit plan is
directly affected by Hurricane Helene,
Tropical Storm Helene, or Hurricane
Milton if the principal place of business
of the employer that maintains the plan
(in the case of a single­employer plan,
determined disregarding the rules of
section 414(b) and (c) of the Code); the
principal place of business of employers
that employ more than 50 percent of the
active participants covered by the plan
(in the case of a plan covering employees
of more than one employer, determined
disregarding the rules of section 414(b)
and (c) of the Code); or the office of the
plan or the plan administrator; or the
office of the primary recordkeeper serv­
ing the plan, was located in one of the
disaster areas (as defined in paragraph
III.C.(2)) at the time of the hurricane or
tropical storm.
(4) The term “Relief Period” means—­
(i) For disaster areas in Florida desig­
nated as eligible for Individual Assistance
by FEMA because of the devastation
caused by Hurricane Helene, the period
beginning on September 23, 2024, and
ending on May 1, 2025;
(ii) For disaster areas in Georgia desig­
nated as eligible for Individual Assistance
by FEMA because of the devastation
caused by Hurricane Helene, the period
5
The term “election period” is defined as “the period which—(A) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event, (B) is of at least
60 days’ duration, and (C) ends not earlier than 60 days after the later of—(i) the date described in subparagraph (A), or (ii) in the case of any qualified beneficiary who receives notice under
section 1166(a)(4) of this title, the date of such notice.” 29 USC 1165(a)(1), ERISA section 605(a)(1). See also Code section 4980B(f)(5).
6
Under this provision, the group health plan must treat the COBRA premium payments as timely paid if paid in accordance with the periods and dates set forth in this notice. Regarding
coverage during the election period and before an election is made, see 26 CFR 54.4980B­6, Q&A 3; during the period between the election and payment of the premium, see 26 CFR
54.4980B­8, Q&A 5(c).

December 23, 2024 1432 Bulletin No. 2024–52
beginning on September 24, 2024, and
ending on May 1, 2025;
(iii) For disaster areas in North Caro­
lina, South Carolina, and Virginia desig­
nated as eligible for Individual Assistance
by FEMA because of the devastation
caused by Hurricane Helene or Tropical
Storm Helene, the period beginning on
September 25, 2024, and ending on May
1, 2025;
(iv) For disaster areas in Tennes­
see designated as eligible for Individual
Assistance by FEMA because of the dev­
astation caused by Tropical Storm Helene,
the period beginning on September 26,
2024, and ending on May 1, 2025; and
(v) For disaster areas in Florida not
designated as eligible for Individual
Assistance by FEMA because of the
devastation caused by Hurricane Helene
(but designated as eligible for Individual
Assistance by FEMA because of the dev­
astation caused by Hurricane Milton), the
period beginning October 5, 2024 and
ending on May 1, 2025.
D. Later Extensions
The Agencies will continue to monitor
the effects of Hurricane Helene, Tropi­
cal Storm Helene, and Hurricane Milton
and may provide additional relief as war­
ranted.
IV. Examples
The following examples illustrate the
timeframe for extensions required by this
notice. In each example, assume that the
individual described is directly affected by
the hurricane or tropical storm.
Example 1 (Electing COBRA). (i) Facts. Indi­
vidual A works for Employer X in Buncombe
County, NC and participates in X’s group health
plan. Due to Tropical Storm Helene, X’s business is
destroyed, and the plan terminates. Individual A has
no other coverage. Employer Y is part of the same
controlled group as Employer X and continues to
operate and sponsor a group health plan. Individual
A is provided a COBRA election notice on Decem­
ber 1, 2024. What is the deadline for Individual A to
elect COBRA?
(ii) Conclusion. In Example 1, Individual A is eli­
gible to elect COBRA coverage under Employer Y’s
plan because Employer Y is in the same controlled
group as Employer X.
7
The Relief Period is disre­
garded for purposes of determining Individual A’s
COBRA election period. The last day of Individual
A’s COBRA election period is 60 days after May 1,
2025, which is June 30, 2025.
Example 2 (Special enrollment period). (i) Facts.
Individual B resides in Columbia, South Carolina.
Individual B is eligible for, but previously declined
participation in, her employer­sponsored group
health plan. On October 31, 2024, Individual B gives
birth and would like to enroll herself and the child
into her employer’s plan; however, open enrollment
does not begin until November 15, for coverage that
begins January 1. When may Individual B exercise
her special enrollment rights?
(ii) Conclusion. In Example 2, the Relief Period
is disregarded for purposes of determining Individual
B’s and her child’s special enrollment period. Indi­
vidual B and her child qualify for special enrollment
into her employer’s plan for coverage that begins on
the date of the child’s birth, to the extent she satisfies
all of the plan’s conditions for special enrollment that
the plan may apply under Federal law. Individual B
may exercise her special enrollment rights for herself
and her child until 30 days after May 1, 2025, which
is May 31, 2025, provided that she pays her share of
the premiums for any period of coverage.
Example 3 (COBRA premium payments). (i)
Facts. Individual C resides in Chatham County,
Georgia. Before the hurricane, Individual C was
receiving COBRA continuation coverage under a
group health plan. More than 45 days had passed
since Individual C had elected COBRA. Monthly
premium payments are due by the first of the month.
The plan does not permit qualified beneficiaries lon­
ger than the statutory 30­day grace period for mak­
ing premium payments. Individual C made a timely
September payment, but did not make the October
payment or any subsequent payments during the
Relief Period. As of May 1, 2025, Individual C has
made no premium payments for October, November,
December, January, February, March, April, or May.
Does Individual C lose COBRA coverage, and if so
for which month(s)?
(ii) Conclusion. In this Example 3, the Relief
Period is disregarded for purposes of determining
whether monthly COBRA premium installment pay­
ments are timely. Premium payments made by 30
days after May 1, 2025, which is May 31, 2025, for
October, November, December, January, February,
March, April, and May, are timely, and Individual
C is entitled to COBRA continuation coverage for
these months if she timely makes payment. Under
the terms of the COBRA statute, premium pay­
ments are timely if made within 30 days from the
date they are first due. In calculating the 30­day
period, however, the Relief Period is disregarded,
and payments for October, November, December,
January, February, March, and April are all deemed
to be timely if they are made within 30 days after
the end of the Relief Period. Premium payments for
May are deemed timely if they are made within 30
days after they are first due (May 1). Accordingly,
premium payments for October, November, Decem­
ber, January, February, March, and April, as well as
premium payments for May, are all due by May 31,
2025. Since the due dates for Individual C’s premi­
ums would be postponed and Individual C’s payment
for premiums would be retroactive during the initial
COBRA election period, Individual C’s insurer or
plan may initially deny claims and then, after pre­
miums are paid, must make retroactive payment
for benefits and services received by the participant
during this time.
Example 4 (COBRA premium payments). (i)
Facts. Same facts as Example 3. By May 31, 2025,
Individual C made a payment equal to two months’
premiums. For how long does Individual C have
COBRA continuation coverage?
(ii) Conclusion. Individual C is entitled to
COBRA continuation coverage for October and
November of 2024, the two months for which timely
premium payments were made, and Individual C is
not entitled to COBRA continuation coverage for
any month after November 2024. Items and services
covered by the group health plan (e.g., doctors’ vis­
its or filled prescriptions) that were furnished on
or before November 30, 2024 would be covered
under the terms of the plan. The plan would not be
obligated to cover items or services furnished after
November 30, 2024.
Example 5 (Claims for medical treatment under
a group health plan). (i) Facts. Individual D lives in
Caldwell County, North Carolina and is a participant
in a group health plan. On October 15, 2023, Indi­
vidual D received medical treatment for a condition
covered under the plan, but a claim relating to the
medical treatment was not submitted until October
20, 2024. Under the plan, claims must be submitted
within 365 days of the participant’s receipt of the
medical treatment. Was Individual D’s claim timely?
(ii) Conclusion. Ye s. Absent this relief, the last
day for Individual D to submit a claim was October
14, 2024. For purposes of determining the 365­day
period applicable to Individual D’s claim, the Relief
Period is disregarded. As of the first day of the Relief
Period, Individual D had 19 days to file the claim
(September 25, 2024, through October 14, 2024).
Therefore, Individual D’s last day to submit a claim
is 19 days after May 1, 2025, which is May 20, 2025,
so Individual D’s claim was timely. If the plan has
already denied Individual D’s claim as untimely, the
claim may have to be resubmitted and, if the claim is
fully or partially denied, the plan may need to send
an updated adverse benefit determination.
Example 6 (Internal appeal­disability plan). (i)
Facts. Individual E resides in Gulf County, Florida
and received a notification of an adverse benefit
determination from Individual E’s disability plan on
August 28, 2024. The notification advised Individ­
ual E that there are 180 days within which to file an
appeal. What is Individual E’s appeal deadline?
(ii) Conclusion. When determining the 180­day
period within which Individual E’s appeal must be
filed, the Relief Period is disregarded. Therefore,
Individual E’s last day to submit an appeal is 154
7
Under the COBRA rules, an employee’s COBRA continuation coverage period continues even after the end of the plan, if the employer continues to provide any group health plan to any
employee. Code section 4980B(f)(2)(B)(ii) and ERISA 602(2)(B). For purposes of COBRA, ‘‘employer’’ includes the person for whom services are performed and any other person that is a
member of a group described in Code section 414(b), (c), (m), or (o). 26 CFR 54.4980B–2, Q&A 2.

Bulletin No. 2024–52 1433 December 23, 2024
days (180 – 26 days following August 28 to Septem­
ber 23) after May 1, 2025, which is October 2, 2025.
Example 7 (Internal appeal – employee pen­
sion benefit plan). (i) Facts. Individual F resides in
Greene County, Tennessee and received a notice of
adverse benefit determination from Individual F’s
401(k) plan on November 15, 2024. The notification
advised Individual F that there are 60 days within
which to file an appeal. What is Individual F’s appeal
deadline?
(ii) Conclusion. When determining the 60­day
period within which Individual F’s appeal must be
filed, the Relief Period is disregarded. Therefore,
Individual F’s last day to submit an appeal is 60 days
after May 1, 2025, which is June 30, 2025.
Signed at Washington, DC, this 4th day of
November, 2024.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits
Security Administration, Department of
Labor.
Douglas W. O’Donnell,
Deputy Commissioner, Internal Revenue
Service, Department of the Treasury.
26 CFR 601.601: Rules and regulations
(Also Part 1, §§ 6049; 1.6049-4, 1.6049-8)
Rev. Proc. 2024-42
SECTION 1. PURPOSE
This revenue procedure provides a list
of the jurisdictions with which the United
States has in effect a relevant information
exchange agreement such that the report­
ing requirement of §§ 1.6049­4(b)(5) and
1.6049­8(a) of the Income Tax Regula­
tions may apply with respect to certain
deposit interest paid to residents of such
jurisdictions.
This revenue procedure also provides
a list of the jurisdictions with which the
Department of the Treasury (Treasury
Department) and the Internal Revenue
Service (IRS) have determined that it is
appropriate to have an automatic exchange
relationship with respect to the informa­
tion collected under §§ 1.6049­4(b)(5)
and 1.6049­8(a).
These lists are updated and restated ver­
sions of those set forth in Rev. Proc. 2023­
36, I.R.B. 2023­51 1485. Armenia and Uru­
guay have been added in Section 3 of this
revenue procedure to the list of jurisdictions
with which the United States has in effect a
relevant information exchange agreement.
Costa Rica and Thailand have been added
in Section 4 of this revenue procedure
to the list of jurisdictions with which the
Treasury Department and the IRS have
determined that it is appropriate to have an
automatic exchange relationship.
SECTION 2. BACKGROUND
Sections 1.6049­4(b)(5) and 1.6049­
8(a), as revised by TD 9584, 2012­20
I.R.B. 900, require the reporting of certain
deposit interest paid to nonresident alien
individuals on or after January 1, 2013.
Section 1.6049­4(b)(5) provides that in
the case of interest aggregating $10 or
more paid to a nonresident alien individ­
ual (as defined in section 7701(b)(1)(B))
that is reportable under § 1.6049­8(a), the
payor is required to make an information
return on Form 1042­S, Foreign Person’s
U.S. Source Income Subject to Withhold­
ing, for the calendar year in which the
interest is paid.
Interest that is reportable under
§ 1.6049­8(a) is interest described in sec­
tion 871(i)(2)(A) that relates to a deposit
maintained at an office within the United
States. The regulations also provide that
such deposit interest is reportable only
if paid to a resident of a jurisdiction that
is identified as a jurisdiction with which
the United States has in effect an income
tax or other convention or bilateral agree­
ment relating to the exchange of tax infor­
mation within the meaning of section
6103(k)(4), under which the competent
authority is the Secretary of the Trea­
sury or the Secretary’s delegate and the
United States agrees to provide, as well
as receive, information. Finally, the reg­
ulations provide that jurisdictions are so
identified in an applicable revenue proce­
dure (see § 601.601(d)(2)) as of December
31 before the calendar year in which the
interest is paid. The preamble to the reg­
ulations (at 2012­20 I.R.B. 901­02) notes
that the IRS will not exchange information
with another jurisdiction, even if an infor­
mation exchange agreement is in effect, if
there are concerns about confidentiality,
safeguarding of data exchanged, the use
of the information, or other factors that
would make the exchange of information
inappropriate.
Rev. Proc. 2012­24, 2012­20 I.R.B. 913,
was published contemporaneously with
the publication of TD 9584 to provide a
list of those jurisdictions with which the
United States has in effect an information
exchange agreement, such that interest paid
to residents of such jurisdictions must be
reported by payors to the extent required
under §§ 1.6049­4(b)(5) and 1.6049­8(a),
and to provide a separate list identifying
those jurisdictions with which the auto­
matic exchange of the information col­
lected under the regulations has been deter­
mined by the Treasury Department and the
IRS to be appropriate. Before issuance of
this Rev. Proc. 2024­42, the most current
versions of those lists were set forth in Rev.
Proc. 2023­36.
SECTION 3. JURISDICTIONS OF
RESIDENCE WITH RESPECT TO
WHICH THE DEPOSIT INTEREST
REPORTING REQUIREMENT
APPLIES
The following are the jurisdictions
with which the United States has in effect
an income tax or other convention or bilat­
eral agreement relating to the exchange
of tax information within the meaning of
section 6103(k)(4) pursuant to which the
United States agrees to provide, as well as
receive, information and under which the
competent authority is the Secretary of the
Treasury or the Secretary’s delegate:

December 23, 2024 1434 Bulletin No. 2024–52
Jurisdiction Rev. Proc. First Identifying Jurisdiction
Antigua & Barbuda2012­24
Argentina2018­36
Armenia2024­42
Aruba2012­24
Australia2012­24
Austria2012­24
Azerbaijan2012­24
Bangladesh2012­24
Barbados2012­24
Belgium2012­24
Bermuda2012­24
Brazil2014­64
British Virgin Islands2012­24
Bulgaria2012­24
Canada2012­24
Cayman Islands2014­64
Chile 2021­32
China2012­24
Colombia2014­64
Costa Rica2012­24
Croatia2014­64
Curaçao2014­64
Cyprus2012­24
Czech Republic2012­24
Denmark2012­24
Dominica2012­24
Dominican Republic2012­24
Ecuador2023­36
Egypt2012­24
Estonia2012­24
Faroe Islands2017­46
Finland2012­24
France2012­24
Georgia2019­23
Germany2012­24
Gibraltar2012­24
Greece2012­24
Greenland2017­46
Grenada2012­24
Guernsey2012­24
Guyana2012­24
Honduras2012­24
Hong Kong2014­64
Hungary2012­24

Bulletin No. 2024–52 1435 December 23, 2024
Jurisdiction Rev. Proc. First Identifying Jurisdiction
Iceland2012­24
India2012­24
Indonesia2012­24
Ireland2012­24
Isle of Man2012­24
Israel2012­24
Italy2012­24
Jamaica2012­24
Japan2012­24
Jersey2012­24
Kazakhstan2012­24
Korea, Republic of2012­24
Latvia2012­24
Liechtenstein2012­24
Lithuania2012­24
Luxembourg2012­24
Malta2012­24
Marshall Islands2012­24
Mauritius2014­64
Mexico2012­64
Moldova2018­36
Monaco2012­24
Morocco2012­24
Netherlands2012­24
Netherlands special municipalities: Bonaire, Sint Eustatius, and Saba2012­24
New Zealand2012­24
Norway2012­24
Pakistan2012­24
Panama2012­24
Peru2012­24
Philippines2012­24
Poland2012­24
Portugal2012­24
Romania2012­24
Russian Federation2012­24
Saint Lucia2016­56
Singapore2020­15
Sint Maarten 2014­64
Slovak Republic2012­24
Slovenia2012­24
South Africa2012­24
Spain2012­24
Sri Lanka2012­24
Sweden2012­24

December 23, 2024 1436 Bulletin No. 2024–52
Jurisdiction Rev. Proc. First Identifying Jurisdiction
Switzerland2012­24
Thailand2012­24
Trinidad and Tobago2012­24
Tunisia2012­24
Turkey2012­24
Ukraine2012­24
United Kingdom2012­24
Uruguay2024­42
Venezuela2012­24
SECTION 4. JURISDICTIONS
WITH WHICH THE TREASURY
DEPARTMENT AND THE IRS HAVE
DETERMINED THAT AUTOMATIC
EXCHANGE OF DEPOSIT
INTEREST INFORMATION IS
APPROPRIATE
The following list identifies the
jurisdictions with which the automatic
exchange of the information collected
under §§ 1.6049­4(b)(5) and 1.6049­8 has
been determined by the Treasury Depart­
ment and the IRS to be appropriate:
JurisdictionRev. Proc. First Memorializing Determination on Automatic
Exchange with Jurisdiction
Argentina2023­36
Australia2014­64
Azerbaijan2016­18
Belgium2017­31
Brazil2015­50
Canada2012­24
Colombia2017­31
Costa Rica2024­42
Croatia2017­46
Curaçao2019­23
Cyprus 2019­23
Czech Republic2015­50
Denmark 2014­64
Dominican Republic2021­32
Estonia2015­50
Finland2014­64
France2014­64
Germany 2014­64
Gibraltar2015­50
Greece2018­36
Guernsey 2014­64
Hungary2015­50
Iceland2015­50

Bulletin No. 2024–52 1437 December 23, 2024
JurisdictionRev. Proc. First Memorializing Determination on Automatic
Exchange with Jurisdiction
India2015­50
Ireland2014­64
Isle of Man2014­64
Israel2016­56
Italy2014­64
Jamaica2016­18
Jersey 2014­64
Kazakhstan2023­36
Korea, Republic of2016­56
Latvia2015­50
Liechtenstein2015­50
Lithuania2015­50
Luxembourg2015­50
Malta2014­64
Mauritius2014­64
Mexico2014­64
Netherlands2014­64
New Zealand2015­50
Norway2014­64
Panama2017­46
Poland2015­50
Portugal2017­31
Saint Lucia2016­56
Singapore2021­32
Slovak Republic2016­18
Slovenia2015­50
South Africa2015­50
Spain2014­64
Sweden2015­50
Thailand2024­42
Turkey2022­35
United Kingdom2014­64
SECTION 5. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2023­36 is superseded.
SECTION 6. EFFECTIVE DATES
For purposes of the reporting require­
ment of § 1.6049­4(b)(5), the list of juris­
dictions in Section 3 of this revenue pro­
cedure is effective for interest paid on or
after January 1 of the calendar year fol­
lowing the issuance of the revenue pro­
cedure (as cited in Section 3) first identi­
fying the jurisdiction as having in effect
an agreement with the United States as
described in § 1.6049­8(a).
The list of jurisdictions in Section 4 of
this revenue procedure is effective from
the date of issuance of this revenue proce­
dure with respect to information reported
to the IRS pursuant to §§ 1.6049­4(b)(5)
and 1.6049­8(a) for any tax year for which
the jurisdiction was included in the list in
Section 3. The revenue procedure cita­
tions in the Section 4 list are included for
historical reference.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Michelle R. Phillips of the
Office of Associate Chief Counsel (Inter­
national). For further information regard­
ing this revenue procedure, contact Ms.
Phillips at (202) 317­4382 (not a toll­free
number).

December 23, 2024 1438 Bulletin No. 2024–52
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of
correct tax liability.
(Also: Part 1, §§ 6662, 6694, 1.6662-4, 1.6694-2)
Adequate Disclosure
Revenue Procedure
Renewal
Rev. Proc. 2024-44
SECTION 1. PURPOSE
This revenue procedure updates Rev.
Proc. 2023­40, 2023­51 I.R.B. 1553, and
identifies circumstances under which the
disclosure on a taxpayer’s income tax
return with respect to an item or position
is adequate for the purpose of reducing
the understatement of income tax under
section 6662(d) of the Internal Revenue
Code (relating to the substantial under­
statement aspect of the accuracy­related
penalty), and for the purpose of avoid­
ing the tax return preparer penalty under
section 6694(a) (relating to understate­
ments due to unreasonable positions)
with respect to income tax returns. This
revenue procedure does not apply with
respect to any other penalty provisions
(including but not limited to the disre­
gard provisions of the section 6662(b)
(1) accuracy­related penalty, the sec­
tion 6662(i) increased accuracy­related
penalty in the case of nondisclosed non­
economic substance transactions, and
the section 6662(b)(7) and (j) increased
accuracy­related penalty in the case
of undisclosed foreign financial asset
understatements). If this revenue proce­
dure does not include an item or posi­
tion, disclosure is adequate with respect
to that item or position only if made on a
properly completed Form 8275 or 8275­
R, as appropriate, attached to the return
for the year or to a qualified amended
return. See Treas. Reg. § 1.6664­2(c)
for information about qualified amended
returns.
This revenue procedure applies to any
income tax return filed on 2024 tax forms
for a taxable year beginning in 2024, and
to any income tax return filed in 2025 on
2024 tax forms for short taxable years
beginning in 2025.
SECTION 2. CHANGES FROM REV.
PROC. 2023-40
Changes have been made in order to
update the taxable years to which this rev­
enue procedure applies. No substantive
changes have been made.
SECTION 3. BACKGROUND
.01 If section 6662 applies to any por­
tion of an underpayment of tax required to
be shown on a return, an amount generally
equal to 20 percent of the portion of the
underpayment is added to the tax. Under
section 6662(b)(2), the penalty applies to
the portion of any underpayment of tax
that is attributable to a substantial under­
statement of income tax. The penalty rate
increases to 40 percent in the case of gross
valuation misstatements under section
6662(h), nondisclosed noneconomic sub­
stance transactions under section 6662(i),
or undisclosed foreign financial asset
understatements under section 6662(j).
.02 Generally, there is a substan­
tial understatement of income tax if the
amount of the understatement exceeds
the greater of (i) 10 percent of the amount
of tax required to be shown on the return
for the taxable year or (ii) $5,000. Section
6662(d)(1). Section 6662(d)(1)(C) pro­
vides a special rule for taxpayers claiming
a section 199A deduction. In the case of
any taxpayer who claims any deduction
allowed under section 199A for the tax­
able year, there is a substantial understate­
ment of income tax if the amount of the
understatement exceeds the greater of (i)
5 percent of the amount of tax required
to be shown on the return for the taxable
year or (ii) $5,000. Section 6662(d)(1)(B)
provides a special rule for corporations.
A corporation (other than an S corpora­
tion or a personal holding company) has
a substantial understatement of income
tax if the amount of the understatement
exceeds the lesser of (i) 10 percent of the
tax required to be shown on the return for
a taxable year (or, if greater, $10,000) or
(ii) $10,000,000. Generally, an under­
statement is the excess of the amount of
tax required to be shown on the return for
the taxable year over the amount of the
tax that is shown on the return reduced
by any rebate, where the excess is deter­
mined without regard to items to which
the reportable transaction understatement
penalty under section 6662A applies.
Section 6662(d)(2)(A). For purposes of
determining whether an understatement
is substantial, the understatement deter­
mined under the general rule is increased
by the aggregate amount of any reportable
transaction understatements relating to the
return. Section 6662A(e)(1)(A).
.03 In the case of an item not attribut­
able to a tax shelter, if the taxpayer has a
reasonable basis for the tax treatment of
the item, the amount of the understate­
ment is reduced by the portion of the
understatement attributable to the item
with respect to which the relevant facts
affecting the item’s tax treatment are
adequately disclosed in the return or in a
statement attached to the return. Section
6662(d)(2)(B)(ii).
.04 Section 6694(a) imposes a penalty
on a tax return preparer who prepares
a return or claim for refund reflecting
an understatement of liability due to an
“unreasonable position” if the tax return
preparer knew (or reasonably should have
known) of the position. A position (other
than a position with respect to a tax shelter
or a reportable transaction to which sec­
tion 6662A applies) is generally treated
as unreasonable unless (i) there is or was
substantial authority for the position, or
(ii) the position was properly disclosed
in accordance with section 6662(d)(2)(B)
(ii)(I) and had a reasonable basis. If the
position is with respect to a tax shelter
(as defined in section 6662(d)(2)(C)(ii))
or a reportable transaction to which sec­
tion 6662A applies, the position is treated
as unreasonable unless it is reasonable
to believe that the position would more
likely than not be sustained on the merits.
See Notice 2009­5, 2009­3 I.R.B. 309, for
interim penalty compliance rules for tax
shelter transactions.
.05 In general, this revenue proce­
dure provides guidance for determining
when disclosure by return is adequate
for purposes of section 6662(d)(2)(B)(ii)
and section 6694(a)(2)(B). For purposes
of this revenue procedure, the taxpayer
must furnish all required information in
accordance with the applicable forms
and instructions, and the money amounts
entered on these forms must be verifiable.

Bulletin No. 2024–52 1439 December 23, 2024
.06 This revenue procedure may apply
to a return for a fiscal tax year that begins
in 2024 and ends in 2025. This revenue
procedure may also apply to a short year
return for a period beginning in 2025 if
the return is to be filed before the 2025
forms are available. (Note that individuals
are generally not put in this position.) The
most frequent situation in which a short
year arises is when filing a decedent’s final
return for a fractional part of a year. In that
situation, the 2025 form will be available
because the final return is due the fifteenth
day of the fourth month following the close
of the 12­month period that began with the
first day of such fractional part of the year
(meaning the due date is not accelerated).
See Treas. Reg. § 1.6072­1(b). In the case
of fiscal year and short year returns, the
taxpayer must take into account any tax
law changes that are effective for tax years
beginning after December 31, 2024, even
though these changes are not reflected on
the form or instructions.
.07 This document does not take into
account the effect of tax law changes effec­
tive for tax years beginning after Decem­
ber 31, 2024. If a line referenced in this
revenue procedure is affected by such a
change and requires additional reporting,
a taxpayer may have to file Form 8275,
Disclosure Statement, or Form 8275­R,
Regulation Disclosure Statement, until the
Service prescribes criteria for complying
with the requirement.
.08 A complete and accurate disclosure
of a tax position on the appropriate year’s
Schedule UTP, Uncertain Tax Position
Statement, will be treated as if the corpo­
ration filed a Form 8275 or Form 8275­R
regarding the tax position. The filing of
a Form 8275 or Form 8275­R, however,
will not be treated as if the corporation
filed a Schedule UTP.
SECTION 4. PROCEDURE
.01 General
(1) Additional disclosure of facts rel­
evant to, or positions taken with respect
to, issues involving any of the items set
forth below is unnecessary for purposes
of reducing any understatement of income
tax under section 6662(d) (except as oth­
erwise provided in section 4.02(3) con­
cerning Schedules M­1 and M­3), pro­
vided that the forms and attachments are
completed in a clear manner and in accor­
dance with their instructions.
(2) The money amounts entered on the
forms must be verifiable, and the informa­
tion on the return must be disclosed in the
manner described below. For purposes of
this revenue procedure, a number is veri­
fiable if, on audit, the taxpayer can prove
the origin of the amount (even if that
number is not ultimately accepted by the
Service) and the taxpayer can show good
faith in entering that number on the appli­
cable form.
(3) The disclosure of an amount as
provided in section 4.02 below is not
adequate when the understatement arises
from a transaction between parties who
are related within the meaning of section
267(b). If an entry may present a legal
issue or controversy because of a relat­
ed­party transaction, then that transaction
and the relationship must be disclosed on
a Form 8275 or Form 8275­R.
(4) When the amount of an item is
shown on a line that does not have a pre­
printed description identifying that item
(such as on an unnamed line under an
“Other Expense” category), the taxpayer
must clearly identify the item by including
the description on that line. For example,
to disclose a bad debt for a sole proprietor­
ship, the words “bad debt” must be written
or typed on the line of Schedule C (Form
1040 or 1040­SR) that shows the amount
of the bad debt. Also, for Schedule M­3
(Form 1120), Part II, line 25, Other income
(loss) items with differences, or Part III,
line 38, Other expense/deduction items
with differences, the entry must provide
descriptive language; for example, “Cost
of non­compete agreement deductible not
capitalizable,” and the description must be
provided on an attachment. Similarly, for
other forms, if space limitations on a form
do not allow for an adequate description,
the description must be continued on an
attachment.
(5) Although a taxpayer may literally
meet the disclosure requirements of this
revenue procedure, the disclosure will
have no effect for purposes of the section
6662 accuracy­related penalty if the item
or position on the return (1) does not have
a reasonable basis as defined in Treas.
Reg. § 1.6662­3(b)(3); (2) is attributable
to a tax shelter item as defined in section
6662(d)(2)(C)(ii); or (3) is not properly
substantiated or the taxpayer failed to
keep adequate books and records with
respect to the item or position.
(6) Disclosure also will have no effect
for purposes of the section 6694(a) pen­
alty as applicable to tax return preparers if
the position is with respect to a tax shelter
(as defined in section 6662(d)(2)(C)(ii)) or
a reportable transaction to which section
6662A applies.
.02 Items
(1) Form 1040, Schedule A, Itemized
Deductions:
(a) Medical and Dental Expenses:
Complete lines 1 through 4, supplying all
required information.
(b) Taxes: Complete lines 5 through 7,
supplying all required information. Line 6
must list each type of tax and the amount
paid.
(c) Interest Expenses: Complete lines 8
through 10, supplying all required infor­
mation. This section 4.02(1)(c) does not
apply to (i) amounts disallowed under sec­
tion 163(d) unless Form 4952, Investment
Interest Expense Deduction, is completed,
or (ii) amounts disallowed under section
265.
(d) Charitable Contributions: Complete
lines 11 through 14, supplying all required
information and attaching all related forms
required pursuant to statute or regulation.
(e) Casualty and Theft Losses: Com­
plete Form 4684, Casualties and Thefts,
and attach to the return. Each item or arti­
cle for which a casualty or theft loss is
claimed must be listed on Form 4684.
(2) Certain Trade or Business Expenses
(including, for purposes of this section,
the following six expenses as they relate
to the rental of property):
(a) Casualty and Theft Losses: The
procedure outlined in section 4.02(1)(e)
must be followed.
(b) Legal Expenses: The amount
claimed must be stated. This section does
not apply, however, to amounts properly
characterized as capital expenditures, per­
sonal expenses, or non­deductible lobby­
ing or political expenditures, including
amounts that are required to be (or that
are) amortized over a period of years.
(c) Specific Bad Debt Charge­off: The
amount written off must be stated.
(d) Officers’ Compensation: Complete
Form 1125­E, Compensation of Officers,
when its instructions require completion.

December 23, 2024 1440 Bulletin No. 2024–52
You must express the “percent of time
devoted to business” as a numerical per­
centage, rather than as a non­numerical
description such as “part” or “as needed.”
This section does not apply to “excess
parachute payments,” as defined in sec­
tion 280G. This section does not apply
to the extent that remuneration paid or
incurred exceeds an applicable employ­
ee­remuneration deduction limitation
under section 162(m).
(e) Repair Expenses: The amount
claimed must be stated. This section does
not apply, however, to any amount prop­
erly characterized as capital expenditures
or personal expenses.
(f) Taxes (other than foreign taxes):
The amount claimed must be stated.
(3) Differences in book and income tax
reporting:
For Schedule M­1 and all Schedules
M­3, including those listed in (a)­(f)
below, the information provided must
reasonably apprise the Service of the
potential controversy concerning the tax
treatment of the item. If the information
provided does not so apprise the Service, a
Form 8275 or Form 8275­R must be used
to adequately disclose the item (see Part II
of the instructions for those forms).
Note: An item reported on a line with
a pre­printed description, shown on an
attached schedule or “itemized” on Sched­
ule M­1, may represent the aggregate
amount of several transactions producing
that item (i.e., a group of similar items,
such as amounts paid or incurred for sup­
plies by a taxpayer engaged in business). In
some instances, a potentially controversial
item may involve a portion of the aggre­
gate amount disclosed on the schedule. The
Service will not be reasonably apprised of
a potential controversy by the aggregate
amount disclosed. In these instances, the
taxpayer must use Form 8275 or Form
8275­R regarding that portion of the item.
Combining unlike items, whether on
Schedule M­1 or Schedule M­3 (or on an
attachment when directed by the instruc­
tions), will not constitute an adequate dis­
closure.
Additionally, taxpayers that file the
Schedule M­3 (Form 1120), Net Income
(Loss) Reconciliation for Corporations
With Total Assets of $10 Million or More,
may be required to complete Schedule B
(Form 1120), Additional Information for
Schedule M-3 Filers. For further infor­
mation, see Who Must File in the Gen­
eral Instructions for Schedule B (Form
1120). Taxpayers that file the Schedule
M­3 (Form 1065), Net Income (Loss)
Reconciliation for Certain Partnerships,
may be required to complete Schedule C
(Form 1065), Additional Information for
Schedule M-3 Filers. For further infor­
mation, see Who Must File in the Gen­
eral Instructions for Schedule C (Form
1065). When required, these schedules
are necessary to constitute adequate dis­
closure:
(a) Form 1065. Schedule M­3 (Form 1065), Net Income (Loss) Reconciliation for Certain Partnerships:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(b) Form 1120. (i) Schedule M­1, Reconciliation of Income (Loss) per Books With Income per Return.
(ii) Schedule M­3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(c) Form 1120­L. Schedule M­3 (Form 1120­L), Net Income (Loss) Reconciliation for U.S. Life Insurance Companies With Total
Assets of $10 Million or More:

Bulletin No. 2024–52 1441 December 23, 2024
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(d) Form 1120­PC. Schedule M­3 (Form 1120­PC), Net Income (Loss) Reconciliation for U.S. Property and Casualty Insurance
Companies With Total Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(e) Form 1120­S. Schedule M­3 (Form 1120­S), Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10
Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(f) Form 1120­F. Schedule M­3 (Form 1120­F), Net Income (Loss) Reconciliation for Foreign Corporations With Reportable
Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (b), Temporary Differences;
Column (c), Permanent Differences; and
Column (d), Other Permanent Differences for Allocations to
Non-ECI and ECI
Part III (reconciliation of expense/deduction items)
Column (b), Temporary Differences;
Column (c), Permanent Differences; and
Column (d), Other Permanent Differences for Allocations to
Non-ECI and ECI
(4) Foreign Tax Items:
(a) International Boycott Transactions:
Transactions disclosed on Form 5713,
International Boycott Report; Schedule
A, International Boycott Factor (Sec-
tion 999(c)(1)); Schedule B, Specifically
Attributable Taxes and Income (Section
999(c)(2)); and Schedule C, Tax Effect
of the International Boycott Provisions,
must be completed when required by their
instructions.
(b) Treaty­Based Return Position:
Transactions and amounts under sec­
tion 6114 or section 7701(b) as disclosed
on Form 8833, Treaty-Based Return
Position Disclosure Under Section 6114
or 7701(b), must be completed when
required by its instructions.
(5) Other:
(a) Moving Expenses: Complete Form
3903, Moving Expenses, and attach to the
return.
(b) Employee Business Expenses:
Complete Form 2106, Employee Business

December 23, 2024 1442 Bulletin No. 2024–52
Expenses (for use only by Armed Forces
reservists, qualified performing artists,
fee-basis state or local government offi-
cials, and employees with impairment-re-
lated work expenses), and attach to the
return. This section does not apply to club
dues or to travel expenses for any non­em­
ployee accompanying the taxpayer on the
trip.
(c) Fuels Credit: Complete Form 4136,
Credit for Federal Tax Paid on Fuels, and
attach to the return.
(d) Investment Credit: Complete Form
3468, Investment Credit, and attach to the
return.
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to any
income tax return filed on a 2024 tax form
for a taxable year beginning in 2024 and
to any income tax return filed on a 2024
tax form in 2025 for a short taxable year
beginning in 2025.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Vincent Liu of the Office of
the Associate Chief Counsel (Procedure
& Administration). For further infor­
mation regarding this revenue proce­
dure, contact Branch 2 of Procedure and
Administration at (202) 317­6844 (not a
toll free number).

Bulletin No. 2024–52 1443 December 23, 2024
Part IV
U.S.-Norway Competent Authority Arrangement
Announcement 2024-42
The following is a copy of the Competent Authority Arrangement entered into by the competent authorities of the United States of
America and the Kingdom of Norway under paragraph 2 of Article 27 (Mutual Agreement Procedure) of the Convention between the
United States of America and the Kingdom of Norway for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income and Property, signed on December 3, 1971, and as amended by the Protocol signed on September
19, 1980, in which the competent authorities confirm that Article 20 (Investment or Holding Companies) is not applicable to a U.S.
investment company that qualifies as a Regulated Investment Company pursuant to sections 851 (Definition of regulated investment
company) and 852 (Taxation of regulated investment companies and their shareholders) of the Internal Revenue Code.
The text of the Competent Authority Arrangement is as follows:
COMPETENT AUTHORITY ARRANGEMENT
The Competent Authorities of the United States of America and the Kingdom of Norway hereby enter into the following Compe­
tent Authority Arrangement (the “Arrangement”) under the Convention between the United States of America and the Kingdom of
Norway for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Property,
signed on December 3, 1971, and as amended by the Protocol signed on September 19, 1980 (the “Treaty”). This Arrangement is
entered into under paragraph 2 of Article 27 (Mutual Agreement Procedure) of the Treaty.
Article 20 (Investment or Holding Companies) of the Treaty is not applicable to a U.S. investment company when such company
qualifies as a Regulated Investment Company (“RIC”) pursuant to sections 851 (Definition of regulated investment company) and
852 (Taxation of regulated investment companies and their shareholders) of the U.S. Internal Revenue Code, Title 26, Subtitle A,
Chapter 1, Subchapter M, Part I, United States Code.
Nothing in this Arrangement restricts the Competent Authorities on the interpretation or application of Article 20 of the Treaty
with respect to companies other than RICs.
If, after the Arrangement is signed, there is a substantive amendment to the U.S laws mentioned above, the Arrangement is no
longer valid from the effective date of the amendment.
Signed by the undersigned Competent Authorities:
/s/ Trude Steinnes Sønvisen /s/ Holly O. Paz
______________________ ______________________
Trude Steinnes Sønvisen Holly O. Paz
Norwegian Competent Authority U.S. Competent Authority
Date: October 29, 2024 Date: November 6, 2024

December 23, 2024 1444 Bulletin No. 2024–52
Notice of Proposed
Rulemaking
Substantiation
Requirements and Qualified
Nonpersonal Use Vehicles
REG-106595-22
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak­
ing.
SUMMARY: This document sets forth
proposed regulations relating to the defini­
tion of qualified nonpersonal use vehicles.
Qualified nonpersonal use vehicles are
excepted from the substantiation require­
ments that apply to certain listed property.
These proposed regulations add unmarked
vehicles used by firefighters or members
of a rescue squad or ambulance crew as
a new type of qualified nonpersonal use
vehicle. These regulations affect govern­
mental units that provide firefighter or
rescue squad or ambulance crew member
employees with unmarked qualified non­
personal use vehicles and the employees
who use those vehicles.
DATES: Written or electronic comments
and requests for a public hearing must be
received by March 3, 2025.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal eRulemak­
ing Portal at http://www.regulations.gov
(indicate IRS and REG­106595­22) by
following the online instructions for sub­
mitting comments. Requests for a public
hearing must be submitted as prescribed
in the “Comments and Requests for a
Public Hearing” section. Once submitted
to the Federal Rulemaking Portal, com­
ments cannot be edited or withdrawn. The
Department of the Treasury (Treasury
Department) and the IRS will publish for
public availability any comment submit­
ted electronically or on paper, to the IRS’s
public docket. Send paper submissions to
CC:PA:01:PR (REG­106595­22), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Stephanie Caden at (202)
317­4774; concerning submissions of
comments or requests for a public hearing,
the Publications and Regulations section
by email at publichearings@irs.gov (pre­
ferred) or (202) 317­6901 (not toll­free
numbers).
SUPPLEMENTARY INFORMATION:
Authority
This notice of proposed rulemaking
contains proposed regulations issued
under the authority granted to the Secre­
tary of the Treasury or her delegate (Sec­
retary) by sections 274(p) and 132(o) of
the Internal Revenue Code (Code) that
would amend the Income Tax Regulations
(26 CFR part 1) under sections 274(i) and
132(d) related to qualified nonpersonal
use vehicles. Section 274(p) provides the
Secretary with an express grant of regula­
tory authority with respect to section 274
as the Secretary may deem necessary to
carry out the purposes of that section. Sec­
tion 132(o) provides the Secretary with an
express grant of regulatory authority with
respect to section 132 to prescribe such
regulations as may be necessary or appro­
priate to carry out the purposes of that sec­
tion. In addition, section 7805(a) autho­
rizes the Secretary to prescribe all needful
rules and regulations for the enforcement
of the Code.
Background
In general, section 274 limits or disal­
lows deductions for certain expenditures
that otherwise would be allowable under
chapter 1 of the Code, primarily under
section 162(a), which allows a deduction
for ordinary and necessary expenses paid
or incurred during the taxable year in car­
rying on any trade or business.
Section 274(d), as relevant to these
proposed regulations, provides that a tax­
payer is not allowed a deduction or credit
for certain expenses unless the expenses
are substantiated by adequate records or
by sufficient evidence corroborating the
taxpayer’s own statement as to the amount,
time and place, business purposes of the
expenditure, and the business relationship
to the taxpayer of the person receiving the
benefit. These substantiation requirements
apply to expenses incurred in the use of
any listed property, as defined in section
280F(d)(4), which includes any passenger
automobile and any other property used as
a means of transportation.
In 1985, Congress modified section
274(d) and added section 274(i), creat­
ing an exception from the substantiation
requirements for qualified nonpersonal
use vehicles. Public Law 99­44 2, 99 Stat.
77 (1985). Section 274(i) provides that the
term “qualified nonpersonal use vehicle”
means any vehicle, which by reason of its
nature, is not likely to be used more than a
de minimis amount for personal purposes.
Both the business and personal use of
an employer­provided vehicle that is a
qualified nonpersonal use vehicle under
section 274(i) qualifies under section
132(d) as a working condition fringe ben­
efit that is excluded from the employee’s
income. Thus, if an employer provides an
employee with a qualified nonpersonal
use vehicle, the employee does not need
to keep records of how the vehicle is used,
and the total use of the vehicle is excluded
from the employee’s income as a work­
ing condition fringe benefit under section
132(d). See §§1.132­5(h) and 1.274­5(k).
The legislative history to section 274(i)
includes examples of qualified nonper­
sonal use vehicles such as school buses,
qualified specialized utility repair trucks,
qualified moving vans, clearly marked
police and fire vehicles, and unmarked
law enforcement vehicles. H.R. Rep. No.
99­67, at 16 (1985) (Conf. Rep.). The leg­
islative history indicates that Congress
intended the IRS and the Treasury Depart­
ment to expand the list to include other
vehicles that, by reason of their nature,
are highly unlikely to be used more than
a very minimal amount for personal pur­
poses. H.R. Rep. No. 99­34, at 11 (1985).
Temporary Regulations §1.274­5T(k)
and (l) were issued in 1985, identifying
categories of qualified nonpersonal use
vehicles and providing definitions (by
cross reference) of terms such as “auto­
mobile,” “vehicle,” and “personal use.”
TD 8061, 50 FR 46006, 46033, and

Bulletin No. 2024–52 1445 December 23, 2024
46036. Police and fire vehicles that are
clearly marked and law enforcement vehi­
cles that are unmarked were included as
categories of qualified nonpersonal use
vehicles. However, clearly marked vehi­
cles provided to Federal, State, and local
government workers who respond to
emergency situations as public safety offi­
cers but who are not employed by either a
fire department or police department were
not included as qualified nonpersonal use
vehicles.
In 2008, proposed regulations were
issued to incorporate the text of §1.274­
5T(k) and add clearly marked public
safety officer vehicles as a new type of
qualified nonpersonal use vehicle. 73 FR
32500. An example illustrating the appli­
cation of the rules to a clearly marked
public safety officer vehicle was included
at §1.274­5(k)(8) as Example 3.
In 2010, final regulations were pub­
lished adding clearly marked public safety
officer vehicles to the list of qualified non­
personal use vehicles. TD 9483, 75 FR
27934 (current regulations). As a result,
emergency responders who are provided
a clearly marked vehicle receive the same
tax treatment whether they work for the
police department, fire department, or
other governmental unit, or any agency or
instrumentality thereof.
Explanation of Provisions
The Treasury Department and the IRS
have become aware that certain emer­
gency responders not covered by the cur­
rent regulations are provided unmarked
vehicles by a governmental unit or an
agency or instrumentality thereof (govern­
mental unit). In particular, stakeholders
have commented that fire chiefs or mem­
bers of rescue squads or ambulance crews
who, when not on a regular shift, need to
be on call at all times to respond to emer­
gencies will often be assigned unmarked
command vehicles to travel safely and
quickly to a scene and perform emer­
gency services. While the authorized use
of unmarked vehicles by law enforcement
officers employed on a full­time basis by
a governmental unit that is responsible for
the prevention or investigation of crime
involving injury to persons or property
(including apprehension or detention of
persons for such crimes) satisfies the cur­
rent regulations governing qualified non­
personal use vehicles, the use of unmarked
vehicles provided to firefighters or mem­
bers of a rescue squad or ambulance crew
does not satisfy the current regulations.
Section 274(i) defines a qualified non­
personal use vehicle as one which, by rea­
son of its nature, “is not likely to be used
more than a de minimis amount for per­
sonal purposes.” The current regulations
define qualified nonpersonal use vehicles
to include clearly marked police, fire,
or public safety officer vehicles that are
owned or leased by a governmental unit
and required to be used for commuting
by a police officer, firefighter, or public
safety officer (as defined in section 402(l)
(4)(C)) who, when not on a regular shift,
is on call at all times. Any personal use
(other than commuting) of the vehicle out­
side the limit of the police officer’s arrest
powers or the firefighter’s or public safety
officer’s obligation to respond to an emer­
gency must be prohibited by the govern­
mental unit. See §1.274­5(k)(2)(ii)(A) and
(k)(3). The various examples included in
§1.274­5(k)(8) illustrate that a prohibition
on personal use (other than commuting) is
intended to exist in situations where both
commuting and only de minimis personal
use, such as personal errands, are permit­
ted.
The current regulations also define
qualified nonpersonal use vehicles as
including unmarked law enforcement
vehicles owned or leased by Federal,
State, county, or local governmental agen­
cies or departments that officially autho­
rize the business and personal use of the
vehicle by law enforcement officers whom
they employ, provided any personal use is
incidental to law enforcement functions.
See §1.274­5(k)(2)(ii)(R) and (k)(6). The
regulations define law enforcement offi­
cers as individuals who are employed on a
full­time basis by a governmental unit that
is responsible for the prevention or inves­
tigation of crime involving injury to per­
sons or property (including apprehension
or detention of persons for those crimes),
who are authorized by law to carry fire­
arms, execute search warrants, and to
make arrests (other than merely a citizen’s
arrest), and who regularly carry firearms
(except when it is not possible to do so
because of the requirements of undercover
work). See §1.274­5(k)(6)(ii). Unmarked
law enforcement vehicles allow law
enforcement officers to operate inconspic­
uously, e.g., so that they can conduct these
duties while performing undercover work.
Historically, firefighters and rescue
squad and ambulance crew members were
provided with vehicles that had mark­
ings to indicate their status as emergency
response vehicles. More recently, the IRS
and Treasury Department have become
aware that some governmental units are
assigning these emergency responders
unmarked vehicles due to increased inci­
dents of harassment of first responders
and vandalism of clearly marked fire and
emergency vehicles and equipment.
Generally, fire and emergency
response departments retain the title to
the unmarked vehicles and maintain pol­
icies that limit the use of the vehicles for
personal, non­work purposes. Because
firefighters and members of a rescue
squad or ambulance crew respond to a
wide variety of emergencies at all hours,
including fires, medical crises, vehicular
accidents, natural disasters, and terrorist
attacks, these vehicles typically are spe­
cially equipped to allow firefighters and
members of rescue squads or ambulance
crews who, even when not on a regular
shift, are on call at all times to travel safely
and efficiently to the scene of an emer­
gency and provide emergency services.
Onboard equipment may include lights
and sirens, medical emergency equip­
ment, life­saving devices such as defibril­
lators, and radios that assist firefighters,
rescue squads, or ambulance crews in
communicating with a central source and
other emergency response crews related,
for example, to traffic or hospital capac­
ity. Onboard equipment may also include
items such as personal protective equip­
ment (helmet, coat, boots), emergency
oxygen tanks, reference books, and lap­
top computers that enable workers to
access important information related to
the emergency. Under the current regu­
lations, emergency responders must sub­
stantiate all of the time they spend using
these unmarked vehicles for work related
purposes, and the value of any personal
use of these vehicles, even if minimal,
must be included in the employees’ tax­
able income.
Unmarked firefighter and rescue
squad or ambulance crew vehicles are

December 23, 2024 1446 Bulletin No. 2024–52
less likely to be utilized in undercover
work than unmarked law enforcement
vehicles. However, the use of unmarked
vehicles allows firefighters and other
emergency personnel who commute and
are required to be on call at all times,
even when not on a regular shift, to travel
inconspicuously, thereby reducing risk
of harassment and vandalism. Also, as
described above, unmarked firefighter
and rescue squad or ambulance crew
vehicles typically are specially outfit­
ted with onboard equipment, which is
used by firefighters and emergency per­
sonnel to suppress fires, conduct rescue
activities, or provide emergency medi­
cal services as part of an official emer­
gency response system. Because these
vehicles are generally specially outfitted
with such equipment, any personal use
of these vehicles is likely to be minimal.
Thus, adding unmarked firefighter, res­
cue squad or ambulance crew vehicles as
a new category of qualified nonpersonal
use vehicle is consistent with the under­
lying intent of section 274(i).
Accordingly, the proposed regulations
would amend §1.274­5(k)(2)(ii) to add
unmarked vehicles used by firefighters,
members of rescue squads, or ambulance
crews to the list of qualified nonpersonal
use vehicles that are exempt from the
substantiation requirements of section
274(d). In addition, the proposed regula­
tions would amend §1.274­5(k) to add a
new §1.274­5(k)(7) providing definitions
for the terms “unmarked firefighter, rescue
squad or ambulance crew vehicles”, “fire­
fighter,” and “member of a rescue squad
or ambulance crew,” and add §1.274­5(k)
(9)(v) (Example 5) illustrating the new
provision.
The proposed regulations provide that
the substantiation requirements of sec­
tion 274(d) do not apply to an unmarked
firefighter, rescue squad, or ambulance
crew vehicle that is required to be used
for commuting by the firefighter or mem­
ber of a rescue squad or ambulance crew,
who, when not on a regular shift, is on call
at all times. Because any personal use of
an unmarked firefighter, rescue squad, or
ambulance crew vehicle should be min­
imal and incidental to its main purpose
in providing emergency services, the
proposed regulations also provide that
personal use of the vehicle, other than
commuting and personal errands, that is
outside the firefighter’s or rescue squad or
ambulance crew member’s obligation to
respond to an emergency must be prohib­
ited by the governmental unit that owns
or leases the vehicle and employs the fire­
fighter or rescue squad or ambulance crew
member.
The proposed regulations define an
“unmarked firefighter, rescue squad, or
ambulance crew vehicle” as a vehicle,
that is owned or leased by a governmen­
tal unit, or any agency or instrumentality
thereof, and that is specially outfitted to
allow firefighters or members of rescue
squads and ambulance crews to travel
safely and efficiently to the scene of an
emergency and provide emergency ser­
vices. The description of the types of
special equipment found in the unmarked
vehicles is derived from information pro­
vided by stakeholders requesting updates
to the current regulations. The proposed
regulations also provide that a license
plate marking or insignia do not disqual­
ify a vehicle from being an unmarked
firefighter, rescue squad, or ambulance
crew vehicle.
The definition of “firefighter” for pur­
poses of these proposed regulations, is
modeled in part on the definition of “law
enforcement officer” in §1.274­5(k)(6)
(ii) and draws from relevant language in
the Public Safety Officers’ Benefits Act
(PSOB Act)’s definition of “action outside
of jurisdiction” in 34 U.S.C. 10284(1)(C),
as well as from outside sources. The defi­
nition of “member of a rescue squad or
ambulance crew” in these proposed reg­
ulations is the same definition that is set
forth in 34 U.S.C. 10284(10), which was
enacted as an amendment to the PSOB
Act that establishes a framework for the
expeditious and fair processing of claims
brought by disabled law enforcement offi­
cers, firefighters, and other first respond­
ers or their survivors. H. Rep. No. 112­
548 (2012).
These proposed regulations provide
an example of circumstances in which a
member of a rescue squad or ambulance
crew assigned an unmarked vehicle would
qualify for the exclusion under this new
provision.
Finally, these proposed regulations pro­
vide conforming amendments to §§1.132­
1(g) and 1.132­5(h)(1).
The purpose of these proposed reg­
ulations is to ensure that firefighters and
members of rescue squads and ambulance
crews who are officially authorized to use
specially equipped unmarked vehicles to
respond to emergencies are accorded the
same tax treatment as other first respond­
ers who use qualified nonpersonal use
vehicles. The Treasury Department and
the IRS request comments on whether the
definitions of “unmarked firefighter, res­
cue squad or ambulance crew vehicles,”
“firefighter,” and “member of a rescue
squad or ambulance crew,” are sufficient
to accomplish the intended purpose of
these proposed regulations or whether any
of them might lead to potential abuse.
Applicability Date
Proposed §1.274­5(k)(2)(ii)(S), (k)
(7), (k)(9)(v) and references to §1.274­
5(k)(9) in §1.132­5(h) are proposed to
apply to tax years beginning on or after
the date of publication of final regula­
tions in the Federal Register. Until the
date of publication of final regulations
in the Federal Register, for purposes of
proposed §1.274­5(k)(2)(ii)(S), (k)(7),
(k)(9)(v) and references to §1.274­5(k)
(9) in §1.132­5(h), taxpayers may rely on
the guidance provided in these proposed
regulations.
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Pursuant to the Memorandum of
Agreement, Review of Treasury Regula­
tions under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.
II. Paperwork Reduction Act
This proposed regulation does not
create new collection requirements, as
defined under the Paperwork Reduction
Act (44 U.S.C. 35); and does not alter any
previously approved Office of Manage­
ment and Budget information collection
requirements and their associated burden.

Bulletin No. 2024–52 1447 December 23, 2024
III. Regulatory Flexibility Act
It is hereby certified that these proposed
regulations will not have a significant eco­
nomic impact on a substantial number of
small entities pursuant to the Regulatory
Flexibility Act (5 U.S.C. chapter 6). This
certification is based on the fact that these
proposed regulations do not impose any new
or different requirements on small entities.
The proposed regulations would apply only
to employers that utilize unmarked fire­
fighter, rescue squad, or ambulance vehicles
and therefore would affect a relatively small
number of entities, most of which would be
public entities. In addition, these proposed
regulations would not affect employment
tax reporting or require any additional sub­
stantiation. Rather, the proposed regulations
exempt affected entities from substantiation
requirements and for this reason do not add
any economic burden to affected entities.
Therefore, a Regulatory Flexibility Analy­
sis under the Regulatory Flexibility Act (5
U.S.C. chapter 6) is not required.
IV. Section 7805(f)
Pursuant to section 7805(f), this notice of
proposed rulemaking has been submitted to
the Chief Council for the Office of Advocacy
of the Small Business Administration for
comment on its impact on small business.
V. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal mandate
that may result in expenditures in any one
year by a State, local, or Tribal government,
in the aggregate, or by the private sector,
of $100 million in 1995 dollars, updated
annually for inflation. These proposed regu­
lations do not include any Federal mandate
that may result in expenditures by State,
local, or Tribal governments, or by the pri­
vate sector, in excess of that threshold.
VI. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov­
ernments, and is not required by statute, or
preempts State law, unless the agency meets
the consultation and funding requirements
of section 6 of the Executive order. These
proposed regulations do not have federal­
ism implications, do not impose substantial
direct compliance costs on State and local
governments, and do not preempt State law
within the meaning of the Executive order.
Comments and Request for a Public
Hearing
Before final regulations regarding the
definition of qualified nonpersonal use
vehicles are adopted, consideration will
be given to any written or electronic com­
ments on these proposed amendments
that are submitted timely (in the manner
described under the ADDRESSES head­
ing) to the IRS. The Treasury Department
and the IRS request comments on all
aspects of the proposed regulations. Any
electronic or paper comments submitted,
will be made available at https://www.reg­
ulations.gov or upon request.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com­
ments. Requests for a hearing are strongly
encouraged to be submitted electronically.
If a public hearing is scheduled, notice of
the date and time for the public hearing
will be published in the Federal Register.
Drafting Information
The principal author of these regula­
tions is Stephanie L. Caden of the Office
of the Associate Chief Counsel (Employee
Benefits, Exempt Organizations, and
Employment Taxes). However, other per­
sonnel from the Treasury Department and
the IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record­
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and IRS propose to amend 26 CFR part 1
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by revising the
entries for §§1.132­0 through 1.132­8T
and §1.274­5 to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Sections 1.132­0 through 1.132­8T
also issued under 26 U.S.C. 132(o).
* * * * *
Section 1.274­5 also issued under 26
U.S.C. 274(p).
* * * * *
Par. 2. Section 1.132­1 is amended by
adding a sentence to the end of paragraph
(g) to read as follows:
§1.132-1 Exclusion from gross income
for certain fringe benefits.
* * * * *
(g) * * * In addition, references to
§1.274­5(k)(9) in §1.132­5(h) are applica­
ble as of [date of publication of final regu­
lations in the Federal Register].
Par. 3. Section 1.132­5 is amended by
revising paragraph (h)(1) to read as fol­
lows:
§1.132-5 Working condition fringes.
* * * * *
(h) * * * (1) In general. Except as pro­
vided in paragraph (h)(2) of this section,
100 percent of the value of the use of a qual­
ified nonpersonal use vehicle (as described
in §1.274­5(k)) is excluded from gross
income as a working condition fringe, pro­
vided that, in the case of a vehicle described
in §1.274­5(k)(3) through (9), the use of
the vehicle conforms to the requirements of
§1.274­5(k)(3) through (9).
* * * * *
Par. 4. Section 1.274­5 is amended by:
1. Redesignating paragraph (k)(2)(ii)
(S) as paragraph (k)(2)(ii)(T) and adding
new paragraph (k)(2)(ii)(S);
2. Redesignating paragraph (k)(8) as
paragraph (k)(9);
3. Redesignating paragraph (k)(7) as
new paragraph (k)(8) and adding new
paragraph (k)(7);
4. In newly redesignated paragraph (k)
(9), designating Examples 1 through 4 as
paragraphs (k)(9)(i) through (k)(9)(iv),
respectively.

December 23, 2024 1448 Bulletin No. 2024–52
5. Adding paragraph (k)(9)(v); and
6. Revising paragraph (m).
The additions read as follows:
§1.274-5 Substantiation requirements.
* * * * *
(k) * * *
(2) * * *
(ii) * * *
(S) Unmarked firefighter, rescue squad,
or ambulance crew vehicles (as defined in
paragraph (k)(7) of this section).
* * * * *
(7) Unmarked firefighter, rescue squad,
or ambulance crew vehicles—(i) In gen-
eral. The substantiation requirements
of section 274(d) and this section do not
apply to an unmarked firefighter, res­
cue squad, or ambulance crew vehicle
required to be used for commuting by the
firefighter or member of a rescue squad
or ambulance crew, who, when not on a
regular shift, is on call at all times. Per­
sonal use (other than commuting) of the
vehicle outside the firefighter’s or rescue
squad or ambulance crew member’s obli­
gation to respond to an emergency must
be prohibited by the governmental unit, or
any agency or instrumentality thereof, that
owns or leases the vehicle and employs
the firefighter, rescue squad, or ambulance
crew member.
(ii) Unmarked firefighter, rescue squad,
or ambulance crew vehicle defined. An
unmarked firefighter, rescue squad, or
ambulance crew vehicle is an unmarked
vehicle used by a firefighter, or member of
a rescue squad or ambulance crew, that is
owned or leased by a governmental unit,
or any agency or instrumentality thereof,
and that is specially outfitted to allow
firefighters or members of rescue squads
and ambulance crews to travel safely and
efficiently to the scene of an emergency
and provide emergency services. Onboard
equipment on the vehicles includes but is
not limited to lights and sirens, medical
emergency equipment, life­saving devices
such as defibrillators, and radios that assist
firefighters, rescue squads, or ambulance
crews in communicating with a central
source or other emergency response crews
related, for example, to traffic or hospital
capacity. Onboard equipment may also
include items such as personal protective
equipment (helmet, coat, boots), emer­
gency oxygen tanks, reference books, and
laptop computers that enable workers to
access important information related to
the emergency. A license plate marking
or insignia does not disqualify a vehicle
from being an unmarked firefighter, res­
cue squad, or ambulance crew vehicle for
purposes of this paragraph (k)(7).
(iii) Firefighter. The term firefighter
means an individual who is employed
by a governmental unit, or any agency or
instrumentality thereof, that is responsi­
ble for firefighting, rescue activity, or the
provision of emergency medical care, and
other related emergency services to pre­
vent injury to persons or property and has
the official authority to engage in fire sup­
pression and provide related emergency
services.
(iv) Member of a rescue squad or
ambulance crew. For purposes of this
paragraph (k)(7), the term member of a
rescue squad or ambulance crew has the
same meaning as in 34 U.S.C. 10284(10).
* * * * *
(9) * * *
(v) Example 5. Emergency medical
technician, X, is a member of a rescue
squad employed by City M. X is provided
with an unmarked vehicle (equipped with
sirens and medical equipment) for use in
responding to emergencies. X, along with
other members of the rescue squad, is
ordinarily on duty for a regular shift, and
on call during the other hours of the day.
X is required to use the unmarked rescue
squad vehicle to commute to X’s home in
City M. The rescue squad’s official policy
regarding unmarked rescue squad vehicles
prohibits personal use (other than com­
muting) of the vehicles outside the city
limits. When not using the vehicle on the
job, X uses the vehicle only for commut­
ing, personal errands on the way between
work and home, and personal errands
within City M. All use of the vehicle by X
conforms to the requirements of paragraph
(k)(7) of this section. Therefore, the value
of that use is excluded from X’s gross
income as a working condition fringe and
the vehicle is not subject to the substantia­
tion requirements of section 274(d).
* * * * *
(m) Applicability date. This section
applies to expenses paid or incurred after
December 31, 1997. However, paragraph
(j)(3) of this section applies to expenses
paid or incurred after September 30, 2002,
and paragraph (k) of this section applies
to clearly marked public safety officer
vehicles, as defined in paragraph (k)(3)
of this section, only with respect to uses
occurring after May 19, 2010. The rules of
paragraphs (k)(2)(ii)(S), (k)(7) and (k)(9)
(v) of this section apply to taxable years
ending on or after [date of publication of
final regulations in the Federal Register].
Douglas W. O’Donnell,
Deputy Commissioner.
(Filed by the Office of the Federal Register Decem­
ber 2, 2024, 8:45 a.m., and published in the issue of
the Federal Register for December 3, 2024, 89 FR
95727).

Bulletin No. 2024–52 i December 23, 2024
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub­
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu­
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub­
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub­
lished ruling that is not considered deter­
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub­
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul­
ings in the series.
Suspended is used in rare situations
to show that the previous published rul­
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

December 23, 2024 ii Bulletin No. 2024–52
Numerical Finding List
1
Bulletin 2024–52
Announcements:
2024­26, 2024­27 I.R.B. 14
2024­27, 2024­27 I.R.B. 14
2024­28, 2024­28 I.R.B. 39
2024­29, 2024­29 I.R.B. 71
2024­31, 2024­34 I.R.B. 533
2024­32, 2024­35 I.R.B. 535
2024­30, 2024­36 I.R.B. 581
2024­39, 2024­39 I.R.B. 639
2024­34, 2024­41 I.R.B. 758
2024­35, 2024­43 I.R.B. 1013
2024­36, 2024­44 I.R.B. 1073
2024­37, 2024­47 I.R.B. 1124
2024­38, 2024­50 I.R.B. 1230
2024­39, 2024­50 I.R.B. 1231
2024­40, 2024­51 I.R.B. 1352
2024­42, 2024­52 I.R.B. 1443
AOD:
2024­1, 2024­52 I.R.B. 1354
Notices:
2024­47, 2024­27 I.R.B. 1
2024­52, 2024­27 I.R.B. 2
2024­53, 2024­27 I.R.B. 4
2024­54, 2024­28 I.R.B. 24
2024­55, 2024­28 I.R.B. 31
2024­56, 2024­29 I.R.B. 64
2024­57, 2024­29 I.R.B. 67
2024­58, 2024­30 I.R.B. 120
2024­59, 2024­32 I.R.B. 348
2024­60, 2024­34 I.R.B. 515
2024­61, 2024­34 I.R.B. 520
2024­62, 2024­36 I.R.B. 570
2024­63, 2024­36 I.R.B. 573
2024­64, 2024­39 I.R.B. 632
2024­65, 2024­39 I.R.B. 633
2024­66, 2024­40 I.R.B. 682
2024­67, 2024­41 I.R.B. 726
2024­68, 2024­41 I.R.B. 729
2024­69, 2024­41 I.R.B. 733
2024­70, 2024­43 I.R.B. 1001
2024­72, 2024­43 I.R.B. 1005
2024­73, 2024­43 I.R.B. 1007
2024­71, 2024­44 I.R.B. 1026
2024­75, 2024­44 I.R.B. 1026
2024­74, 2024­45 I.R.B. 1089
2024­76, 2024­45 I.R.B. 1089
2024­77, 2024­45 I.R.B. 1093
2024­78, 2024­46 I.R.B. 1111
2024­80, 2024­47 I.R.B. 1120
2024­81, 2024­49 I.R.B. 1203
2024­83, 2024­49 I.R.B. 1206
Notices:—Continued
2024­84, 2024­50 I.R.B. 1229
2024­85, 2024­51 I.R.B. 1349
2024­82, 2024­52 I.R.B. 1425
2024­86, 2024­52 I.R.B. 1429
Proposed Regulations:
REG­124593­23, 2024­28 I.R.B. 40
REG­109032­23, 2024­31 I.R.B. 332
REG­120137­19, 2024­31 I.R.B. 336
REG­119283­23, 2024­32 I.R.B. 351
REG­102161­23 2024­33 I.R.B. 502
REG­103529­23, 2024­33 I.R.B. 512
REG­105128­23, 2024­35 I.R.B. 536
REG­108920­24, 2024­38 I.R.B. 607
REG­111629­23, 2024­39 I.R.B. 640
REG­106851­21, 2024­40 I.R.B. 684
REG­116787­23, 2024­40 I.R.B. 709
REG­119683­22, 2024­40 I.R.B. 716
REG­118269­23, 2024­41 I.R.B. 761
REG­112129­23, 2024­42 I.R.B. 787
REG­113628­21, 2024­44 I.R.B. 1074
REG­110878­24, 2024­47 I.R.B. 1125
REG­116017­24, 2024­50 I.R.B. 1232
REG­106595­22, 2024­52 I.R.B. 1444
Revenue Procedures:
2024­26, 2024­27 I.R.B. 7
2024­29, 2024­30 I.R.B. 121
2024­30, 2024­30 I.R.B. 183
2024­27, 2024­31 I.R.B. 300
2024­28, 2024­31 I.R.B. 326
2024­32, 2024­34 I.R.B. 523
2024­34, 2024­38 I.R.B. 604
2024­35, 2024­39 I.R.B. 638
2024­36, 2024­41 I.R.B. 737
2024­37, 2024­41 I.R.B. 755
2024­38, 2024­43 I.R.B. 1010
2024­33, 2024­44 I.R.B. 1030
2024­39, 2024­45 I.R.B. 1097
2024­40, 2024­45 I.R.B. 1100
2024­31, 2024­46 I.R.B. 1113
2024­41, 2024­47 I.R.B. 1122
2024­42, 2024­52 I.R.B. 1433
2024­44, 2024­52 I.R.B. 1438
Revenue Rulings:
2024­13, 2024­28 I.R.B. 18
2024­14, 2024­28 I.R.B. 18
2024­15, 2024­32 I.R.B. 340
2024­16, 2024­35 I.R.B. 534
2024­17, 2024­36 I.R.B. 568
2024­18, 2024­37 I.R.B. 584
2024­20, 2024­40 I.R.B. 646
2024­21, 2024­41 I.R.B. 724
2024­22, 2024­43 I.R.B. 980
Revenue Rulings:—Continued
2024­23, 2024­43 I.R.B. 981
2024­24, 2024­45 I.R.B. 1086
2024­25, 2024­49 I.R.B. 1181
2024­26, 2024­49 I.R.B. 1201
2024­27, 2024­51 I.R.B. 1240
Treasury Decisions:
10002, 2024­29 I.R.B. 56
9999, 2024­30 I.R.B. 72
10000, 2024­31 I.R.B. 185
10003, 2024­32 I.R.B. 342
10001, 2024­33 I.R.B. 412
10004, 2024­33 I.R.B. 489
9998, 2024­34 I.R.B. 412
10005, 2024­34 I.R.B. 510
9991, 2024­40 I.R.B. 646
10007, 2024­43 I.R.B. 981
9994, 2024­44 I.R.B. 1014
10008, 2024­45 I.R.B. 1082
10011, 2024­48 I.R.B. 1177
10012, 2024­50 I.R.B. 1207
10013, 2024­50 I.R.B. 1220
10009, 2024­51 I.R.B. 1251
10010, 2024­51 I.R.B. 1286
10014, 2024­51 I.R.B. 1340
10015, 2024­52 I.R.B. 1355
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin
2024–52, dated December 30, 2024.

Bulletin No. 2024–52 iii December 23, 2024
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2024–52
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin
2024–52, dated December 30, 2024.

Internal Revenue Service
Washington, DC 20224
Official Business
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