Internal Revenue Bulletin 2024-38 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2024–38
September 16, 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.
INCOME TAX
REG-108920-24, page 607.
These are proposed regulations concerning the clean electric-
ity low-income communities bonus credit program (Program)
established pursuant to the Inflation Reduction Act of 2022 as
section 48E(h) of the Internal Revenue Code. Applicants invest-
ing in certain non-combustion and gasification clean electricity
generation facilities may apply for an allocation of environmen-
tal justice capacity limitation (Capacity Limitation) to increase
the amount of the clean electricity investment credit for the
taxable year in which the facility is placed in service. These
proposed regulations describe proposed definitions and
requirements that would be applicable for the Program. The
proposed regulations would affect applicants seeking alloca-
tions of Capacity Limitation to claim the increased clean elec-
tricity investment credit under section 48E for the taxable year
in which the facility is placed in service.
Rev. Proc. 2024-34, page 604.
This revenue procedure modifies section 7 of Rev. Proc.
2024-23, 2024-23 I.R.B. 1334, to modify the procedures
under section 446 of the Internal Revenue Code and
§ 1.446-1(e) of the Income Tax Regulations for obtaining
automatic consent of the Commissioner to change meth-
ods of accounting for research or experimental expendi-
tures paid or incurred in taxable years beginning after
December 31, 2021. Specifically, this revenue procedure
expands the waiver of the eligibility rules in section 5.01(1)
(d) and (f) of Rev. Proc. 2015-13 to accounting method
changes described in section 7.01 of Rev. Proc. 2024-
23 that are made in any taxable year beginning in 2022
or 2023. This revenue procedure also permits a taxpayer
to make changes under section 7.01 of Rev. Proc. 2024-
23 regardless of whether a change under that section has
been filed for any other taxable year beginning in 2022 or
2023. Finally, for any change under section 7.01 of Rev.
Proc. 2024-23 made in a taxable year beginning in 2022
or 2023 (other than the first taxable year beginning after
December 31, 2021), this revenue procedure limits audit
protection for research or experimental expenditures paid
or incurred in the taxpayer’s first taxable year beginning
after December 31, 2021 if the taxpayer failed to make a
change for such expenditures for such taxable year.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
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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.
September 16, 2024 Bulletin No. 2024–38

Part III
26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(Also, Part 1, §§ 174, 446; 1.446-1.)
Rev. Proc. 2024-34
SECTION 1. PURPOSE
This revenue procedure modifies sec-
tion 7 of Rev. Proc. 2024-23, 2024-23
I.R.B. 1334, to modify the procedures
under § 446 of the Internal Revenue Code
(Code)
1
and § 1.446-1(e) for obtaining
automatic consent of the Commissioner
of Internal Revenue (Commissioner) to
change methods of accounting for expen-
ditures paid or incurred in taxable years
beginning after December 31, 2021, to
comply with § 174 or to rely on interim
guidance provided in sections 3 through
7 of Notice 2023-63, 2023-39 I.R.B. 919,
as modified by Notice 2024-12, 2024-5
I.R.B. 616. References in this revenue
procedure to “former § 174” refer to that
section as in effect for research or exper-
imental expenditures paid or incurred
in taxable years beginning before Janu-
ary 1, 2022, that is, prior to the effective
date of the amendments made to § 174
by § 13206(a) of Public Law 115-97, 131
Stat. 2054 (Dec. 22, 2017), commonly
referred to as the Tax Cuts and Jobs Act
(TCJA). References to “§ 174” in this rev-
enue procedure refer to § 174 as amended
by the TCJA.
SECTION 2. BACKGROUND
.01 Treatment of research and experi-
mental expenditures under former § 174.
Former § 174 allowed taxpayers to
elect to deduct research or experimental
expenditures paid or incurred in connec-
tion with a trade or business as current
expenses, to capitalize and amortize such
expenditures over a period of not less than
60 months, or to charge such expenditures
to capital account.
.02 Treatment of SRE expenditures
under § 174.
(1) Section 13206(a) of the TCJA
amended former § 174. For amounts
paid or incurred in taxable years begin-
ning after December 31, 2021, that meet
the definition of specified research or
experimental (SRE) expenditures under
§ 174(b), § 174(a)(1) disallows deduc-
tions for such amounts, except as provided
in § 174(a)(2). Section 174(a)(2) requires
taxpayers to charge SRE expenditures to
capital account and allows amortization
deductions of such capitalized expendi-
tures ratably over a 5-year period in the
case of SRE expenditures attributable to
domestic research, or a 15-year period in
the case of SRE expenditures attributable
to foreign research, beginning with the
midpoint of the taxable year in which such
expenditures are paid or incurred. Section
13206(a) of the TCJA also made other
amendments to former § 174, including
amendments to treat any amount paid or
incurred in connection with the develop-
ment of any software as an SRE expendi-
ture and to prevent the accelerated recov-
ery of unamortized SRE expenditures on
account of the disposition, retirement, or
abandonment of property with respect
to which such expenditures were paid or
incurred. For additional background on
former § 174 and the TCJA amendments
to former § 174, see section 2 of Notice
2023-63.
(2) Section 13206(b) of the TCJA
requires taxpayers to treat the amend-
ments made by section 13206(a) of the
TCJA as a change in method of account-
ing for purposes of § 481 that is (i) ini-
tiated by the taxpayer, (ii) made with the
consent of the Secretary of the Treasury
or her delegate, and (iii) applied on a cut-
off basis to SRE expenditures paid or
incurred in taxable years beginning after
December 31, 2021. Thus, no adjustments
under § 481(a) are required or permitted
with respect to research or experimental
expenditures paid or incurred in taxable
years beginning before January 1, 2022.
.03 Procedural guidance under Rev.
Proc. 2023-11.
On December 29, 2022, the Depart-
ment of the Treasury (Treasury Depart-
ment) and the Internal Revenue Service
(IRS) issued Rev. Proc. 2023-11, 2023-3
I.R.B. 417, modifying and superseding
Rev. Proc. 2023-8, 2023-3 I.R.B. 407, to
provide procedures to obtain automatic
consent to change methods of account-
ing for SRE expenditures to comply with
§ 174. The change in method of account-
ing provided by Rev. Proc. 2023-11 was
subsequently included in section 7.02 of
Rev. Proc. 2023-24, 2023-28 I.R.B. 1207.
.04 Interim guidance under Notice
2023-63, as modified by Notice 2024-12.
(1) Notice 2023-63 was issued on
September 8, 2023, to announce that the
Treasury Department and the IRS intend
to issue proposed regulations addressing
(1) the capitalization and amortization
of SRE expenditures under § 174, (2)
the treatment of SRE expenditures under
§ 460, and (3) the application of § 482 to
cost sharing arrangements involving SRE
expenditures. Sections 3 through 9 of
Notice 2023-63 provide interim guidance
regarding issues intended to be addressed
by forthcoming proposed regulations.
(2) Notice 2024-12, 2024-5 I.R.B. 616,
was released on December 22, 2023, and
published on January 19, 2024, to provide
additional interim guidance to clarify and
modify Notice 2023-63 regarding (1) the
treatment of costs paid or incurred by a
research provider for research provided
under contract, (2) the requirement that a
taxpayer that chooses to rely on any of the
rules described in Notice 2023-63 must
rely on all the rules described in Notice
2023-63, and (3) the obsoletion of section
5 of Rev. Proc. 2000-50, 2000-1 C.B. 601.
.05 Procedural guidance under Rev.
Proc. 2024-9.
(1) Revenue Procedure 2024-9, 2024-5
I.R.B. 628, was released on December 22,
2023, and published on January 19, 2024,
to provide procedures for taxpayers to
obtain automatic consent to change meth-
ods of accounting for expenditures paid
or incurred in taxable years beginning
after December 31, 2021, to comply with
§ 174 or to rely on interim guidance under
§§ 174 and 460 provided in Notice 2023-
63, as modified by Notice 2024-12. The
change in method of accounting for § 174
provided in section 3 of Rev. Proc. 2024-9
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).
September 16, 2024 604 Bulletin No. 2024–38

modified section 7.02 of Rev. Proc. 2023-
24. Rev. Proc. 2023-24 was subsequently
superseded in part by Rev. Proc. 2024-23.
Rev. Proc. 2024-23 renumbered section
7.02 as section 7.01 and removed former
section 7.01 as obsolete.
(2) Section 7.01(5)(a) of Rev. Proc.
2024-23 waives the eligibility rules in sec-
tions 5.01(1)(d) (regarding changes made
in the final year of a trade or business) and
5.01(1)(f) (regarding changes made in the
previous 5 years for the same item) of Rev.
Proc. 2015-13 for a change described in
section 7.01(1)(a) of Rev. Proc. 2024-23
for the taxpayer’s first or second taxable
year beginning after December 31, 2021.
(3) Section 7.01(5)(b) of Rev. Proc.
2024-23 provides that a taxpayer may
make a change described in section 7.01(1)
(a) of Rev. Proc. 2024-23 for its second
taxable year beginning after December 31,
2021, regardless of whether the taxpayer
made a change for the same item for its
first taxable year beginning after Decem-
ber 31, 2021.
(4) Section 7.01(6) of Rev. Proc. 2024-
23 provides that a taxpayer does not
receive audit protection under section 8.01
of Rev. Proc. 2015-13 for a change under
section 7.01(1)(a) of Rev. Proc. 2024-23
in the second taxable year beginning after
December 31, 2021, with respect to expen-
ditures paid or incurred in the first taxable
year beginning after December 31, 2021,
if the taxpayer did not change its method
of accounting under section 7.01(1)(a) in
an effort to comply with § 174 for the first
taxable year beginning after December 31,
2021.
.06 Changing methods of accounting
under section 446(e).
(1) Except as otherwise expressly
provided in the Code and the regulations
thereunder, § 446(e) and § 1.446-1(e)(2)
require a taxpayer to secure the consent
of the Commissioner before changing a
method of accounting for Federal income
tax purposes. Section 1.446-1(e)(3)(i)
states, in part, that except as otherwise
provided under the authority of § 1.446-
1(e)(3)(ii), to secure the Commissioner’s
consent to a taxpayer’s change in method
of accounting the taxpayer generally must
file a Form 3115, Application for Change
in Accounting Method, with the Commis-
sioner during the taxable year in which
the taxpayer desires to make the change
in method of accounting. Section 1.446-
1(e)(3)(ii) authorizes the Commissioner
to prescribe administrative procedures
under which taxpayers will be permitted
to change their method of accounting. The
administrative procedures will prescribe
those terms and conditions necessary to
obtain the Commissioner’s consent to
effect the change and to prevent amounts
from being duplicated or omitted.
(2) Rev. Proc. 2015-13, 2015-5 I.R.B.
419, as clarified and modified by Rev.
Proc. 2015-33, 2015-24 I.R.B. 1067, and
as modified by Rev. Proc. 2021-34, 2021-
35 I.R.B. 337, Rev. Proc. 2021-26, 2021-
22 I.R.B. 1163, Rev. Proc. 2017-59, 2017-
48 I.R.B. 543, and section 17.02(b) and (c)
of Rev. Proc. 2016-1, 2016-1 I.R.B. 1, sets
forth the general administrative proce-
dures by which a taxpayer may obtain the
automatic consent of the Commissioner to
change a method of accounting described
in the List of Automatic Changes. Rev.
Proc. 2024-23 contains the current List of
Automatic Changes.
(3) A change in a taxpayer’s treatment
of expenditures paid or incurred in taxable
years beginning after December 31, 2021,
to comply with § 174 or to rely on the
interim guidance in sections 3 through 7
of Notice 2023-63 is generally a change in
method of accounting to which §§ 446(e)
and 481, and the corresponding regula-
tions, apply. A taxpayer that changes its
method of accounting to comply with
§ 174 or to rely on the interim guidance
in sections 3 through 7 of Notice 2023-63
must use the accounting method change
procedures in Rev. Proc. 2015-13 or its
successor. Section 3 of this revenue proce-
dure modifies the eligibility rules and lim-
ited audit protection rules in section 7.01
of Rev. Proc. 2024-23 to allow taxpayers
to obtain automatic consent to change
their method of accounting to comply with
§ 174 or to rely on the interim guidance
provided in sections 3 through 7 of Notice
2023-63 for taxable years beginning after
December 31, 2021.
(4) Specifically, the Treasury Depart-
ment and the IRS are aware that certain
taxpayers may not be eligible to file auto-
matic changes in methods of accounting
under section 7.01 of Rev. Proc. 2024-23
for a taxable year beginning in 2022 or a
taxable year beginning in 2023 if the tax-
payer had one or multiple short taxable
years during 2022 or 2023. This is because
the waiver of the eligibility rules in section
5.01(1)(d) and (f) of Rev. Proc. 2015-13
apply only to a taxpayer’s first or second
taxable year beginning after December
31, 2021. Therefore, the procedures in
section 3 of this revenue procedure mod-
ify the eligibility rules in section 7.01(5)
(a) of Rev. Proc. 2024-23 to provide that
the eligibility rules in section 5.01(1)(d)
and (f) of Rev. Proc. 2015-13 do not apply
to a change described in section 7.01(1)
(a) of Rev. Proc. 2024-23 made by a tax-
payer for any taxable year beginning in
2022 or 2023. The procedures in section
3 of this revenue procedure also modify
the rules for changes made in successive
taxable years in section 7.01(5)(b) of Rev.
Proc. 2024-23 to provide that a taxpayer
may make a change described in section
7.01(1)(a) of Rev. Proc. 2024-23 for a
taxable year beginning in 2022 or 2023,
regardless of whether the taxpayer made
a change for the same item for any pre-
vious taxable year beginning in 2022 or
2023. Finally, the procedures in section 3
of this revenue procedure also modify the
limited audit protection rules in section
7.01(6) of Rev. Proc. 2024-23 to provide
that a taxpayer does not receive audit pro-
tection for a change under section 7.01(1)
(a) of this revenue procedure made for any
taxable year beginning in 2022 or 2023
(other than the first taxable year beginning
after December 31, 2021) with respect to
expenditures paid or incurred in the first
taxable year beginning after December
31, 2021, if the taxpayer did not change
its method of accounting under section
7.01(1)(a) in an effort to comply with
§ 174 for the first taxable year beginning
after December 31, 2021.
SECTION 3. MODIFICATIONS TO
REV. PROC. 2024-23
.01 Modification of section 7.01(5) and
(6) of Rev. Proc. 2024-23. Section 7.01(5)
and (6) of Rev. Proc. 2024-23, are modi-
fied to read as follows:
(5) Certain eligibility rules inapplica-
ble.
(a) In general. The eligibility rules in
section 5.01(1)(d) and (f) of Rev. Proc.
2015-13, 2015-5 I.R.B. 419, do not apply
to a change described in section 7.01(1)
(a) of this revenue procedure made by a
Bulletin No. 2024–38 605 September 16, 2024

September 16, 2024 606 Bulletin No. 2024–38
taxpayer for any taxable year beginning in
2022 or 2023.
(b) Changes made in successive tax-
able years. A taxpayer may make a
change described in section 7.01(1)(a) of
this revenue procedure for a taxable year
beginning in 2022 or 2023, regardless of
whether the taxpayer made a change for
the same item for any previous taxable
year beginning in 2022 or 2023.
(6) Limited audit protection. A tax-
payer does not receive audit protection
under section 8.01 of Rev. Proc. 2015-13
for the change under section 7.01(1)(a)
of this revenue procedure with respect to
expenditures paid or incurred in taxable
years beginning on or before December
31, 2021. Additionally, a taxpayer does
not receive audit protection under section
8.01 of Rev. Proc. 2015-13 for a change
under section 7.01(1)(a) of this revenue
procedure made for any taxable year
beginning in 2022 or 2023 (other than the
first taxable year beginning after Decem-
ber 31, 2021), with respect to expendi-
tures paid or incurred in the first taxable
year beginning after December 31, 2021,
if the taxpayer did not change its method
of accounting under section 7.01(1)(a)
in an effort to comply with § 174 for the
first taxable year beginning after Decem-
ber 31, 2021. See section 8.02(2) of Rev.
Proc. 2015-13.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
This revenue procedure modifies sec-
tion 7.01 of Rev. Proc. 2024-23.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for
Forms 3115 filed on or after August 29,
2024.
SECTION 6. PAPERWORK
REDUCTION ACT
The Paperwork Reduction Act of 1995
(44 U.S.C. §§ 3501-3520) (PRA) gener-
ally requires that a Federal agency obtain
the approval of the 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 sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control number
assigned by the OMB. The collection of
information in this revenue procedure is
in section 3 and is performed using Form
3115. This form is approved under OMB
control numbers 1545-0074 for individual
filers and 1545-0123 for business filers.
This revenue procedure is not changing or
creating new collection requirements not
already approved by OMB.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Bruce Chang of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, please
contact Mr. Chang at (202) 317-4870 (not
a toll-free number).

Bulletin No. 2024–38 607 September 16, 2024
Part IV
Notice of Proposed
Rulemaking
Guidance on Clean
Electricity Low-Income
Communities Bonus Credit
Amount Program
REG-108920-24
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations concerning the pro-
gram to allocate clean electricity low-in-
come communities bonus credit amounts
established pursuant to the Inflation
Reduction Act of 2022 for calendar years
2025 and succeeding years. Applicants
investing in certain clean electricity gen-
eration facilities that produce electricity
without combustion and gasification may
apply for an allocation of environmental
justice capacity limitation to increase the
amount of the clean electricity investment
credit for the taxable year in which the
facility is placed in service. This docu-
ment describes proposed definitions and
requirements that would be applicable for
the program.
DATES: Written or electronic comments
must be received by October 3, 2024. The
public hearing on these proposed regu-
lations is scheduled to be held on Octo-
ber 17, 2024, at 10 a.m. EST. Requests
to speak and outlines of topics to be
discussed at the public hearing must be
received by October 3, 2024. If no outlines
are received by October 3, 2024, the pub-
lic hearing will be cancelled. Requests to
attend the public hearing must be received
by 5 p.m. on October 15, 2024.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal eRulemak-
ing Portal at https://www.regulations.gov
(indicate IRS and REG-108920-24) by
following the online instructions for sub-
mitting comments. Requests for the public
hearing must be submitted as prescribed
in the “Comments and Public Hearing”
section. Once submitted to the Federal
eRulemaking Portal, comments cannot
be edited or withdrawn. The Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
will publish for public availability any
comments submitted to the IRS’s pub-
lic docket. Send paper submissions to:
CC:PA:01:PR (REG-108920-24), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
rules, Office of Associate Chief Counsel
(Passthroughs & Special Industries) at
(202) 317-6853 (not a toll-free number);
concerning submissions of comments or
the public hearing, the Publications and
Regulations Section at (202) 317-6901
(not a toll-free number) or by email at
publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Authority
This document contains proposed
amendments to the Income Tax Regula-
tions (26 CFR part 1) under section 48E(h)
of the Internal Revenue Code (Code) to
provide proposed definitions and rules
relating to the allocation of environmen-
tal justice capacity limitation (Capacity
Limitation) for calendar year 2025 and
succeeding years (proposed regulations).
Section 48E(h)(4)(A) provides an express
delegation of authority for the Secretary
of the Treasury or her delegate (Secretary)
to establish a program to allocate amounts
of Capacity Limitation to applicable facil-
ities not later than January 1, 2025, and to
make such allocations. Section 48E(h)(5)
provides an express delegation of authority
for the Secretary, by regulations or other
guidance, to provide rules for recapturing
the benefit of any increase in the credit
allowed under section 48E(a) that results
from an allocation of Capacity Limitation
with respect to any property that ceases
to be property eligible for such increase
(but that does not cease to be investment
credit property within the meaning of
section 50(a) of the Code). In addition,
section 48E(i) provides an express delega-
tion of authority for the Secretary to issue
guidance regarding implementation of
section 48E not later than January 1, 2025.
The proposed regulations are also issued
under the express delegation of authority
under section 7805 of the Code.
Background
I. Overview
Section 13702 of Public Law 117-169,
136 Stat. 1818, 1921 (August 16, 2022),
commonly known as the Inflation Reduc-
tion Act of 2022 (IRA), added new section
48E(h) to authorize the Secretary to estab-
lish a program for calendar years 2025
and succeeding years to award allocations
of Capacity Limitation that increase the
amount of the new clean electricity invest-
ment credit determined under section
48E(a) (section 48E credit) with respect to
eligible property that is part of an appli-
cable facility. This document contains
proposed definitions and rules relating to
the allocation of Capacity Limitation for
calendar year 2025 and succeeding years.
The amount of section 48E credit for
a taxable year generally is calculated by
multiplying the qualified investment for
such taxable year with respect to any
qualified facility placed in service during
that taxable year by the applicable per-
centage (as defined in section 48E(a)(2)).
If an applicable facility is awarded an
allocation of Capacity Limitation, section
48E(h) increases the amount of the sec-
tion 48E credit with respect to the appli-
cable facility by increasing the applicable
percentage used to calculate the amount
of the section 48E credit (section 48E(h)
Increase). The term “applicable facility” is
defined in section 48E(h)(2) to mean any
qualified facility that (i) is not described in
section 45Y(b)(2)(B) of the Code (relating
to combustion and gasification facilities);
(ii) has a maximum net output of less than

September 16, 2024 608 Bulletin No. 2024–38
5 megawatts (MW) (as measured in alter-
nating current (AC)); and (iii) is described
in at least one of four categories in section
48E(h)(2)(A)(iii) (as further described in
part II of this Background).
Section 48E(h)(4)(A) directs the Sec-
retary, not later than January 1, 2025, to
establish a program to allocate amounts of
Capacity Limitation to applicable facilities
and to “provide procedures to allow for an
efficient allocation” of Capacity Limita-
tion to applicable facilities. Accordingly,
the Treasury Department and the IRS are
establishing the Clean Electricity Low-In-
come Communities Bonus Credit Amount
Program (Program). As described in the
Explanation of Provisions, this notice of
proposed rulemaking provides proposed
threshold definitions and requirements for
the Program to make allocations of Capac-
ity Limitation efficiently and effectively.
After finalizing these rules, the Treasury
Department and the IRS will provide the
procedures for the 2025 Program in a rev-
enue procedure published in the Internal
Revenue Bulletin. See §601.601 of the
Statement of Procedural Rules (26 CFR
part 601).
Procedures for future Program years
also will be provided in guidance published
in the Internal Revenue Bulletin. The Trea-
sury Department and the IRS expect that
many of the procedural aspects of the Pro-
gram will be similar to the Low-Income
Communities Bonus Credit Program estab-
lished under section 48(e) of the Code
1

available for calendar years 2023 and 2024.
II. Four Categories of Applicable
Facilities
Depending on the category of the facil-
ity, an allocation of Capacity Limitation
may result in a section 48E(h) Increase
equal to either 10 percentage points or
20 percentage points. Section 48E(h)
(1)(A)(i) provides for a section 48E(h)
Increase of 10 percentage points for eli-
gible property that is located in a low-in-
come community, as defined in section
45D(e) of the Code (Category 1 facility),
or on Indian land, as defined in section
2601(2) of the Energy Policy Act of 1992
(25 U.S.C. 3501(2)) (Category 2 facility).
Section 48E(h)(1)(A)(ii) provides for a
section 48E(h) Increase of 20 percentage
points for eligible property that is part of a
qualified low-income residential building
project (Category 3 facility) or a quali-
fied low-income economic benefit project
(Category 4 facility).
Section 48E(h)(2)(B) provides that a
facility will be treated as part of a “quali-
fied low-income residential building proj-
ect” if the facility is installed on a resi-
dential rental building that participates in
a covered housing program (as defined in
section 41411(a) of the Violence Against
Women Act of 1994 (34 U.S.C. 12491(a)
(3)) (VAWA)), a housing assistance pro-
gram administered by the Department of
Agriculture (USDA) under title V of the
Housing Act of 1949, a housing program
administered by a tribally designated hous-
ing entity (as defined in section 4(22) of the
Native American Housing Assistance and
Self-Determination Act of 1996 (25 U.S.C.
4103(22))), or such other affordable hous-
ing programs as the Secretary may provide,
and the financial benefits of the electricity
produced by the facility are allocated equi-
tably among the occupants of the dwelling
units of such building.
Section 48E(h)(2)(C) provides that a
facility will be treated as part of a “qual-
ified low-income economic benefit proj-
ect” if at least 50 percent of the financial
benefits of the electricity produced by
such facility are provided to households
with income of less than 200 percent of
the poverty line (as defined in section
36B(d)(3)(A) of the Code) applicable to a
family of the size involved, or less than 80
percent of area median gross income (as
determined under section 142(d)(2)(B) of
the Code).
For a qualified low-income residential
building project and a qualified low-in-
come economic benefit project, section
48E(h)(2)(D) provides that electricity
acquired at a below-market rate will be
considered a financial benefit.
III. Overview of Clean Electricity Low-
Income Communities Bonus Credit
Amount Program
Section 48E(h)(4)(A) directs the Sec-
retary to establish the Program, not later
than January 1, 2025, to allocate amounts
of Capacity Limitation to applicable facil-
ities. Under section 48E(h)(4)(C), the total
annual Capacity Limitation that may be
allocated is 1.8 gigawatts of direct current
capacity for each of the calendar years
during the period beginning on January
1, 2025, and ending on December 31 of
the applicable year (as defined in section
45Y(d)(3))
2
, and zero thereafter.
Under section 48E(h)(4)(D)(i), if the
annual Capacity Limitation for any cal-
endar year exceeds the aggregate amount
allocated for such year, the excess is car-
ried forward to the next year. No amount of
Capacity Limitation may be carried to any
calendar year after the third calendar year
following the applicable year (as defined
in section 45Y(d)(3)). Under section
48E(h)(4)(D)(ii), if the annual Capacity
Limitation for calendar year 2024 under
section 48(e)(4)(D) exceeds the aggregate
amount allocated for such year, the excess
amount may be carried over and applied
to the annual Capacity Limitation under
this paragraph for calendar year 2025. The
annual Capacity Limitation for calendar
year 2025 is increased by the amount of
such excess.
The proposed regulations in this notice
of proposed rulemaking would provide
definitions and requirements necessary to
submit an application to request an allo-
cation of Capacity Limitation for calendar
year 2025 (and subsequent years) under
the Program and to claim a section 48E(h)
Increase. The Treasury Department and
the IRS request comments on these pro-
posed definitions and requirements.
Explanation of Provisions
The proposed regulations relate to spe-
cific definitions and requirements regard-
ing the following topics: (1) the definition
1
For the most recent procedures applicable to the Low-Income Communities Bonus Credit Program established under section 48(e), refer to Revenue Procedure 2024-19, 2024-16 I.R.B 899.
2
Section 45Y(d)(3) defines the term “applicable year” as the later of the calendar year in which the Secretary determines that the annual greenhouse gas emissions from the production of
electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or
2032. See also proposed §1.45Y-1(c)(3).

Bulletin No. 2024–38 609 September 16, 2024
of “applicable facility;” (2) definitions of
“eligible property” under section 48E(h)
(3); (3) the definition of “located in” for
relevant geographic criteria; (4) defi-
nitions and requirements related to the
term “financial benefit” and “electricity
acquired at a below-market rate” under
section 48E(h)(2)(D), as well as a manner
to apply such definitions, appropriately, to
Category 3 facilities that are part of quali-
fied low-income residential building proj-
ects and Category 4 facilities that are part
of qualified economic benefit projects; (5)
a rule for facilities placed in service prior
to an allocation award; (6) reservations of
Capacity Limitation allocation for appli-
cant facilities that meet certain Additional
Selection Criteria; (7) sub-reservations of
Capacity Limitation allocation for facili-
ties built in a low-income community; (8)
the requirement to submit certain appli-
cation materials demonstrating facility
viability in order to allow for an efficient
allocation process; (9) the requirement to
submit certain documentation and attes-
tations when a facility is placed in ser-
vice; and (10) post-allocation compliance,
including disqualification of allocations of
Capacity Limitation and recapture of the
section 48E(h) Increase.
I. Definition of Applicable Facility
The term “applicable facility” is
defined in section 48E(h)(2)(A) to mean
any qualified facility (as defined in sec-
tion 48E(b)(3)) that (i) is not described in
section 45Y(b)(2)(B) (related to combus-
tion and gasification facilities); (ii) has a
maximum net output of less than 5 MW
(as measured in AC); and (iii) is described
in at least one of the four categories
described in section 48E(h)(2)(A)(iii)
(Category 1, 2, 3, or 4). Therefore, pro-
posed §1.48E(h)-1(b)(1) would define an
applicable facility as any qualified facility
described in section 48E(b)(3) that (i) is
a facility that is not described in section
45Y(b)(2)(B) (non-combustion and gasifi-
cation facilities); (ii) has a maximum net
output of less than 5 MW (as measured in
AC); and (iii) is described in at least one
of the four categories described in section
48E(h)(2)(A)(iii) (Category 1, 2, 3, or 4).
A. Types of applicable facilities
Proposed §1.48E(h)-1(b)(1) would
also clarify that the types of qualified
facilities eligible for the Program are only
those non-combustion and gasification
qualified facilities
3
(non-C&G facilities)
that the Secretary has determined have
a greenhouse gas (GHG) emissions rate
of not greater than zero. An emissions
rate table for eligible non-C&G facilities
will be published annually in the Federal
Register or the Internal Revenue Bulletin.
Consistent with the notice of proposed
rulemaking and a notice of public hearing
(REG-119283-23) published in the Fed-
eral Register (89 FR 47792) providing
guidance on the clean electricity produc-
tion and investment credits under sections
45Y and 48E, the following types or cat-
egories of qualified facilities are categor-
ically non-C&G facilities with a GHG
emissions rate that is not greater than
zero: wind facilities (including small wind
properties), hydropower facilities (includ-
ing retrofits adding power production to
non-powered dams, conduit hydropower,
hydropower using new impoundments,
and hydropower using diversions such as a
penstock or channel), marine and hydroki-
netic facilities, solar facilities (includ-
ing photovoltaic and concentrating solar
power), geothermal facilities (including
flash and binary plants), nuclear fission
facilities, nuclear fusion facilities, and
waste energy recovery property (WERP)
that derives energy from any of the energy
sources described in proposed §1.45Y-
5(c)(2)(i) through (vii) (including geother-
mal or solar waste heat recovery such as
from a district geothermal heating system,
and waste heat recovery such as from a
nuclear reactor dedicated to heat produc-
tion for an industrial facility). These cate-
gories of facilities may be eligible for an
allocation of Capacity Limitation during
the 2025 Program year. Additional types
of categories of non-C&G facilities may
be eligible in future Program years if the
Secretary determines that such facilities
have a GHG emissions rate that is not
greater than zero in guidance published in
the Federal Register or the Internal Rev-
enue Bulletin. For ease of reference for
applicants to the Program, the Treasury
Department and the IRS will include the
list of eligible qualified facilities in the
procedural guidance that will be published
for the Program.
B. Four categories of applicable facilities
Depending on the category of the facil-
ity, an allocation of Capacity Limitation
under the Program may result in a section
48E(h) Increase equal to either 10 percent-
age points or 20 percentage points. Sec-
tion 48E(h)(1)(A)(i) provides for a section
48(e) Increase of 10 percentage points
for eligible property that is located in a
low-income community (Category 1 facil-
ity), or on Indian land (Category 2 facil-
ity). Section 48E(h)(1)(A)(ii) provides for
a section 48E(h) Increase of 20 percentage
points for eligible property that is part of a
qualified low-income residential building
project (Category 3 facility) or a quali-
fied low-income economic benefit project
(Category 4 facility). Proposed §1.48E(h)-
1(b)(2) would define the four facility cate-
gories (Category 1, 2, 3, or 4).
Section 48E(h)(2)(A)(iii)(I) defines
an “applicable facility” in part to include
a qualified facility that is located in a
low-income community (as defined in sec-
tion 45D(e)). Under section 48E(h)(2)(A)
(iii)(I), the term low-income community
generally is defined under section 45D(e)
(1), with certain modifications described
elsewhere in section 45D(e), as any pop-
ulation census tract if the poverty rate for
such tract is at least 20 percent, or, in the
case of a tract not located within a met-
ropolitan area, the median family income
for such tract does not exceed 80 percent
of statewide median family income, or in
the case of a tract located within a met-
ropolitan area, the median family income
for such tract does not exceed 80 percent
of the greater of statewide median family
income or the metropolitan area median
family income.
Proposed §1.48E(h)-1(b)(2)(i) would
define a Category 1 facility consistent
with section 48E(h)(2)(A)(iii)(I) as a facil-
ity located in a low-income community,
which generally is defined under section
45D(e)(1) as any population census tract
3
See proposed §1.48E-2(a), as proposed in the notice of proposed rulemaking (REG-119283-23) published in the Federal Register (89 FR 47792) on June 3, 2024, and corrected at 2024-
15718 on July 18, 2024, for more information regarding the definition of “qualified facility.”

September 16, 2024 610 Bulletin No. 2024–38
if the poverty rate for such tract is at least
20 percent based on the most recently
released low-income community data
currently used for the New Markets Tax
Credit (NMTC) under section 45D, or, in
the case of a tract not located within a met-
ropolitan area, the median family income
for such tract does not exceed 80 percent
of statewide median family income, or, in
the case of a tract located within a met-
ropolitan area, the median family income
for such tract does not exceed 80 percent
of the greater of statewide median family
income or the metropolitan area median
family income. Proposed §1.48E(h)-1(b)
(2)(i) would provide that the term “low-in-
come community” also includes the mod-
ifications in section 45D(e)(4) and (5) for
tracts with low population and modifica-
tion of the income requirement for census
tracts with high migration rural counties.
Low-income community information for
NMTC can be found at the U.S. Depart-
ment of Treasury, Community Develop-
ment Financial Institutions Fund website
and its webpage mapping tool, https://
www.cdfifund.gov/cims.
Proposed §1.48E(h)-1(b)(2)(i) would
clarify also that the poverty rate for a cen-
sus tract generally is based on the most
recently released American Community
Survey (ACS) low-income community data
for the NMTC. However, if updated data
is released, a taxpayer can choose to base
the poverty rate for any population cen-
sus tract on either the prior version of the
ACS low-income community data or the
updated ACS low-income community data
for a period of 1 year following the date of
the release of the updated data. After the
1-year transition period, the updated ACS
low-income community data must be used.
Proposed §1.48E(h)-1(b)(2)(i) would
provide that population census tracts
that satisfy the definition of low-income
community at the time of application are
considered to continue to meet the defi-
nition of low-income community for the
duration of the recapture period unless the
location of the facility changes.
Section 48E(h)(2)(A)(iii)(I) defines an
“applicable facility” in part to include a
qualified facility that is located on Indian
land (as defined in section 2601(2) of the
Energy Policy Act of 1992 (25 U.S.C.
3501(2)). Proposed §1.48E(h)-1(b)(2)(ii)
would define a Category 2 facility, consis-
tent with section 48E(h)(2)(A)(iii)(I), as
facility that is located on Indian land. Pro-
posed §1.48E(h)-1(b)(2)(ii) would pro-
vide that the term “Indian land” is defined
in section 2601(2) of the Energy Policy
Act of 1992 (25 U.S.C. 3501(2)).
Section 48E(h)(2)(A)(iii)(II) defines an
“applicable facility” in part to include a
qualified facility that is part of a qualified
low-income residential building project.
Proposed §1.48E(h)-1(b)(2)(iii) would
define a Category 3 facility as a facility
that is part of a qualified low-income res-
idential building project. A facility would
be treated as part of a qualified low-income
residential building project if such facility
is installed on a residential rental build-
ing that participates in a covered housing
program or other affordable housing pro-
gram described in section 48E(h)(2)(B)(i)
(Qualified Residential Property) and the
financial benefits of the electricity pro-
duced by such facility are allocated equi-
tably among the occupants of the dwell-
ing units of such building as provided in
proposed §1.48E(h)-1(e). Consistent with
the statute, proposed §1.48E(h)-1(b)(2)
(iii) would clarify that the Qualified Res-
idential Property, and not just its tenants,
must participate in a covered housing
program or other affordable housing pro-
gram described in section 48E(h)(2)(B)
(i). A Qualified Residential Property could
either be a multifamily rental property or
single-family rental property. Proposed
§1.48E(h)-1(b)(2)(iii) also would clarify
that a facility does not need to be installed
directly on the building to be considered
installed on a Qualified Residential Prop-
erty if the facility is installed on the same
or an adjacent parcel of land as the Qual-
ified Residential Property, and the other
requirements to be a Category 3 facility
are satisfied.
The statutory cross-reference to VAWA
is comprehensive and includes numerous
types of housing programs and policies
across Federal agencies. The Treasury
Department and the IRS, in consultation
with other Federal agencies, developed
an illustrative list of Federal housing pro-
grams and policies that meet the require-
ments in section 48E(h)(2)(B)(i):
Covered housing programs and poli-
cies (as defined in VAWA) are those with
active affordability covenants tied to the
following:
• Department of Housing and Urban
Development’s (HUD) Section 202
Supportive Housing for the Elderly,
including the direct loan program
under Section 202.
• HUD’s Section 811 Supportive Hous-
ing for Persons with Disabilities.
• HUD’s Housing Opportunities for Per-
sons With AIDS (HOPWA) program.
• HUD’s homeless programs under title
IV of the McKinney-Vento Homeless
Assistance Act, including the Emergency
Solutions Grants program, the Contin-
uum of Care program, and the Rural
Housing Stability Assistance program.
• HUD’s HOME Investment Partner-
ships (HOME) program.
• Federal Housing Administration (FHA)
mortgage insurance under Section 221(d)
(3) subsidized with a below-market inter-
est rate (BMIR) prescribed in the proviso
of Section 221(d)(5) of the National
Housing Act.
• HUD’s Section 236 interest rate reduc-
tion payments.
• HUD Public Housing assisted under
section 9 of the United States Housing
Act of 1937.
• HUD project-based rental assistance
under section 8 of the United States
Housing Act of 1937.
• HUD Section 8 Moderate Rehabilita-
tion Program.
• HUD Section 8 Moderate Rehabilita-
tion Single Room Occupancy Program
for Homeless Individuals.
• USDA Section 515 Rural Rental Hous-
ing.
• USDA Section 514/516 Farm Labor
Housing.
• USDA Section 538 Guaranteed Rural
Rental Housing.
• USDA Section 533 Housing Preserva-
tion Grant Program.
• Treasury/IRS Low-Income Housing
Credit under section 42.
• HUD’s National Housing Trust Fund.
• Veterans Administration’s (VA) Com-
prehensive Service Programs for
Homeless Veterans.
• VA’s grant program for homeless veter-
ans with special needs.
• VA’s financial assistance for supportive
services for very low-income veteran
families in permanent housing.
• Department of Justice transitional
housing assistance grants for victims

Bulletin No. 2024–38 611 September 16, 2024
of domestic violence, dating violence,
sexual assault, or stalking.
Section 48E(e)(2)(B)(i) also includes the
following Federal housing programs:
• Housing assistance programs adminis-
tered by the USDA under title V of the
Housing Act of 1949.
• Housing programs administered by an
Indian Tribe or a Tribally designated
housing entity (as defined in section
4(22) of the Native American Housing
Assistance and Self-Determination Act
of 1996 (25 U.S.C. 4103(22)).
• Housing programs administered by the
Department of Hawaiian Homelands
as defined in Title VIII of the Native
American Housing Assistance and
Self-Determination Act of 1996 (24
CFR 1006.10), Native Hawaiian Orga-
nizations as defined in (13 CFR 124.3),
and Hawaiian Homestead Associations
as defined in (43 CFR 48.6).
This list also will be made available on the
Program web page.
Section 48E(e)(2)(B)(i) authorizes the
Secretary to add other affordable housing
programs to the list of eligible programs.
The Treasury Department and the IRS
request comment on whether other afford-
able housing programs should be added
to the list of eligible programs, and spe-
cifically request comment on whether and
under what conditions certain state pro-
grams should be added to the list.
Section 48E(h)(2)(A)(iii)(II) defines
an “applicable facility” in part to include
a qualified facility that is part of a quali-
fied low-income economic benefit proj-
ect. Section 48E(h)(2)(C) provides that a
facility will be treated as part of a qualified
low-income economic benefit project if at
least 50 percent of the financial benefits
of the electricity produced by such facility
are provided to households with income of
less than 200 percent of the poverty line (as
defined in section 36B(d)(3)(A)) applicable
to a family of the size involved, or less than
80 percent of area median gross income (as
determined under section 142(d)(2)(B)).
Proposed §1.48E(h)-1(b)(2)(iv), con-
sistent with 48E(h)(2)(A)(iii)(II), would
define a Category 4 facility as a facility that
is part of qualified low-income economic
benefit project. A facility would be treated
as part of a qualified low-income economic
benefit project if, as provided in proposed
§1.48E(h)-1(f), at least 50 percent of the
financial benefits of the electricity pro-
duced by the facility are provided to house-
holds with income of less than (A) 200
percent of the poverty line (as defined in
section 36B(d)(3)(A)) applicable to a fam-
ily of the size involved, or (B) 80 percent of
area median gross income (as determined
under section 142(d)(2)(B)).
C. Less than five megawatts requirement
Section 48E(h)(2)(A)(ii) requires that
an applicable facility have a maximum
net output of less than 5 (MW) (measured
in AC), referred to in this preamble as the
“less than five megawatts requirement.”
Proposed §1.48E(h)-1(b)(3)(i) would
provide that the less than five megawatts
requirement is measured at the level of
the applicable facility in accordance with
section 48E(h)(2)(A)(ii). The maximum
net output of an applicable facility is
measured only by nameplate generating
capacity of the applicable facility, which
includes only functionally interdependent
components of property that are owned by
the taxpayer, that are operated together,
and that can operate apart from other prop-
erty to produce electricity, at the time the
applicable facility is placed in service. In
accordance with proposed §1.48E-2(b)(2)
(ii), proposed §1.48E(h)-1(b)(3)(i) would
provide that components of property are
functionally interdependent if the placing
in service of each component is dependent
upon placing in service other components
to produce electricity.
Proposed §1.48E(h)-1(b)(3)(ii) would
provide that the determination of whether
an applicable facility has a maximum net
output of less than 5 MW (as measured in
AC) is based on the nameplate capacity
of the applicable facility. The nameplate
capacity for purposes of the less than five
megawatts requirement is the maximum
electrical generating output in MW that
the applicable facility 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.
If applicable, the International Standard
Organization conditions should be used to
measure the maximum electrical generat-
ing output of an applicable facility.
The Treasury Department and the IRS
request comments on other approaches
to address this statutory requirement that
would further the purpose of efficient
allocation of a Federal tax credit program
with a national impact and would advance
the goals of the Program to incentivize
additional deployment of qualified facil-
ities in low-income communities. These
approaches could include rules that would
aggregate the capacity of qualified facil-
ities with integrated operations (that is,
qualified facilities that are owned by the
same taxpayer, placed in service in the
same taxable year, and transmit electric-
ity generated by the facilities through the
same point of interconnection or, if the
facilities are not grid-connected, to the
same end user(s)) solely for the purposes
of whether an application meets the less
than five megawatts requirement under
Section 48E(h)(2)(A)(ii).
II. Eligible Property
Section 48E(h)(3) defines “eligible prop-
erty” as a qualified investment with
respect to any applicable facility. Section
48E(b) describes a qualified investment
with respect to a qualified facility. Gen-
erally, for purposes of section 48E(a),
section 48E(b)(1)(A) and (b)(1)(B)(i) pro-
vides that the qualified investment with
respect to a qualified facility for any tax-
able year is the sum of the basis of any
qualified property placed in service by the
taxpayer during such taxable year that is
part of a qualified facility, plus the amount
of expenditures that are paid or incurred
by the taxpayer for qualified interconnec-
tion property that is properly chargeable
to capital account of the taxpayer. Pursu-
ant to section 48E(h)(3), eligible property
does not include any qualified investment
with respect to energy storage technology.
Proposed §1.48E(h)-1(c) would define
“eligible property” as a qualified invest-
ment (as defined in section 48E(b))
4
with
respect to any applicable facility.
4
See proposed §1.48E-2(d), as proposed in the notice of proposed rulemaking (REG-119283-23) published in the Federal Register (89 FR 47792) on June 3, 2024, and corrected at 2024-
15718 on July 18, 2024, for more information regarding the definition of “qualified investment.”

September 16, 2024 612 Bulletin No. 2024–38
III. Location
Proposed §1.48E(h)-1(d)(1) would treat
an applicable facility as “located in a low-in-
come community” or “on Indian land” under
section 48E(h)(2)(A)(iii)(I) or located in a
geographic area under the Additional Selec-
tion Criteria (see part V.B.2. of this Explana-
tion of Provisions) if the facility satisfies the
nameplate capacity test (Nameplate Capac-
ity Test for Location) provided in proposed
§1.48E(h)-1(d)(2).
Under the Nameplate Capacity Test
for Location, which would be provided in
proposed §1.48E(h)-1(d)(2), an applicable
facility would be considered located in or
on the relevant geographic area described in
proposed §1.48E(h)-1(d)(1) if 50 percent or
more of the applicable facility’s nameplate
capacity is in a qualifying area. The percent-
age of an applicable facility’s nameplate
capacity (as defined in proposed §1.48E(h)-
1(d)(3)) that is in a qualifying area would
be determined by dividing the nameplate
capacity of the applicable facility’s elec-
tricity-generating units that are located in
the qualifying area by the total nameplate
capacity of all the electricity-generating
units of the applicable facility.
Proposed §1.48E(h)-1(d)(3) would pro-
vide that nameplate capacity for purposes
of the Nameplate Capacity Test for Loca-
tion for an electricity generating unit
means the maximum electrical generating
output that the applicable facility is capa-
ble of producing on a steady state basis and
during continuous operation under stan-
dard conditions, as measured by the man-
ufacturer and consistent with the definition
of nameplate capacity provided in 40 CFR
96.202. If applicable, the International
Standard Organization conditions should
be used to measure the maximum electrical
generating output of an applicable facility.
For purposes of assessing the Nameplate
Capacity Test for Location, electricity-gen-
erating units that generate direct current
(DC) power before converting to AC (for
example, solar photovoltaic) should use
nameplate capacity in DC, otherwise the
nameplate capacity in AC should be used.
IV. Financial Benefits for Category 3 and
Category 4 Allocations
Section 48E(h)(2)(D) provides that
“electricity acquired at a below market
rate” will not fail to be taken into account
as a financial benefit. To clarify this lan-
guage, the Treasury Department and the
IRS propose definitions of the terms “finan-
cial benefit” and “electricity acquired at a
below market rate” under section 48E(h)
(2)(D), as well as a manner to apply such
definitions, appropriately, to qualified
low-income residential building projects
(section 48E(h)(2)(B)) and qualified eco-
nomic benefit projects (section 48E(h)(2)
(C)). The definitions and requirements
would be different for an allocation under
Category 3 (section 48E(h)(2)(B)) and
Category 4 (section 48E(h)(2)(C)).
A. Financial benefits for qualified low-
income residential building projects
For a facility to be treated as part of
a qualified low-income residential build-
ing project (Category 3 facility), section
48E(h)(2)(B)(ii) provides that the finan-
cial benefits of the electricity produced by
such facility must be allocated equitably
among the occupants of the dwelling units
of a residential rental building that partic-
ipates in a covered housing program or
other affordable housing program (Qual-
ified Residential Property). The Trea-
sury Department and the IRS propose to
reserve allocations under this category
exclusively for applicants that would
apply the financial benefits requirement in
proposed §1.48E(h)-1(e).
Proposed §1.48E(h)-1(e)(1) would
provide that, to satisfy the requirements of
a Category 3 facility, the financial benefits
of the electricity produced by the facility
must be allocated equitably among the
occupants of the dwelling units of the
Qualified Residential Property. The same
rules for financial benefits for Category 3
facilities apply to both multi-family prop-
erty and single-family Qualified Residen-
tial Property.
Proposed §1.48E(h)-1(e)(2) would pro-
vide that at least 50 percent of the finan-
cial value of the electricity produced by the
facility (as defined in proposed §1.48E(h)-
1(e)(3)) must be equitably allocated to the
Qualified Residential Property’s occupants
that are designated as low-income occu-
pants under the housing program.
Proposed §1.48E(h)-1(e)(3) would
define the financial value of the electric-
ity produced by the applicable facility as
the greater of: (i) 25 percent of the gross
financial value (as defined in proposed
§1.48E(h)-1(e)(4)) of the annual electric-
ity produced by the applicable facility, or
(ii) the net financial value (as defined in
proposed §1.48E(h)-1(e)(5)) of the annual
energy produced by the applicable facility.
This requirement would recognize that
not all the financial value of the electric-
ity produced can be passed on to building
occupants because a certain percentage
can be assumed to be dedicated to low-
ering the operational costs of electricity
consumption for common areas, which
benefits all building occupants.
Proposed §1.48E(h)-1(e)(4) would cal-
culate gross financial value of the annual
electricity produced by the applicable
facility as the sum of: (i) the total self-con-
sumed kilowatt-hours produced by the
applicable facility multiplied by the Qual-
ified Residential Property’s metered vol-
umetric price of electricity, (ii) the total
exported kilowatt-hours produced by
the applicable facility multiplied by the
Qualified Residential Property’s volu-
metric export compensation rate for kilo-
watt-hours of electricity, and (iii) the sale
of any attributes associated with the appli-
cable facility’s production (including, for
example, any Federal, State, or Tribal
renewable energy credits or incentives), if
separate from the metered price of elec-
tricity or export compensation rate.
The definition of net financial value
in proposed §1.48E(h)-1(e)(5) would
account for the specific nature of facilities
serving low-income residential buildings
and facility ownership, as the applica-
ble facility may be third-party owned or
commonly owned with the building. For
common ownership, proposed §1.48E(h)-
1(e)(5)(i) would define net financial value
as the gross financial value of the annual
electricity produced minus the annual
average (or levelized) cost of the applica-
ble facility over the useful life of the facil-
ity (including debt service, maintenance,
replacement reserve, capital expenditures,
and any other costs associated with con-
structing, maintaining, and operating the
facility). For third-party ownership, if
the facility and the Qualified Residential
Property are not commonly owned, and
the facility owner enters into a power
purchase agreement or other contract for
electricity services with the Qualified

Bulletin No. 2024–38 613 September 16, 2024
Residential Property owner and/or build-
ing occupants, proposed §1.48E(h)-1(e)
(5)(ii) would define net financial value
as the gross financial value of the annual
electricity produced minus any payments
made by the building owner and/or build-
ing occupants to the applicable facility
owner for electricity services associated
with the applicable facility in a given year.
Proposed §1.48E(h)-1(e)(5)(iii) would
provide different rules to ensure an equi-
table allocation of financial benefits
depending on whether or not financial
value is distributed to building occupants
via utility bill savings or through different
means. If financial value is distributed via
utility bill savings, proposed §1.48E(h)-
1(e)(5)(iii)(A) would provide that finan-
cial benefits will be considered to be allo-
cated equitably if at least 50 percent of the
financial value of the electricity produced
by the applicable facility is distributed as
utility bill savings in equal shares to each
building dwelling unit among the Quali-
fied Residential Property’s occupants that
are designated as low-income under the
covered housing program or other afford-
able housing program (described in sec-
tion 48E(h)(2)(B)(i)) or alternatively dis-
tributed in proportional shares based on
each low-income dwelling unit’s square
footage, or each low-income dwelling
unit’s number of occupants. Proposed
§1.48E(h)-1(e)(5)(iii)(A) would pro-
vide also that for any occupant(s) who
choose to not receive utility bill savings
(for example, exercise their right to not
participate in or to opt out of a commu-
nity generation subscription in applicable
jurisdictions), the portion of the financial
value that would otherwise be distrib-
uted to non-participating occupants must
be instead distributed to all participating
occupants. Proposed §1.48E(h)-1(e)(5)
(iii)(A) would clarify that no less than 50
percent of the Qualified Residential Prop-
erty’s occupants that are designated as
low-income must participate and receive
utility bill savings for the applicable facil-
ity to use this method of benefit distribu-
tion.
Proposed §1.48E(h)-1(e)(5)(iii)(A)
also would provide that in the case of a
solar facility, applicants must follow the
HUD guidance on Treatment of Financial
Benefits to HUD-Assisted Tenants Result-
ing from Participation in Solar Programs
Notice (Housing Notice 2023-09), located
at https://www.hud.gov/sites/dfiles/
OCHCO/documents/2023-09hsgn.pdf,
or future HUD guidance, or other guid-
ance or notices from the Federal agency
that oversees the applicable housing pro-
gram identified in section 48E(h)(2)(B) to
ensure that tenants’ annual income for rent
calculations or other requirements impact-
ing total tenant payment are not impacted
negatively by the distribution of financial
value. Applicants should apply similar
principles in the case of any other appli-
cable facility.
Proposed §1.48E(h)-1(e)(5)(iii)(B)
would provide that if financial value is
not distributed via utility bill savings,
financial benefits will be considered to
be allocated equitably if at least 50 per-
cent of the financial value of the electric-
ity produced by the applicable facility
is distributed to occupants using one or
more methods described Housing Notice
2023-09 for a master-metered building,
or future HUD guidance, or other guid-
ance or notices from the Federal agency
that oversees the applicable housing pro-
gram identified in section 48E(h)(2)(B).
In the case of a solar facility, applicants
must comply with HUD guidance, or
future HUD guidance, for how residents
of master-metered HUD-assisted housing
can benefit from owners’ sharing of finan-
cial benefits accrued from an investment
in solar electricity generation to ensure
that tenants’ utility allowances and annual
income for rent calculations are not nega-
tively impacted. Applicants should apply
similar principles in the case of any other
applicable facility.
To achieve the goal of verifying Pro-
gram compliance and to provide clarifica-
tion to applicants regarding how they can
demonstrate that statutory requirements
are met, proposed §1.48E(h)-1(e)(6)(i)
would provide that a Category 3 facility
owner must prepare a Benefits Sharing
Statement. The Benefits Sharing State-
ment would be required to include (A) a
calculation of the facility’s gross finan-
cial value using the method described in
proposed §1.48E(h)-1(e)(4), (B) a calcu-
lation of the facility’s net financial value
using the method described in proposed
§1.48E(h)-1(e)(5), (C) a calculation of the
financial value required to be distributed
to building occupants using the method
described in proposed §1.48E(h)-1(e)(3),
(D) a description of the means through
which the required financial value will be
distributed to building occupants, and (E)
if the facility and Qualified Residential
Property are separately owned, an indi-
cation of which entity will be responsible
for the distribution of benefits to the occu-
pants.
Proposed §1.48E(h)-1(e)(6)(ii) would
provide that the Qualified Residential
Property owner must formally notify the
occupants of units in the Qualified Resi-
dential Property of the development of the
facility and planned distribution of bene-
fits.
B. Financial benefits in qualified low-
income economic benefit projects
For a facility to be treated as part of a
qualified low-income economic benefit
project, section 48E(h)(2)(C) requires that
at least 50 percent of the financial benefits
of the electricity produced by the facility
be provided to qualifying low-income
households.
Proposed §1.48E(h)-1(f)(1) would pro-
vide that to satisfy the requirements of a
Category 4 facility:
(i) The facility must serve multiple
qualifying low-income households under
section 48E(e)(2)(C)(i);
(ii) At least 50 percent of the facility’s
total output in kilowatts (kW) must be
assigned to Qualifying Households; and
(iii) Each Qualifying Household must
be provided a bill credit discount rate (as
defined in proposed §1.48E(h)-1(f)(2)) of
at least 30 percent.
The Treasury Department and the IRS
request comment on (1) whether a 30-per-
cent bill credit discount rate would be fea-
sible for Category 4 facilities, (2) whether
a rate of 30 percent or greater would be
feasible if transitioned in over time (that
is, an increase in the minimum bill credit
discount for each subsequent program
year) and, if so, what would be an appro-
priate rate of transition, (3) how would
this discount rate impact different eligible
technologies, and (4) the impact of a mini-
mum bill discount credit rate for Category
4 facilities that is different from benefit
requirements for existing or planned state
programs (for example, state-level com-
munity solar programs supported by the

September 16, 2024 614 Bulletin No. 2024–38
U.S. Environmental Protection Agency’s
Greenhouse Gas Reduction Fund).
Proposed §1.48E(h)-1(f)(2)(i) would
define a bill credit discount rate as the
difference between the financial bene-
fit provided to a Qualifying Household
(including utility bill credits, reductions in
a Qualifying Household’s electricity rate,
or other monetary benefits accrued by the
Qualifying Household on their utility bill)
and the cost of participating in the com-
munity program (including subscription
payments for zero-carbon energy and
any other fees or charges), expressed as
a percentage of the financial benefit dis-
tributed to the Qualifying Household. The
bill credit discount rate can be calculated
by starting with the financial benefit pro-
vided to the Qualifying Household, sub-
tracting all payments made by the Qual-
ifying Household (or payments remitted
on behalf of the Qualifying Household
through net crediting, consolidated bill-
ing, or similar arrangements) to the facil-
ity owner and any related third parties as
a condition of receiving that financial ben-
efit, then dividing that difference by the
financial benefit distributed to the Quali-
fying Household.
Proposed §1.48E(h)-1(f)(2)(ii) would
provide that in cases in which the Quali-
fying Household has no or only a nominal
cost of participation, and financial benefits
are delivered through a utility or govern-
ment body, the bill credit discount rate
should be calculated as the financial ben-
efit provided to a Qualifying Household
(including utility bill credits, reductions
in a Qualifying Household’s electricity
rate, or other monetary benefits accrued
by a Qualifying Household on their util-
ity bill) divided by the total value of the
electricity produced by the facility and
assigned to the Qualifying Household
(including any electricity services, prod-
ucts, and credits provided in conjunction
with the electricity produced by such
facility), as measured by the utility, inde-
pendent system operator (ISO), or other
off-taker procuring electricity (and related
services, products, and credits) from the
facility. Proposed §1.48E(h)-1(f)(2)(iii)
would clarify that the bill credit discount
rate is calculated on an annual basis. Pro-
posed §1.48E(h)-1(f)(2)(iv) would pro-
vide examples to clarify that application
of proposed §1.48E(h)-1(f)(2).
The Treasury Department and the IRS
are considering adding other methods,
apart from bill credit discounts, for finan-
cial benefits to be shared with Qualifying
Households. Accordingly, the Treasury
Department and the IRS request com-
ments on (1) what alternative methods
for delivering financial benefits should be
considered to provide equivalent financial
benefits in cases in which bill credit dis-
counts are not available or are not feasible
for covered technologies; (2) how these
alternative mechanisms should be verified
to ensure they provide the required finan-
cial benefits to Qualifying Households;
(3) whether these alternative mechanisms
are feasible for multiple technologies; and
(4) what requirements can be put in place
to address any uncertainties related to the
potential treatment of financial benefits as
income for Federal income tax purposes
or the potential impact on eligibility for
public assistance benefits.
Proposed §1.48E(h)-1(f)(2)(iii) would
provide that if the facility derives financial
value from the production of electricity in
a manner such that this value cannot be
directly applied to the Qualifying House-
hold’s utility bill (for example, renewable
energy credit payments made directly to
the facility owner), then no less than 30
percent of that monetary value must also
be provided to the Qualifying Household,
either through a greater bill credit discount
on the Qualifying Household’s utility bill
than would otherwise be derived from the
method described in proposed §1.48E(h)-
1(f)(1)(i) or through other means.
To ensure the requirements of pro-
posed §1.48E(h)-1(f) are met, proposed
§1.48E(h)-1(f)(3) would require verifi-
cation of households’ qualifying low-in-
come status. Applicants are responsible
for proof-of-income verification. Pro-
posed §1.48E(h)-1(f)(3)(i) would provide
that to establish that financial benefits are
provided to Qualifying Households as
provided in proposed §1.48E(h)-1(f)(1),
applicants must submit documentation in
accordance with guidance published in the
Internal Revenue Bulletin. A Qualifying
Household’s low-income status is deter-
mined at the time the household enrolls
in the subscription program and does not
need to be re-verified.
Proposed §1.48E(h)-1(f)(3)(ii) would
provide that applicants can use categori-
cal eligibility or other income verification
methods to establish that a household
is a Qualifying Household. Proposed
§1.48E(h)-1(f)(3)(ii)(A) would provide
that categorical eligibility consists of
obtaining proof of the household’s par-
ticipation in a needs-based Federal, State,
Tribal, or utility program with income lim-
its at or below the qualifying income level
required to be a Qualifying Household.
Federal programs may include, but are not
limited to: Medicaid, Low-Income Home
Energy Assistance Program (LIHEAP)
administered by the Department of Health
and Human Services, Weatherization
Assistance Program (WAP) administered
by the Department of Energy (DOE), Sup-
plemental Nutrition Assistance Program
(SNAP) administered by the USDA, Sec-
tion 8 Project-Based Rental Assistance,
the Housing Choice Voucher Program
administered by HUD, the Federal Com-
munication Commission’s Lifeline Sup-
port for Affordable Communications, the
National School Lunch Program admin-
istered by the USDA, the Supplemental
Security Income Program administered
by the Social Security Administration,
and any verified government or non-profit
program serving Asset Limited Income
Constrained Employed (ALICE) persons
or households. With respect to the Fed-
eral programs listed previously an indi-
vidual in the household must currently be
approved for assistance from or participa-
tion in the program with an award letter
or other written documentation within
the last 12 months for enrollment in that
program to establish categorical eligibility
of the household. State agencies also can
provide verification that a household is a
Qualifying Household if the household
participates in a State’s solar or other pro-
gram and income limits for such program
are at or below the qualifying income
level required to be a Qualifying House-
hold. The qualifying income level for a
Qualifying Household is based on where
such household is located.
Proposed §1.48E(h)-1(f)(3)(ii)(B)
would provide that paystubs, Federal or
State tax returns, or income verification
through crediting agencies and com-
mercial data sources can also be used to
establish that a household is a Qualifying
Household. Proposed §1.48E(h)-1(f)(3)
(ii)(C) would provide that a self-attesta-

Bulletin No. 2024–38 615 September 16, 2024
tion from a household is not a permissi-
ble method to establish a household is a
Qualifying Household. This prohibition
on direct self-attestation from a household
does not extend to categorical eligibility
for needs-based Federal, State, Tribal, or
utility programs with income limits that
rely on self-attestation for verification of
income.
V. Proposed Program Requirements and
Structure
A. Annual capacity limitation
Under section 48E(h)(4)(C), the total
annual Capacity Limitation is 1.8 giga-
watts of DC capacity for each calendar
year during the period beginning on Jan-
uary 1, 2025, and ending on December
31 of the applicable year (as defined in
section 45Y(d)(3))
5
, and zero thereafter.
Proposed §1.48E(h)-1(g) would provide
that the Treasury Department and the IRS
intend to announce how the annual Capac-
ity Limitation would be allocated across
the four facility categories (described in
proposed §1.48E(h)-1(b)(2)) in future
guidance published in the Internal Reve-
nue Bulletin. Proposed §1.48E(h)-1(g)(1)
also would provide that the Capacity Lim-
itation for each Program year is divided
across the four facility categories based
on factors such as the anticipated number
of applications that are expected for each
category and the amount of Capacity Lim-
itation that needs to be reserved for each
category to encourage market participa-
tion in each category consistent with stat-
utory intent and the goals of the Program.
After the Capacity Limitation for each
facility category is established in guid-
ance published in the Internal Revenue
Bulletin, it may be reallocated later across
facility categories and sub-reservation in
the event one category or sub-reservation
is oversubscribed and another has excess
capacity. Proposed §1.48E(h)-1(g) would
specify that a facility category or sub-res-
ervation is oversubscribed if it receives
applications in excess of Capacity Limita-
tion reserved for the facility category or
sub-reservation.
Proposed §1.48E(h)-1(g)(2) would
provide that if the annual Capacity Lim-
itation for any calendar year exceeds the
aggregate amount of annual Capacity
Limitation allocated for a calendar year
under proposed §1.48E(h)-1(g)(2), then
the annual Capacity Limitation for the
succeeding calendar year is increased by
the amount of such excess. No amount of
Capacity Limitation may be carried to any
calendar year after the third calendar year
following the applicable year (as defined
in section 45Y(d)(3)).
B. Additional Selection Criteria
Proposed §1.48E(h)-1(h)(1) would
provide that at least 50 percent of the
total Capacity Limitation in each facility
category would be reserved for facilities
meeting criteria described in proposed
§1.48E(h)-1(h)(2) (relating to ownership
criteria) and proposed §1.48E(h)-1(h)
(3) (relating to geographic criteria); both
the ownership and the geographic criteria
are collectively referred to as “Additional
Selection Criteria”. The specific amount
of Capacity Limitation reserved (but not
less than 50 percent) would be provided in
guidance published in the Internal Reve-
nue Bulletin for each Program year.
The procedure for using these Addi-
tional Selection Criteria also will be
provided in guidance published in the
Internal Revenue Bulletin. The Treasury
Department and the IRS expect that in
evaluating applications received during
the initial application window, priority
would be given to eligible applications
for facilities meeting at least one of the
two Additional Selection Criteria. The
Treasury Department and the IRS expect
that if the eligible applications for Capac-
ity Limitation for facilities that meet at
least one of the two Additional Selection
Criteria categories exceed the Capacity
Limitation for a category, then facilities
meeting both of the Additional Selection
Criteria categories would be prioritized
for an allocation. If eligible applications
for facilities that meet at least one of the
two Additional Selection Criteria catego-
ries received during the initial application
window total less than 50 percent of the
Capacity Limitation for a category, then
additional Capacity Limitation would be
reserved during the rolling application
period such that 50 percent of the total
Capacity Limitation in the category would
be reserved for these facilities.
Proposed §1.48E(h)-1(h) also would
provide that after the reservation of
Capacity Limitation for qualified facilities
meeting the Additional Selection Criteria
described in proposed §1.48E(h)-1(h)(2)
and (3) is established in guidance pub-
lished in the Internal Revenue Bulletin,
it may be reallocated later across facility
categories and sub-reservations in the
event one category or sub-reservation
within a category is oversubscribed and
another has excess capacity. The Treasury
Department and the IRS would retain the
discretion to reallocate Capacity Limita-
tion across categories and sub-categories
to maximize allocations in the event one
category or sub-reservation is oversub-
scribed and another has excess capacity.
1. Ownership criteria
Proposed §1.48E(h)-1(h)(2) would
provide criteria based on ownership
(Ownership Criteria). The Ownership Cri-
teria category is based on characteristics
of the applicant that owns the applicable
facility. An applicable facility would meet
the Ownership Criteria if it is owned by a
Tribal enterprise, an Alaska Native Corpo-
ration, a Native Hawaiian Organization, a
renewable energy cooperative, or a qual-
ified tax-exempt entity. If an applicant
wholly owns an entity that is the owner
of an applicable facility, and the entity is
disregarded as separate from its owner for
Federal income tax purposes (disregarded
entity), then the applicant, and not the
disregarded entity, is treated as the owner
of the applicable facility for purposes of
the Ownership Criteria. For corporations
incorporated under the authority of either
section 17 of the Indian Reorganization
Act of 1934, 25 U.S.C. 5124 or section
3 of the Oklahoma Indian Welfare Act,
25 U.S.C. 5203, an application may be
made as a Tribal Enterprise. If an appli-
5
Section 45Y(d)(3) defines the term "applicable year" as the later of the calendar year in which the Secretary determines that the annual greenhouse gas emissions from the production of
electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or
2032. See also proposed §1.45Y-1(c)(3).

September 16, 2024 616 Bulletin No. 2024–38
cant is an entity treated as a partnership
for Federal income tax purposes, and an
entity described in proposed §1.48E(h)-
1(h)(2)(i)(A) through (E) owns at least
a one percent interest (either directly or
indirectly) in each material item of part-
nership income, gain, loss, deduction, and
credit and is a managing member or gen-
eral partner (or similar title) under State or
Tribal law of the partnership (or directly
owns 100 percent of the equity interests
in the managing member or general part-
ner) at all times during the existence of the
partnership, the applicable facility will be
deemed to meet the Ownership Criteria. If
the partnership becomes the owner of the
facility after an allocation is made to an
entity described in proposed §1.48E(h)-
1(h)(2)(i)(A) through (E), the transfer
of the facility to the partnership is not a
disqualification event for purposes of pro-
posed §1.48E(h)-1(m)(5), so long as the
requirements of proposed §1.48E(h)-1(m)
(5) are satisfied. The original applicant
and the successor partnership should refer
to guidance published in the Internal Rev-
enue Bulletin for the procedures to request
a transfer of the Capacity Limitation allo-
cation to the successor partnership.
Currently, these proposed regulations
do not include an Ownership Criteria cat-
egory for emerging market businesses,
such as those businesses that do not have
large market shares that could be demon-
strated by the number of employees,
annual revenue, and other factors. The
Treasury Department and IRS considered
including a category for emerging market
businesses similar to the qualified renew-
able energy company category under the
section 48(e) Low-Income Communities
Bonus Credit Program and §1.48(e)-1(h)
(2)(vi), but ultimately decided not to retain
the qualified renewable energy company
category for purposes of the Program
under section 48E(h) and these proposed
regulations. The Treasury Department and
IRS request comments on how an admin-
istrable emerging market business Owner-
ship Criteria category could be structured,
including what thresholds a definition
should include to define market share
and size, age of business, the number of
employees (both minimum and maxi-
mum) and/or annual gross receipts gener-
ated by an emerging market business, and
the supporting documentation that could
be provided as part of the application to
verify an applicant meets such criteria.
Additionally, the Treasury Department
and the IRS request comments on any
other appropriate Ownership Criteria that
might be applied, for example the degree
to which a business focuses its efforts on
and delivers benefits to low-income and
disadvantaged communities, and the sup-
porting documentation that could be pro-
vided as part of the application to verify
an applicant meets such criteria.
a. Tribal enterprise
A “Tribal enterprise” for purposes of
the Ownership Criteria is an entity that is
(1) owned at least 51 percent directly by
an Indian Tribal government (as defined in
section 30D(g)(9) of the Code), or owned
at least 51 percent indirectly through a
corporation that is wholly owned by the
Indian Tribal government and is created
either under the Tribal laws of the Indian
Tribal government or through a corporation
incorporated under the authority of either
section 17 of the Indian Reorganization Act
of 1934, 25 U.S.C. 5124, or section 3 of the
Oklahoma Indian Welfare Act, 25 U.S.C.
5203, and (2) subject to Tribal government
rules, regulations, and/or codes that regu-
late the operations of the entity.
b. Alaska Native Corporation
An “Alaska Native Corporation”
for purposes of the Ownership Crite-
ria is defined in section 3 of the Alaska
Native Claims Settlement Act, 43 U.S.C.
1602(m).
c. Native Hawaiian Organization
A “Native Hawaiian Organization”
for purposes of the Ownership Criteria is
defined in 13 CFR 124.3.
d. Renewable energy cooperative
A “renewable energy cooperative” for
purposes of the Ownership Criteria is an
entity that develops applicable facilities
and is either (1) a consumer or purchas-
ing cooperative controlled by its members
with each member having an equal voting
right and with each member having rights
to profit distributions based on patron-
age as defined by proportion of volume
of energy or energy credits purchased
(kWh), volume of financial benefits deliv-
ered ($), or volume of financial payments
made ($), and in which at least 50 percent
of the patronage in the qualified facility is
by cooperative members who are low-in-
come households (as defined in section
48(e)(2)(C)); or (2) a worker cooperative
controlled by its worker-members with
each member having an equal voting right.
e. Qualified tax-exempt entity
A “qualified tax-exempt entity” for
purposes of the Ownership Criteria is:
(1) An organization exempt from the
tax imposed by subtitle A of the Code
by reason of being described in section
501(c)(3) or (d) of the Code;
(2) Any State, the District of Columbia, or
political subdivision thereof, or any agency or
instrumentality of any of the foregoing;
(3) An Indian Tribal government (as
defined in section 30D(g)(9)), a politi-
cal subdivision thereof, or any agency or
instrumentality of any of the foregoing; or
(4) Any corporation described in sec-
tion 501(c)(12) operating on a cooperative
basis that is engaged in furnishing electric
energy to persons in rural areas.
2. Geographic criteria
Proposed §1.48E(h)-1(h)(3) would
provide criteria based on geography (Geo-
graphic Criteria). The Geographic Crite-
ria category is based on where the facil-
ity will be placed in service. Geographic
Criteria would not apply to Category 2
facilities. To meet the Geographic Cri-
teria, a facility would need to be located
in a Persistent Poverty County (PPC)
6
as
described in proposed §1.48E(h)-1(h)(3)
(ii) or in certain census tracts identified on
the Climate and Economic Justice Screen-
ing Tool (CEJST)
7
and as described in
proposed §1.48E(h)-1(h)(3)(iii). Proposed
6
https://www.ers.usda.gov/data-products/county-typology-codes/.
7
https://screeningtool.geoplatform.gov/en/#3/33.47/-97.5.

Bulletin No. 2024–38 617 September 16, 2024
§1.48E(h)-1(h)(3) would also provide that
applicants who meet the Geographic Cri-
teria at the time of application are consid-
ered to continue to meet the Geographic
Criteria for the duration of the recapture
period described in proposed §1.48E(h)-
1(n)(1) unless the location of the facility
changes.
Proposed §1.48E(h)-1(h)(3)(ii) would
describe a PPC as any county in which 20
percent or more of residents have experi-
enced high rates of poverty over the past
30 years. For purposes of the Program, the
Treasury Department and the IRS propose
using the PPC measure adopted by the
USDA to make this determination. The
most recent measure, which would apply
for the 2025 program year, incorporates
poverty estimates from the 1990 and 2000
censuses, and 2007-2011 and 2017-2021
ACS Survey 5-year averages.
8

Proposed §1.48E(h)-1(h)(3)(iii) would
provide that a census tract qualifies under
§1.48E(h)-1(h)(3)(i) if it is described in
the latest official CEJST, as greater than
or equal to the 90th percentile for energy
burden and greater than or equal to the
65th percentile for low income, or as
greater than or equal to the 90th percen-
tile for PM2.5 exposure and greater than
or equal to the 65th percentile for low
income. Proposed §1.48E(h)-1(h)(3)(iii)
(A) through (C) would provide definitions
for terms used in identifying census tracts
described in proposed §1.48E(h)-1(h)(3)
(iii). See CEJST, Methodology & data,
https://screeningtool.geoplatform.gov/
en/methodology for more information on
these terms as applied in the screening
tool.
C. Sub-reservations of allocation for
facilities located in a low-income
community
The Treasury Department and the IRS
anticipate that Category 1 will receive the
largest number of applications, and that
within Category 1, many applications will
involve residential solar facilities that are
smaller in scale and have relatively short
construction completion timelines. There-
fore, proposed §1.48E(h)-1(i) would sub-
divide the Capacity Limitation reservation
for facilities seeking a Category 1 alloca-
tion with a portion of the Capacity Limita-
tion specifically reserved for eligible resi-
dential behind the meter (BTM) facilities,
including rooftop solar. The sub-reserva-
tion of a substantial portion of the alloca-
tion in Category 1 for eligible residential
BTM facilities would help ensure that
allocations predominantly are awarded
to facilities serving residences and con-
sumers, rather than facilities serving busi-
nesses. Proposed §1.48E(h)-1(i) would
reserve the remaining Capacity Limitation
in Category 1 for applicants with front
of the meter (FTM) facilities as well as
non-residential BTM facilities. Proposed
§1.48E(h)-1(i) clarifies that the specific
amounts of the Category 1 sub-reserva-
tions will be provided in future guidance
published in the Internal Revenue Bul-
letin that is applicable to a Program year
based on factors such as promoting effi-
cient allocation of Capacity Limitation
and allowing like-projects to compete for
an allocation. Proposed §1.48E(h)-1(i)
provides that after the sub-reservation
is established in guidance published in
the Internal Revenue Bulletin, it may be
reallocated later in the event it has excess
capacity.
Proposed §1.48E(h)-1(i)(2)(ii) would
define an eligible residential BTM facil-
ity as single-family or multi-family resi-
dential applicable facility that does not
meet the requirements for Category 3 and
is BTM. Proposed §1.48E(h)-1(i)(2)(ii)
would provide that an applicable facility is
residential if it is uses energy to generate
electricity for use in a dwelling unit that is
used as a residence. Proposed §1.48E(h)-
1(i)(2)(i) would define an applicable facil-
ity as BTM if: (1) it is connected with an
electrical connection between the facility
and the panelboard or sub-panelboard of
the site where the facility is located, (2) it
is to be connected on the customer side of
a utility service meter before it connects
to a distribution or transmission system
(that is, before it connects to the electricity
grid), and (3) its primary purpose is to pro-
vide electricity to the utility customer of
the site where the facility is located. This
also includes systems not connected to a
grid and that may not have a utility service
meter, and whose primary purpose is to
serve the electricity demand of the owner
of the site where the system is located.
Proposed §1.48E(h)-1(i)(2)(iii) would
define a facility as FTM if it is directly
connected to a grid and its primary pur-
pose is to provide electricity to one or
more offsite locations via such grid or util-
ity meters with which it does not have an
electrical connection; alternatively, FTM
is defined as a facility that is not BTM.
For purposes of Category 4 facilities, an
applicable facility is also FTM if 50 per-
cent or more of its electricity generation
on an annual basis is physically exported
to the broader electricity grid.
D. Application and selection process
Section 48E(h)(4)(A) provides that “[i]
n establishing such program and to carry
out the purposes of this paragraph, the Sec-
retary shall provide procedures to allow
for an efficient allocation process.” The
Treasury Department and the IRS antici-
pate that the number of eligible applicants
seeking an allocation may exceed the total
Capacity Limitation allocation available
to be allocated. Accordingly, the Treasury
Department and the IRS are designing an
application process that both ensures that
allocations are awarded to facilities that
advance the Program goals and facilitates
an efficient allocation process.
Proposed §1.48E(h)-1(j)(1) provides
that applications for a Capacity Limitation
allocation will be evaluated according to
the procedures specified in guidance pub-
lished in the Internal Revenue Bulletin.
Based on feedback received with respect
to the section 48(e) Low-Income Com-
munities Bonus Credit Program (a simi-
lar program applicable solely to qualified
solar and wind facilities in 2023 and 2024)
and an assessment of operational capabil-
ities set up to administer the Program, the
Treasury Department and the IRS expect
to provide a process that includes one or
more initial application windows in which
applications received by a certain time
and date would be evaluated together, fol-
lowed by a rolling application process if
Capacity Limitation is not fully allocated
after an initial application window closes.
8
https://www.ers.usda.gov/data-products/poverty-area-measures.

September 16, 2024 618 Bulletin No. 2024–38
Facilities that meet at least one of the two
categories of specified Ownership and
Geographic criteria (Additional Selec-
tion Criteria, discussed in part V.B. of this
Explanation of Provisions) would receive
priority for an allocation within each facil-
ity category described in section 48E(h)
(2)(A)(iii).
Because section 48E(h) is subject to
a finite annual Capacity Limitation, the
Treasury Department and the IRS think
that allocating amounts of Capacity Lim-
itation to a group of related qualified
facilities with an aggregate total maxi-
mum net output equal to or greater than
five megawatts (as measured in alternat-
ing current) could concentrate allocations
in a smaller number of communities,
which would not further the purpose of
efficient allocation of a Federal tax credit
program with a national impact. The
Treasury Department and the IRS addi-
tionally believe that although such facil-
ities could be provided a small capacity
allocation rather than be deprioritized,
providing a small allocation to a group
of related qualified facilities with a much
larger aggregate capacity is not likely to
be determinative of the deployment of
those qualified facilities and thus would
not advance the goals of the Program
to incentivize additional deployment of
qualified facilities in low-income com-
munities. The Treasury Department and
the IRS therefore intend to deprioritize
review of applications for an applicable
facility that together with other qualified
facilities (1) share a point of intercon-
nection, (2) produce electricity using the
same technology, (3) are owned by the
same taxpayer, and (4) have an aggregate
total maximum net output (as determined
by the sum of the maximum net output of
the applicable facility and each qualified
facility under proposed §1.48E(h)-1(b)
(3)(ii)) equal to or greater than five mega-
watts (alternating current). Deprioritized
applications will be considered after
other applications in the current alloca-
tion round, or a subsequent allocation
round at the Secretary’s discretion. An
application for review may be deemed to
not be part of a group of related qualified
facilities with a total combined maximum
net output equal to or greater than five
megawatts if it has an interconnection
agreement for less than five megawatts.
Section 48E(h)(4)(A) directs the Sec-
retary to provide procedures to allow for
an efficient allocation process. Addition-
ally, section 48E(h)(4)(E)(i) requires that
facilities allocated an amount of Capacity
Limitation be placed in service within four
years of the date of allocation. To promote
efficient allocation, and to ensure that allo-
cations will be awarded to facilities that
are sufficiently viable and well defined to
allow for a review for an allocation, and
sufficiently advanced such that they are
likely to meet the four-year placed-in-ser-
vice deadline, proposed §1.48E(h)-1(j)
(2) would require applicants to submit
certain information, documentation, and
attestations when applying for an alloca-
tion that demonstrate project eligibility
and viability. Proposed §1.48E(h)-1(j)(2)
would clarify that the specific informa-
tion, documentation, and attestation to be
submitted will be provided in future guid-
ance published in the Internal Revenue
Bulletin that is applicable to a Program
year. Details regarding the application
process will be provided in future proce-
dural guidance published in the Internal
Revenue Bulletin. Procedural guidance
for the 2025 Program year will be issued
later this year.
The Treasury Department and the IRS
expect that the specific application infor-
mation, documentation, and attestation
requirements provided in procedural guid-
ance applicable to the Program published
in the Internal Revenue Bulletin will
be substantially similar to requirements
applicable the section 48(e) Low-Income
Communities Bonus Program provided
in Revenue Procedure 2024-19, 2024-
16 I.R.B. 899. Like the section 48(e)
program, some requirements may differ
for FTM and BTM facilities and other
requirements may differ by Facility Cat-
egory and Additional Selection Criteria.
The Treasury Department and the IRS will
periodically assess the Program and previ-
ous applications to determine any changes
to the Program’s application process. The
Treasury Department and the IRS request
comments on all aspects of the applica-
tion and selection process but specifically
request comments on whether (1) modifi-
cations are necessary with respect to any
of the application requirements so that
the Program is available to all applicable
facilities under the Program, and (2) cer-
tain facility categories can demonstrate
project viability with other types of doc-
umentation.
Proposed §1.48E(h)-1(j)(3) would pro-
vide that there is no administrative appeal
of Capacity Limitation allocation deci-
sions.
E. Documentation and attestations to be
submitted when placed in service
The Treasury Department and the
IRS also propose in §1.48E(h)-1(k)(1) to
require facilities that received a Capacity
Limitation allocation to report to the DOE
the date the eligible property was placed
in service. Proposed §1.48E(h)-1(k)(1)
also would require that this report be made
through the same portal used to submit the
original application for allocation.
Proposed §1.48E(h)-1(k)(2) would
require facilities that received a Capacity
Limitation to submit additional documen-
tation or complete additional attestations
with this reporting. At the time of appli-
cation, applicants would not necessar-
ily be able to demonstrate compliance
with certain eligibility requirements, as
the facility would not yet be operating
at that time. Requiring placed in service
reporting would allow for final verifica-
tion that the facilities that were awarded a
Capacity Limitation Allocation have met
certain eligibility requirements under the
Program. Therefore, proposed §1.48E(h)-
1(k)(2) would require facilities awarded
a Capacity Limitation to submit final eli-
gibility information at placed in service
time. At the time that the owner reports
that eligible property has been placed in
service the owner also must confirm infor-
mation about the facility and submit addi-
tional documentation to prove the facility
is still eligible to maintain the allocation
and the increased applicable percentage
under section 48E(h)(1) as specified in
guidance published in the Internal Reve-
nue Bulletin.
Proposed §1.48E(h)-1(k)(3) would pro-
vide that the DOE will review the placed
in service documentation and attestations
to determine if the facility meets the eli-
gibility criteria for the owner to claim
an increased applicable percentage. The
DOE then provides a recommendation to
the IRS regarding whether the facility con-
tinues to meet the eligibility requirements

Bulletin No. 2024–38 619 September 16, 2024
for the facility to retain its allocation or if
the facility should be disqualified (as pro-
vided in proposed §1.48E(h)-1(m)). Based
on DOE’s recommendation, the IRS will
decide whether the facility should retain
its allocation or if the facility should be
disqualified and will notify the appli-
cant of its decision. Each applicant must
receive confirmation from the IRS that the
DOE has reviewed the placed in service
submissions, and that eligibility is con-
firmed, prior to the owner (or a partner or
shareholder in the case of a partnership
or S corporation) claiming the increased
credit amount on Form 3468, Investment
Credit (or Form 3800, General Business
Credit), or successor form, or, if eligible,
making a transfer election under section
6418 of the Code, or an elective payment
election under section 6417 of the Code.
Proposed §1.48E(h)-1(k)(4) would
provide a definition of placed in service.
Pursuant to proposed §1.48E(h)-1(k)(4),
for purposes of §1.48E(h)-1(k), eligible
property is considered placed in service
in the earlier of the following taxable
years: (i) the taxable year in which, under
the taxpayer’s depreciation practice, the
period for depreciation with respect to
such eligible property begins; or (ii) the
taxable year in which the eligible prop-
erty is placed in a condition or state of
readiness and availability for a specif-
ically assigned function, whether in a
trade or business or in the production of
income.
F. Placed in service prior to allocation
award
The Treasury Department and the IRS
propose in §1.48E(h)-1(l) that facilities
placed in service prior to being awarded
an allocation of Capacity Limitation
would not be eligible to receive an alloca-
tion. One of the goals of the Program is to
increase adoption of and access to renew-
able energy facilities in low-income and
other communities with environmental
justice concerns. Awarding an allocation
to facilities that have already been placed
in service would be inconsistent with this
goal. Further, section 48E(h)(4)(E)(i)
provides that a facility must be placed in
service within four years of receiving an
allocation of Capacity Limitation, indi-
cating that allocations should be made
to new facilities that have not yet been
placed in service. Accordingly, the Trea-
sury Department and the IRS propose that
facilities placed in service prior to being
awarded an allocation of Capacity Lim-
itation would not be eligible to receive an
allocation.
VI. Post-Allocation Compliance
A. Disqualification after receiving an
allocation
The Treasury Department and the
IRS recognize that because, under sec-
tion 48E(h)(4)(E)(i), an applicant has
four years after the date of an allocation
of Capacity Limitation to place eligible
property in service, circumstances may
change prior to the property being placed
in service such that a facility is no lon-
ger eligible for the allocation it received.
In addition, to promote an efficient allo-
cation process consistent with section
48E(h)(4)(A), the Treasury Department
and the IRS want to discourage material
changes in project plans, such as signifi-
cant reductions in facility size that tie up
Capacity Limitation that could otherwise
be awarded to other qualified facilities.
Accordingly, proposed §1.48E(h)-1(m)
would provide that a facility that was
awarded a Capacity Limitation allocation
is disqualified and loses its allocation if
prior to or upon the facility being placed
in service: (1) the location where the
facility will be placed in service changes;
(2) the maximum net output of the facil-
ity increases such that it exceeds the less
than five megawatt requirement provided
in section 48E(h)(2)(A)(ii) or the name-
plate capacity decreases by the greater of
2 kW or 25 percent of the Capacity Lim-
itation awarded in the allocation; (3) the
facility cannot satisfy the financial ben-
efits requirements under section 48E(h)
(2)(B)(ii) and proposed §1.48E(h)-1(e)
as planned (if applicable) or cannot sat-
isfy the financial benefits requirements
under section 48E(h)(2)(C) and proposed
§1.48E(h)-1(f) as planned (if applica-
ble); (4) the eligible property that is part
of the facility that received the Capacity
Limitation allocation is not placed in ser-
vice within four years after the date the
applicant was notified of the allocation of
Capacity Limitation to the facility; or (5)
the facility received a Capacity Limita-
tion allocation based, in part, on meeting
the Ownership Criteria and ownership of
the facility changes prior to the facility
being placed in service, unless the orig-
inal applicant transfers the facility to an
entity treated as a partnership for Federal
income tax purposes and retains at least
a one percent interest (either directly or
indirectly) in each material item of part-
nership income, gain, loss, deduction, and
credit of such partnership and is a manag-
ing member or general partner (or similar
title) under State or Tribal law of the part-
nership (or directly owns 100 percent of
the equity interests in the managing mem-
ber or general partner) at all times during
the existence of the partnership.
B. Recapture of section 48E(h) Increase
Section 48E(h)(5) requires the Secre-
tary, by regulations or other guidance, to
provide rules for recapturing the benefit of
any section 48E(h) Increase with respect
to any property that ceases to be property
eligible for such section 48E(h) Increase
(but that does not cease to be investment
credit property within the meaning of sec-
tion 50(a)). The period and percentage of
such recapture is determined under rules
similar to the rules of section 50(a). To
the extent provided by the Secretary, such
recapture may not apply with respect to
any property if, within 12 months after
the date the applicant becomes aware (or
reasonably should have become aware)
of such property ceasing to be property
eligible for such section 48E(h) Increase,
the eligibility of such property for such
section 48E(h) Increase is restored. Such
restoration of a section 48E(h) Increase is
not available more than once with respect
to any facility.
Proposed §1.48E(h)-1(n)(1) would
provide that if, at any time during the five-
year recapture period beginning on the
date that an applicable facility under sec-
tion 48E(h) is placed in service, there is a
recapture event under proposed §1.48E(h)-
1(n)(3) with respect to such property, then
the Federal income tax imposed on the
taxpayer by chapter 1 of the Code for the
taxable year in which the recapture event
occurs is increased by the recapture per-
centage of the benefit of the increase in the
section 48E credit. The recapture percent-

September 16, 2024 620 Bulletin No. 2024–38
age is determined according to the table
provided in section 50(a)(1)(B).
Proposed §1.48E(h)-1(n)(2) would
provide that recapture under proposed
§1.48E(h)-1(n)(1) may not apply with
respect to any property if, within 12
months after the date the applicant
becomes aware (or reasonably should
have become aware) of such property
ceasing to be property eligible for such
increase in the credit allowed under sec-
tion 48E(a), the eligibility of such prop-
erty for such increase pursuant to section
48E(h) is restored. Such restoration of an
increase pursuant to section 48E(h) is not
available more than once with respect to
any facility.
Proposed §1.48E(h)-1(n)(3) would
provide that the following circumstances
result in a recapture event if the property
ceases to be eligible for the increased
credit under section 48E(h): (1) prop-
erty described in section 48E(h)(2)(A)
(iii)(II) fails to provide financial bene-
fits over the 5-year period after its orig-
inal placed-in-service date; (2) property
described under section 48E(h)(2)(B)
ceases to allocate the financial bene-
fits equitably among the occupants of
the dwelling units, such as not passing
on to residents the required net energy
savings of the electricity; (3) property
described under section 48E(h)(2)(C)
ceases to provide at least 50 percent of
the financial benefits of the electricity
produced to Qualifying Households as
described under section 48E(h)(2)(C)(i)
or (ii), or fails to provide those house-
holds the required minimum 30 percent
bill credit discount rate; (4) for property
described under section 48E(h)(2)(B),
the residential rental building the facil-
ity is a part of ceases to participate in a
covered housing program or any other
housing program described in section
48E(h)(2)(B)(i), if applicable; and (5) a
facility increases its maximum net out-
put such that the facility’s maximum net
output is 5 MW AC or greater.
Proposed §1.48E(h)-1(n)(4) would
provide that any event that results in recap-
ture under section 50(a) also will result in
recapture of the benefit of the increase in
the section 48E credit by reason of sec-
tion 48E(h). The exception to the appli-
cation of recapture provided in proposed
§1.48E(h)-1(n)(2) does not apply in the
case of a recapture event under section
50(a).
Proposed Applicability Date
These regulations are proposed to
apply to qualified facilities placed in ser-
vice after December 31, 2024, and during
taxable years ending after the date the final
regulations are filed for public inspection
by the Office of the Federal Register.
Special Analysis
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 OMB before collecting information
from the public, whether such collection
of information is mandatory, voluntary,
or required to obtain or retain a benefit.
The collections of information in these
proposed regulations contain reporting
and recordkeeping requirements that are
required to obtain the section 48E(h)
Increase. This information in the col-
lections of information would generally
be used by the IRS and the DOE for tax
compliance purposes and by taxpayers
to facilitate proper reporting and compli-
ance. A Federal agency may not conduct
or sponsor, and a person is not required
to respond to, a collection of information
unless the collection of information dis-
plays a valid control number.
The recordkeeping requirements men-
tioned within this proposed regulation
are considered general tax records under
§1.6001-1(e). These records are required
for the IRS to validate that taxpayers have
met the regulatory requirements and are
entitled to receive section 48E(h) Increase.
For PRA purposes, general tax records are
already approved by OMB under 1545-
0123 for business filers, 1545-0074 for
individual filers, and 1545-0047 for tax-ex-
empt organizations.
The proposed regulations also provide
reporting requirements related to provid-
ing attestations and supporting documen-
tation for initial application, supplemental
documentation for specific facilities, and
to confirm a facility is placed in service
as detailed in this NPRM. These attes-
tations and documentation would allow
IRS to allocate Capacity Limitation and
ensure taxpayers keep and maintain com-
pliance for the credits. To assist with the
collections of information, the DOE will
provide certain administration services
for the Program. Among other things, the
DOE will establish a website portal to
review the applications for eligibility cri-
teria and will provide recommendations to
the IRS regarding the selection of appli-
cations for an allocation of Capacity Lim-
itation. These collection requirements will
be submitted to the Office of Management
and Budget (OMB) under 1545-NEW
for review and approval in accordance
with 5 CFR 1320.11. The likely respon-
dents are business filers, individual fil-
ers, and tax-exempt organization filers. A
summary of paperwork burden estimates
for the application and attestations is as
follows:
Estimated number of respondents:
70,000
Estimated burden per response: 60
minutes
Estimated frequency of response: 1 for
initial applications, 1 for follow-up doc-
umentation, and 1 for projects placed in
service.
Estimated total burden hours: 210,000
burden hours
IRS will be soliciting feedback on the
collection requirements for the application
and attestations. Commenters are strongly
encouraged to submit public comments
electronically. Written comments and
recommendations for the proposed infor-
mation collection should be sent to www.
reginfo.gov/public/do/PRAMain. Com-
ments on the collection of information
should be received by October 3, 2024.
Comments are specifically requested con-
cerning:
(1) Whether the proposed collection
of information is necessary for the proper

Bulletin No. 2024–38 621 September 16, 2024
performance of the functions of the IRS,
including whether the information will
have practical utility;
(2) The accuracy of the estimated bur-
den associated with the proposed collec-
tion of information;
(3) How the quality, utility, and clarity
of the information to be collected may be
enhanced;
(4) How the burden of complying with
the proposed collection of information
may be minimized, including through the
application of automated collection tech-
niques or other forms of information tech-
nology; and
(5) Estimates of capital or start-up
costs and costs of operation, maintenance,
and purchase of services to provide infor-
mation.
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 603 of the RFA requires
the agency to present an initial regulatory
flexibility analysis (IRFA) of the proposed
rule. The Treasury Department and the IRS
have not determined whether the proposed
rule would likely have a significant eco-
nomic impact on a substantial number of
small entities. This determination requires
further study and an IRFA is provided in
these proposed regulations. The Treasury
Department and the IRS invite comments
on both the number of entities affected
and the economic impact on small entities.
Pursuant to section 7805(f), this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel of Advocacy of
the Small Business Administration for
comment on its impact on small business.
1. Need for and Objectives of the Rule
The proposed regulations would pro-
vide guidance to potential applicants to
determine eligibility to apply for an allo-
cation of Capacity Limitation under sec-
tion 48E(h), and, in general, to taxpayers
awarded an allocation of Capacity Lim-
itation to understand the requirement to
claim the section 48E(h) Increase. The
proposed regulations are expected to
encourage applicants to invest in applica-
ble facilities. Thus, the Treasury Depart-
ment and the IRS intend and expect that
the proposed rule will deliver benefits
across the economy and environment that
will beneficially impact various industries.
2. Affected Small Entities
The Small Business Administration
estimates in its 2018 Small Business Pro-
file that 99.9 percent of United States busi-
nesses meet its definition of a small busi-
ness. The applicability of these proposed
regulations does not depend on the size of
the business, as defined by the Small Busi-
ness Administration. As described more
fully in the preamble to this proposed reg-
ulation and in this IRFA, these rules may
affect a variety of different businesses
across serval different industries.
The Treasury Department and the IRS
expect to receive more information on
the impact on small businesses through
comments on this proposed rule and again
when participation in the Program com-
mences.
3. Impact of the Rules
The recordkeeping and reporting
requirements would increase for appli-
cants that participate in the Program.
Although the Treasury Department and
the IRS do not have sufficient data to
determine precisely 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 the preamble.
4. Alternatives Considered
The Treasury Department and the IRS
considered alternatives to the proposed
regulations. For example, the Treasury
Department and the IRS considered
requests from stakeholders that potential
applicants be able to place a facility in
service before applying for or receiving
an allocation of Capacity Limitation. The
Treasury Department and IRS determined
it would not be possible to accommodate
this request in the proposed regulations
because the statutory language under
section 48E(h)(4)(E)(i) requires that the
facility be placed in service by a date that
is 4 years after the date of the allocation.
Moreover, facilities that were placed in
service prior to the allocation process do
not increase adoption of and access to
renewable energy facilities, as compared
to the absence of the Program, and so do
not further Program goals.
Additionally, the Treasury Department
and IRS considered proposing a variety
of bill credit discounts for Category 4
qualified low-income benefit project facil-
ities, including the 20 percent bill credit
discount rate used in the Low-Income
Communities Bonus Credit Program
established under section 48(e). However,
to ensure that low-income customers are
receiving meaningful financial benefits,
the Treasury Department and the IRS
decided to propose a 30 percent bill credit
discount for the Program but are also
requesting comments on whether this is
the most appropriate bill credit discount
rate for the Program and whether a transi-
tion rule to achieve this bill discount rate
is necessary.
Another example is the revisions to the
list of eligible covered housing programs
that can be found in the Explanation of
Provisions section of this document. In
the preamble to Treasury Decision 9979,
applicable to the Low-Income Commu-
nities Bonus Credit Program established
under section 48(e), the Treasury Depart-
ment and the IRS included as an eligible
covered housing program, HUD tenant-
based rental assistance under section 8 of
the United States Housing Act of 1937.
The Treasury Department and IRS con-
sidered retaining tenant-based housing
assistance programs. However, after
consulting with HUD, it was determined
that tenant-based assistance is assistance
that can only be attributed to a particular
tenant, and not a building. Under section
48E(h)(2)(B), for a facility to qualify as a
being part of a qualified low-income resi-
dential building project, the facility must
be installed on a residential rental build-
ing that participates in a covered housing

September 16, 2024 622 Bulletin No. 2024–38
program (that is, a Qualified Residential
Property). Tenant-based housing assis-
tance programs applicable to a particu-
lar tenant do not qualify the building in
which the tenant resides as participating
in a covered housing program. There-
fore, because tenant-based assistance
under Section 8 does not comport with
the requirements under section 48E(h)
(2)(B), tenant-based housing assistance
programs under Section 8, have been
removed as an eligible covered housing
program for purposes of the Program
under section 48E(h).
Additionally, the Treasury Department
and IRS considered whether to propose to
include the sub-reservation for Category
1 facilities for eligible residential BTM
facilities but concluded this sub-reserva-
tion should be proposed for the Program.
The sub-reservation of a substantial por-
tion of the allocation in Category 1 for
eligible residential BTM facilities would
help ensure that allocations are predomi-
nantly awarded to facilities serving resi-
dences and consumers, rather than facili-
ties serving businesses.
Comments are requested on the
requirements in the proposed regulations,
including specifically, whether there are
less burdensome alternatives that ensure
the Treasury Department and IRS and
DOE can efficiently administer the Pro-
gram.
5. Duplicative, Overlapping, or
Conflicting Federal Rules
The proposed rule would not duplicate,
overlap, or conflict with any relevant Fed-
eral rules. As discussed in the Explanation
of Provisions, the proposed rules would
merely provide requirements, procedures,
and definitions related to the Program.
The Treasury Department and the IRS
invite input from interested members of
the public about identifying and avoiding
overlapping, duplicative, or conflicting
requirements.
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 Indian Tribal government, in the
aggregate, or by the private sector, of $100
million (updated annually for inflation).
These proposed regulations do not include
any Federal mandate that may result in
expenditures by State, local, or Indian
Tribal governments, or by the private sec-
tor 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 Execu-
tive order. These proposed regulations do
not have federalism implications and does
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal Gov-
ernments) prohibits an agency from pub-
lishing any rule that has Tribal implica-
tions if the rule either imposes substantial,
direct compliance costs on Indian Tribal
governments, and is not required by stat-
ute, or preempts Tribal law, unless the
agency meets the consultation and fund-
ing requirements of section 5 of the Exec-
utive order. These proposed 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.
Nevertheless, consistent with Trea-
sury’s Tribal Consultation Policy, the
Treasury Department and the IRS will
hold a consultation with Tribal leaders
requesting assistance in addressing ques-
tions related to these proposed regula-
tions.
Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final regula-
tions, consideration will be given to com-
ments regarding the notice of proposed
rulemaking that are submitted timely to
the IRS as prescribed in the preamble
under the ADDRESSES section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. All comments will be made
available at https://www.regulations.gov.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn.
A public hearing with respect to this
notice of proposed rulemaking has been
scheduled for October 17, 2024, begin-
ning at 10 a.m. EST. The hearing sched-
uled for October 17, 2024, will be held in
the Auditorium at the Internal Revenue
Building, 1111 Constitution Avenue, NW.,
Washington, D.C. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
Participants may alternatively attend the
public hearing by telephone.
The rules of 26 CFR 601.601(a)(3)
apply to the public hearing. Persons who
wish to present oral comments at the
public hearing must submit an outline of
the topics to be discussed and the time
to be devoted to each topic by October
3, 2024. A period of 10 minutes will be
allotted to each person for making com-
ments. An agenda showing the scheduling
of the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available
free of charge at the public hearing. If no
outline of the topics to be discussed at the
public hearing is received by October 3,
2024, the public hearing will be cancelled.
If the public hearing is cancelled, a notice
of cancellation of the public hearing will
be published in the Federal Register.
Individuals who want to testify in per-
son at the public hearing must send an
email to publichearings@irs.gov to have
your name added to the building access
list. The subject line of the email must

Bulletin No. 2024–38 623 September 16, 2024
contain the regulation number REG-
108920-24 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY In Person at
Hearing for REG-108920-24.
Individuals who want to testify by tele-
phone at the public hearing must send an
email to publichearings@irs.gov to receive
the telephone number and access code for
the public hearing. The subject line of the
email must contain the regulation number
REG-108920-24 and the language TESTIFY
Telephonically. For example, the subject line
may say: Request to TESTIFY Telephoni-
cally at Hearing for REG-108920-24.
Individuals who want to attend the pub-
lic hearing in person without testifying must
also send an email to publichearings@irs.
gov to have your name added to the build-
ing access list. The subject line of the email
must contain the regulation number REG-
108920-24 and the language ATTEND In
Person. For example, the subject line may
say: Request to ATTEND Hearing In Per-
son for REG-108920-24. Requests to attend
the public hearing must be received by 5
p.m. EST on October 15, 2024.
Individuals who want to attend the pub-
lic hearing by telephone without testifying
must also send an email to publichear-
ings@irs.gov to receive the telephone
number and access code for the public
hearing. The subject line of the email
must contain the regulation number REG-
108920-24 and the language ATTEND
Hearing Telephonically. For example, the
subject line may say: Request to ATTEND
Hearing Telephonically for REG-108920-
24. Requests to attend the public hearing
must be received by 5 p.m. EST on Octo-
ber 15, 2024.
Public hearings will be made accessi-
ble to people with disabilities. To request
special assistance during a public hearing
please contact the Publications and Regu-
lations Section of the Office of Associate
Chief Counsel (Procedure and Adminis-
tration) by sending an email to publichear-
ings@irs.gov (preferred) or by telephone
at (202) 317-6901 (not a toll-free number)
and must be received by October 11, 2024.
Statement of Availability of IRS
Documents
Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin
and is 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.
Drafting Information
The principal author of these proposed
rules is the Office of the Associate Chief
Counsel (Passthroughs and Special Indus-
tries), IRS. However, other personnel
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 adding an entry
for §1.48E(h)-1 in numerical order to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.48E(h)-1 also issued under
26 U.S.C. 48E(h) and (i).
* * * * *
Par. 2. Sections 1.48E(h)-0 and
1.48E(h)-1 are added to read as follows:
§1.48E(h)-0 Table of contents.
This section lists the captions con-
tained in §1.48E(h)-1.
§1.48E(h)-1 Clean Electricity Low-
Income Communities Bonus Credit
Amount Program.
(a) Overview.
(1) General rule.
(2) Certain terms used in this section.
(i) Applicants.
(ii) Internal Revenue Bulletin.
(b) Applicable facility defined.
(1) In general.
(2) Facility categories.
(i) Category 1 facility.
(ii) Category 2 facility.
(iii) Category 3 facility.
(iv) Category 4 facility.
(3) Less than five megawatts require-
ment.
(i) In general.
(ii) Nameplate capacity for purposes of
the less than five megawatts requirement.
(c) Eligible property.
(d) Location.
(1) In general.
(2) Nameplate Capacity Test for Loca-
tion.
(3) Nameplate capacity for purpose of
Nameplate Capacity Test for Location.
(e) Financial benefits for a Category 3
facility.
(1) In general.
(2) Threshold requirement.
(3) Financial value of the electricity
produced by the facility.
(4) Gross financial value.
(5) Net financial value defined.
(i) Common ownership.
(ii) Third-party ownership.
(iii) Equitable allocation of financial
benefits.
(A) If financial value distributed via
utility bill savings.
(B) If financial value is not distributed
via utility bill savings.
(6) Benefits sharing statement.
(i) In general.
(ii) Notification requirement.
(f) Financial benefits for a Category 4
facility.
(1) In general.
(2) Bill credit discount rate.
(i) In general.
(ii) No or nominal cost of participation.
(iii) Other value from electricity pro-
duction.
(iv) Calculation on annual basis.
(v) Examples.
(A) Example 1.
(B) Example 2.
(C) Example 3.
(3) Low-income verification.
(i) In general.
(ii) Methods of verification.
(A) Categorical eligibility.
(B) Other income verification methods.
(C) Impermissible verification method.
(g) Annual Capacity Limitation.
(1) In general.

September 16, 2024 624 Bulletin No. 2024–38
(2) Carryover of unallocated Annual
Capacity Limitation.
(h) Reservations of Capacity Limita-
tion allocation for facilities that meet cer-
tain Additional Selection Criteria.
(1) In general.
(2) Ownership criteria.
(i) In general.
(ii) Indirect ownership.
(A) Disregarded entities.
(B) Partner qualifying partnership
under ownership criteria.
(iii) Tribal enterprise.
(iv) Alaska Native Corporation.
(v) Native Hawaiian Organization.
(vi) Renewable energy cooperative.
(vii) Qualified tax-exempt entity.
(3) Geographic criteria.
(i) In general.
(ii) Persistent Poverty County.
(iii) Certain census tracts under Cli-
mate and Economic Justice Screening
Tool.
(A) Energy burden.
(B) PM2.5.
(C) Low-income.
(i) Sub-reservations of allocation for
Category 1 facilities.
(1) In general.
(2) Definitions.
(i) Behind the meter (BTM) facility.
(ii) Eligible residential BTM facility.
(iii) FTM facility.
(j) Process of application evaluation.
(1) In general.
(2) Information required as part of
application.
(3) No administrative appeal of Capac-
ity Limitation allocation decisions.
(k) Placed in service.
(1) Requirement to report date placed
in service.
(2) Requirement to submit final eli-
gibility information at placed in service
time.
(3) DOE confirmation.
(4) Definition of placed in service.
(l) Facilities placed in service prior to
an allocation award.
(1) In general.
(2) Rejection or rescission.
(m) Disqualification.
(n) Recapture of section 48E(h)
Increase to the section 48E(a) credit.
(1) In general.
(2) Exception to application of recap-
ture.
(3) Recapture events.
(4) Section 50(a) recapture.
(o) Applicability date.
§1.48E(h)-1 Clean Electricity Low-
Income Communities Bonus Credit
Amount Program.
(a) Overview—(1) General rule. For
purposes of section 46 of the Internal
Revenue Code (Code), if an allocation of
the environmental justice capacity limita-
tion (Capacity Limitation) is made with
respect to eligible property (as defined in
paragraph (c) of this section) that is part of
any applicable facility (as defined in para-
graph (b) of this section) placed in service
in connection with low-income communi-
ties under the Clean Electricity Low-In-
come Communities Bonus Credit Amount
Program (Program) established under sec-
tion 48E(h)(4), the applicable percentage
used to calculate the amount of the clean
electricity investment credit determined
under section 48E(a) (section 48E credit)
is increased under section 48E(h)(1).
(2) Certain terms used in this section.
In this section:
(i) Applicants. The terms applicant and
taxpayer are used interchangeably as the
context may require.
(ii) Internal Revenue Bulletin. The term
Internal Revenue Bulletin has the meaning
provided in §601.601 of this chapter.
(b) Applicable facility defined—(1) In
general. An applicable facility means any
qualified facility (as defined in section
48E(b)(3)) that—
(i) Is a non-combustion and gasifica-
tion facility for which the Secretary of the
Treasury or her delegate has determined
has a greenhouse gas (GHG) emissions
rate of not greater than zero in guidance
published either in the Federal Register
or in the Internal Revenue Bulletin as
of the opening date for a Program year,
which the Internal Revenue Service will
publicly announce;
(ii) Has a maximum net output of less
than 5 megawatts (MW) (as measured in
alternating current (AC)); and
(iii) Is described in at least one of
the four categories described in section
48E(h)(2)(A)(iii) and paragraph (b)(2) of
this section.
(2) Facility categories—(i) Category
1 facility. A facility is a Category 1 facil-
ity if it is located in a low-income com-
munity. The term low-income community
generally is defined under section 45D(e)
(1) of the Code as any population census
tract for which the poverty rate is at least
20 percent based on the most recently
released American Community Survey
(ACS) low-income community data cur-
rently used for the New Markets Tax
Credit (NMTC) under section 45D, or, in
the case of a tract not located within a met-
ropolitan area, the median family income
for such tract does not exceed 80 percent
of statewide median family income, or, in
the case of a tract located within a metro-
politan area, the median family income for
such tract does not exceed 80 percent of the
greater of statewide median family income
or the metropolitan area median family
income. The term low-income community
also includes the modifications in section
45D(e)(4) and (5) for tracts with low pop-
ulation and modification of the income
requirement for census tracts with high
migration rural counties. Low-income
community information for NMTC can be
found at https://www.cdfifund.gov/cims3.
For purposes of this paragraph (b)(2)(i),
if updated ACS low-income community
data is released for the NMTC program,
a taxpayer can choose to base the poverty
rate for any population census tract on
either the prior version of the ACS low-in-
come community data for the NMTC
program or the updated ACS low-income
community data for the NMTC program
for a period of 1 year following the date
of the release of the updated data. After
the 1-year transition period, the updated
ACS low-income community data for the
NMTC program must be used to deter-
mine the poverty rate for any population
census tract. Population census tracts that
satisfy the definition of low-income com-
munity at the time of application are con-
sidered to continue to meet the definition
of low-income community for the dura-
tion of the recapture period described in
paragraph (n)(1) of this section unless the
location of the facility changes.
(ii) Category 2 facility. A facility is a
Category 2 facility if it is located on Indian
land. The term Indian land is defined in
section 2601(2) of the Energy Policy Act
of 1992 (25 U.S.C. 3501(2)).
(iii) Category 3 facility. A facility is a
Category 3 facility if it is part of a quali-

Bulletin No. 2024–38 625 September 16, 2024
fied low-income residential building proj-
ect. A facility will be treated as part of a
qualified low-income residential building
project if such facility is installed on a
residential rental building that participates
in a covered housing program or other
affordable housing program described in
section 48E(h)(2)(B)(i) (Qualified Res-
idential Property) and the financial ben-
efits of the electricity produced by such
facility are allocated equitably among the
occupants of the dwelling units of such
building as provided in paragraph (e) of
this section. A Qualified Residential Prop-
erty could either be a multifamily rental
property or single-family rental property.
However, the building, and not merely
the tenants, must participate in a covered
housing program or other affordable hous-
ing program described in section 48E(h)
(2)(B)(i). A facility does not need to be
installed directly on the building to be
considered installed on a Qualified Resi-
dential Property if the facility is installed
on the same or an adjacent parcel of land
as the Qualified Residential Property, and
the other requirements to be a Category 3
facility are satisfied.
(iv) Category 4 facility. A facility is a
Category 4 facility if it is part of a quali-
fied low-income economic benefit project.
A facility will be treated as part of a qual-
ified low-income economic benefit proj-
ect if, as provided in paragraph (f) of this
section, at least 50 percent of the financial
benefits of the electricity produced by
such facility are provided to households
with income of less than—
(A) Two-hundred percent of the pov-
erty line (as defined in section 36B(d)(3)
(A) of the Code) applicable to a family of
the size involved; or
(B) Eighty percent of area median
gross income (as determined under sec-
tion 142(d)(2)(B) of the Code).
(3) Less than five megawatts require-
ment—(i) In general. For purposes of this
paragraph (b), the less than five mega-
watts requirement is measured at the level
of the applicable facility in accordance
with section 48E(h)(2)(A)(ii). The maxi-
mum net output of an applicable facility
is measured only by nameplate generating
capacity of the applicable facility, which
includes only functionally interdependent
components of property that are owned by
the taxpayer, that are operated together,
and that can operate apart from other
property to produce electricity, at the time
the applicable facility is placed in service.
Components of property are functionally
interdependent if the placing in service of
each component is dependent upon plac-
ing in service other components to pro-
duce electricity.
(ii) Nameplate capacity for purposes of
the less than five megawatts requirement.
The determination of whether an appli-
cable facility has a maximum net output
of less than 5 MW (as measured in AC)
is based on the nameplate capacity of the
applicable facility. The nameplate capac-
ity for purposes of the less than five mega-
watts requirement is the maximum elec-
trical generating output in MW that the
applicable facility is capable of producing
on a steady state basis and during contin-
uous operation under standard conditions,
as measured by the manufacturer and con-
sistent with the definition of nameplate
capacity provided in 40 CFR 96.202. If
applicable, the International Standard
Organization conditions should be used to
measure the maximum electrical generat-
ing output of an applicable facility.
(c) Eligible property. Eligible property
means a qualified investment (as defined
in section 48E(b)) with respect to any
applicable facility.
(d) Location—(1) In general. An
applicable facility is treated as located in
a low-income community or located on
Indian land under section 48E(h)(2)(A)
(iii)(I) if the applicable facility satisfies
the Nameplate Capacity Test for Location
of paragraph (d)(2) of this section. Sim-
ilarly, an applicable facility is treated as
located in a geographic area under the
Additional Selection Criteria described in
paragraph (h) of this section if it satisfies
the Nameplate Capacity Test for Location.
(2) Nameplate Capacity Test for Loca-
tion. An applicable facility is considered
located in or on the relevant geographic
area described in paragraph (d)(1) of this
section if 50 percent or more of the appli-
cable facility’s nameplate capacity is in
a qualifying area. The percentage of an
applicable facility’s nameplate capacity
(as defined in paragraph (d)(3) of this sec-
tion) that is in a qualifying area is deter-
mined by dividing the nameplate capacity
of the applicable facility’s electricity-gen-
erating units that are located in the quali-
fying area by the total nameplate capacity
of all the electricity-generating units of
the applicable facility.
(3) Nameplate capacity for purpose of
Nameplate Capacity Test for Location.
Nameplate capacity for an electricity gen-
erating unit means the maximum electri-
cal output that the applicable facility 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. If applicable, the Inter-
national Standard Organization conditions
should be used to measure the maximum
electrical generating output. For purposes
of assessing the Nameplate Capacity Test,
electricity-generating units that generate
direct current (DC) power before con-
verting to AC (for example, solar photo-
voltaic), should use nameplate capacity in
DC, otherwise the nameplate capacity in
AC should be used.
(e) Financial benefits for a Category
3 facility—(1) In general. To satisfy the
requirements of a Category 3 facility as
provided in paragraph (b)(2)(iii) of this
section, the financial benefits of the elec-
tricity produced by the facility must be
allocated equitably among the occupants
of the dwelling units of the Qualified
Residential Property. The same rules for
financial benefits for Category 3 facilities
apply to both multi-family property and
single-family Qualified Residential Prop-
erty.
(2) Threshold requirement. At least 50
percent of the financial value of the elec-
tricity produced by the facility (as defined
in paragraph (e)(3) of this section) must be
allocated equitably to the Qualified Resi-
dential Property’s occupants that are des-
ignated as low-income occupants under
the covered housing program or other
affordable housing program.
(3) Financial value of the electricity
produced by the facility. For purposes of
this paragraph (e), the financial value of
the electricity produced by the facility is
defined as the greater of:
(i) 25 percent of the gross financial
value (as defined in paragraph (e)(4) of
this section) of the annual electricity pro-
duced by the applicable facility; or
(ii) The net financial value (as defined
in paragraph (e)(5) of this section) of the

September 16, 2024 626 Bulletin No. 2024–38
annual electricity produced by the appli-
cable facility.
(4) Gross financial value. For purposes
of this paragraph (e), gross financial value
of the annual electricity produced by the
applicable facility is calculated as the sum
of:
(i) The total self-consumed kilo-
watt-hours produced by the applicable
facility multiplied by the Qualified Res-
idential Property’s metered volumetric
price of electricity;
(ii) The total exported kilowatt-hours
produced by the applicable facility multi-
plied by the Qualified Residential Proper-
ty’s volumetric export compensation rate
for the type of electricity produced by the
applicable facility per kilowatt-hour; and
(iii) The sale of any attributes associ-
ated with the applicable facility’s produc-
tion (including, for example, any Federal,
State, or Tribal renewable energy cred-
its or incentives), if separate from the
metered price of electricity or export com-
pensation rate.
(5) Net financial value defined—(i)
Common ownership. For purposes of this
paragraph (e), if the facility and Quali-
fied Residential Property are commonly
owned, net financial value is defined as
the gross financial value of the annual
electricity produced minus the annual
average (or levelized) cost of the applica-
ble facility over the useful life of the facil-
ity (including debt service, maintenance,
replacement reserve, capital expenditures,
and any other costs associated with con-
structing, maintaining, and operating the
facility).
(ii) Third-party ownership. For pur-
poses of this paragraph (e), if the facility
and the Qualified Residential Property
are not commonly owned and the facil-
ity owner enters into a Power Purchase
Agreement or other contract for electric-
ity services with the Qualified Residential
Property owner and/or building occupants,
net financial value is defined as the gross
financial value of the annual electricity
produced minus any payments made by
the building owner and/or building occu-
pants to the facility owner for electricity
services associated with the facility in a
given year.
(iii) Equitable allocation of financial
benefits. There are different rules to ensure
an equitable allocation of financial bene-
fits depending on whether or not financial
value is distributed to building occupants
via utility bill savings or through different
means. Previously distributed financial
benefits or investments already made to
the Qualified Residential Property are not
considered eligible financial benefits for
this purpose.
(A) If financial value distributed via
utility bill savings. If financial value is
distributed via utility bill savings, finan-
cial benefits will be considered to be
allocated equitably if at least 50 percent
of the financial value of the electricity
produced by the facility is distributed as
utility bill savings in equal shares to each
building dwelling unit among the Quali-
fied Residential Property’s occupants that
are designated as low-income under the
covered housing program or other afford-
able housing program (described in sec-
tion 48E(h)(2)(B)(i)) or alternatively dis-
tributed in proportional shares based on
each low-income dwelling unit’s square
footage, or each low-income dwelling
unit’s number of occupants. For any
occupant(s) who choose to not receive
utility bill savings (for example, exercise
their right to not participate in or to opt
out of a community solar subscription
in applicable jurisdictions), the portion
of the financial value that would other-
wise be distributed to non-participating
occupants must be distributed instead to
all participating occupants. No less than
50 percent of the Qualified Residential
Property’s occupants that are designated
as low-income must participate and
receive utility bill savings for the facility
to use this method of benefit distribution.
In the case of a solar facility, applicants
must follow the Department of Housing
and Urban Development (HUD) guid-
ance on Treatment of Financial Benefits
to HUD-Assisted Tenants Resulting from
Participation in Solar Programs Notice
(Housing Notice 2023-09), located at
https://www.hud.gov/sites/dfiles/
OCHCO/documents/2023-09hsgn.pdf,
or future HUD guidance, or other guid-
ance or notices from the Federal agency
that oversees the applicable housing pro-
gram identified in section 48E(h)(2)(B)
to ensure that tenants’ annual income for
rent calculations or other requirements
impacting total tenant payment are not
negatively impacted by the distribution
of financial value. Applicants should
apply similar principles in the case of any
other applicable facility.
(B) If financial value is not distributed
via utility bill savings. If financial value
is not distributed via utility bill savings,
financial benefits will be considered to
be allocated equitably if at least 50 per-
cent of the financial value of the electric-
ity produced by the facility is distributed
to occupants using one or more methods
described in Housing Notice 2023-09 for
a master-metered building, or future HUD
guidance, or other guidance or notices
from the Federal agency that oversees
the applicable housing program identi-
fied in section 48E(h)(2)(B). In the case
of a solar facility, applicants must com-
ply with HUD guidance, or future HUD
guidance, for how residents of master-me-
tered HUD-assisted housing can benefit
from owners’ sharing of financial benefits
accrued from an investment in solar elec-
tricity generation to ensure that tenants’
utility allowances and annual income
for rent calculations are not negatively
impacted. Applicants should apply similar
principles in the case of any other applica-
ble facility.
(6) Benefits sharing statement—(i) In
general. The facility owner must prepare
a Benefits Sharing Statement, which must
include:
(A) A calculation of the facility’s gross
financial value using the method described
paragraph (e)(4) of this section;
(B) A calculation of the facility’s net
financial value using the method described
in paragraph (e)(5) of this section;
(C) A calculation of the financial value
required to be distributed to building
occupants using the method described in
paragraph (e)(3) of this section;
(D) A description of the means through
which the required financial value will be
distributed to building occupants; and
(E) If the facility and Qualified Resi-
dential Property are separately owned,
specify the entity that will be responsible
for the distribution of benefits to the occu-
pants.
(ii) Notification requirement. The Qual-
ified Residential Property owner must
formally notify the occupants of units in
the Qualified Residential Property of the
development of the facility and planned
distribution of benefits.

Bulletin No. 2024–38 627 September 16, 2024
(f) Financial benefits for a Category
4 facility—(1) In general. To satisfy the
requirements of a Category 4 facility as
provided in paragraph (b)(2)(iv) of this
section:
(i) The facility must serve multiple
qualifying low-income households under
section 48E(h)(2)(C)(i) or (ii) (Qualifying
Household);
(ii) At least 50 percent of the facility’s
total output in kW must be assigned to
Qualifying Households; and
(iii) Each Qualifying Household must
be provided a bill credit discount rate (as
defined in paragraph (f)(2) of this section)
of at least 30 percent.
(2) Bill credit discount rate—(i) In
general. A bill credit discount rate is the
difference between the financial bene-
fit provided to a Qualifying Household
(including utility bill credits, reductions in
a Qualifying Household’s electricity rate,
or other monetary benefits accrued by the
Qualifying Household on their utility bill)
and the cost of participating in the com-
munity program (including subscription
payments for zero carbon and any other
fees or charges), expressed as a percent-
age of the financial benefit distributed to
the Qualifying Household. The bill credit
discount rate can be calculated by start-
ing with the financial benefit provided to
the Qualifying Household, subtracting all
payments made by the Qualifying House-
hold (or payments remitted on behalf of
the Qualifying Household through net
crediting, consolidated billing, or similar
arrangements) to the facility owner and
any related third parties as a condition of
receiving that financial benefit, then divid-
ing that difference by the financial benefit
distributed to the Qualifying Household.
(ii) No or nominal cost of participation.
In cases in which the Qualifying House-
hold has no or only a nominal cost of par-
ticipation, and financial benefits are deliv-
ered through a utility or government body,
the bill credit discount rate should be cal-
culated as the financial benefit provided
to a Qualifying Household (including
utility bill credits, reductions in a Qualify-
ing Household’s electricity rate, or other
monetary benefits accrued by a Qualifying
Household on their utility bill) divided by
the total value of the electricity produced
by the facility and assigned to the Quali-
fying Household (including any electricity
services, products, and credits provided in
conjunction with the electricity produced
by such facility), as measured by the util-
ity, independent system operator, or other
off-taker procuring electricity (and related
services, products, and credits) from the
facility.
(iii) Other value from electricity pro-
duction. If the facility derives financial
value from the production of electricity
in a manner such that this value cannot be
directly applied to the Qualifying House-
hold’s utility bill (for example, renewable
energy credit payments made directly to
the facility owner), than no less than 30
percent of that monetary value must also
be provided to the Qualifying Household,
either through a greater bill credit discount
on the Qualifying Household’s utility bill
than would otherwise be derived from the
method described in paragraph (f)(2)(i) of
this section or through other means.
(iv) Calculation on annual basis. In all
instances, the bill credit discount rate is
calculated on an annual basis.
(v) Examples. The provisions of this
paragraph (f)(2) may be illustrated by the
following examples:
(A) Example 1. A Qualifying Household signs
a community solar subscription agreement with the
facility owner. Each month, the facility owner will
assign a portion of the electricity generated (or its
value) by the facility to the household’s utility bill,
and the household will pay the facility owner. The
amount the household pays the facility owner can-
not exceed 70 percent of the monetary value of the
assigned generation. The remaining 30 percent is a
cost savings to the household on electricity. In this
example, over the course of the first year the facility
owner or their agent cause $180 in utility bill credits
to be placed on the Qualifying Household’s bill, and
the Qualifying Household pays $126, inclusive of
any upfront fees. The subsequent year, due to vari-
ation in solar generation and/or the compensation
paid by the utility for solar generation, the facility
owner, in accordance with the community solar sub-
scription agreement, causes $240 in bill credits to be
provided to the Qualifying Household’s bill and the
household pays $168. In each year of facility opera-
tion described within this example, a bill credit dis-
count rate of 30 percent is maintained (($180 - $126)
/ $180 = 30%) and (($240 -$168) / $240 = 30%),
respectively.
(B) Example 2. Due to the regulatory structure
of the applicable jurisdiction or program, the terms
of the community solar subscription, the use of a
net-crediting mechanism, or other reason, the Qual-
ifying Household does not make a direct payment
to the facility owner, but rather payment is remitted
on their behalf by the utility. In this example, over
the course of the first year the facility owner or their
agent cause $200 in utility bill credits to be placed
on the Qualifying Household’s bill, and the Quali-
fying Household’s utility remits $126 to the facility
owner, inclusive of any upfront fees. The subsequent
year, due to variation in solar generation and/or the
compensation paid by the utility for solar generation,
the facility owner, in accordance with the commu-
nity solar subscription agreement, causes $240 in bill
credits to be provided to the Qualifying Household’s
bill and the utility remits $168 to the facility owner.
In each year of facility operation described within
this example, a bill credit discount rate of 30 per-
cent is maintained (($180 - $126) / $180 = 30%) and
(($240 -$168) / $240 = 30%), respectively.
(C) Example 3. Assume the facility is part of a
program by which the financial benefits are deliv-
ered to Qualifying Households through a utility or
government body, and each Qualifying Household
pays no cost to participate. Assume that the total
annual financial benefit for a Qualifying Household
is $180 in the first year and $240 in the second year.
Assume further that the value of the electricity pro-
duced by the facility and assigned to the Qualifying
Household though a utility or government body, as
measured by the utility, independent system oper-
ator, or other off-taker procuring the electricity, is
$600 in the first year and $800 in the second year. In
this case, the bill credit discount rate is 30 percent in
each year (($600 x 30% = $180) and ($800 x 30% =
$240), respectively).
(3) Low-income verification—(i) In
general. To establish that financial bene-
fits are provided to Qualifying Households
as provided in paragraph (f)(1) of this sec-
tion, applicants must, in accordance with
guidance published in the Internal Reve-
nue Bulletin, submit documentation upon
placing the applicable facility in service.
A Qualifying Household’s low-income
status is determined at the time the house-
hold enrolls in the subscription program
and does not need to be re-verified.
(ii) Methods of verification. Applicants
may use categorical eligibility or other
income verification methods to establish
that a household is a Qualifying House-
hold.
(A) Categorical eligibility. Categorical
eligibility consists of obtaining proof of
the household’s participation in a needs-
based Federal, State, Tribal, or utility pro-
gram with income limits at or below the
qualifying income level required to be a
Qualifying Household. Federal programs
may include, but are not limited to: Med-
icaid, Low-Income Home Energy Assis-
tance Program (LIHEAP) administered by
the Department of Health and Human Ser-
vices, Weatherization Assistance Program
(WAP) administered by the Department
of Energy (DOE), Supplemental Nutri-
tion Assistance Program (SNAP) admin-
istered by the Department of Agriculture
(USDA), Section 8 Project-Based Rental

September 16, 2024 628 Bulletin No. 2024–38
Assistance, the Housing Choice Voucher
Program administered by HUD, the Fed-
eral Communication Commission’s Life-
line Support for Affordable Communica-
tions, the National School Lunch Program
administered by the USDA, the Supple-
mental Security Income Program admin-
istered by the Social Security Adminis-
tration, and any verified government or
non-profit program serving Asset Limited
Income Constrained Employed (ALICE)
persons or households. With respect to
the Federal programs listed previously an
individual in the household must currently
be approved for assistance from or partic-
ipation in the program with an award let-
ter or other written documentation within
the last 12 months for enrollment in that
program to establish categorical eligibil-
ity of the household. State agencies can
also provide verification that a household
is a Qualifying Household if the house-
hold participates in a State’s solar or other
energy program and income limits for
such program are at or below the qualify-
ing income level required to be a Quali-
fying Household. The qualifying income
level for a Qualifying Household is based
on where such household is located.
(B) Other income verification meth-
ods. Paystubs, Federal or State tax returns,
or income verification through crediting
agencies and commercial data sources can
be used to establish that a household is a
Qualifying Household.
(C) Impermissible verification method.
A self-attestation from a household is not
a permissible method to establish a house-
hold is a Qualifying Household. This pro-
hibition on direct self-attestation from a
household does not extend to categorical
eligibility for needs-based Federal, State,
Tribal, or utility programs with income
limits that rely on self-attestation for veri-
fication of income.
(g) Annual Capacity Limitation—(1)
In general. Under section 48E(h)(4)(C),
the total annual Capacity Limitation is 1.8
gigawatts of DC capacity for each calendar
year of the Program. The annual Capac-
ity Limitation for each Program year is
divided across the four facility categories
described in section 48E(h)(2)(A)(iii) and
paragraph (b)(2) of this section as pro-
vided in guidance published in the Inter-
nal Revenue Bulletin. The Capacity Lim-
itation for each Program year is divided
across the four facility categories based
on factors such as the anticipated number
of applications that are expected for each
category and the amount of Capacity Lim-
itation that needs to be reserved for each
category to encourage market participa-
tion in each category consistent with stat-
utory intent and the goals of the Program.
After the Capacity Limitation for each
facility category is established in guid-
ance published in the Internal Revenue
Bulletin, it may be reallocated later across
facility categories and sub-reservation in
the event one category or sub-reservation
is oversubscribed and another has excess
capacity. A facility category or sub-res-
ervation is oversubscribed if it receives
qualified applications in excess of Capac-
ity Limitation reserved for the facility cat-
egory or sub-reservation.
(2) Carryover of unallocated Annual
Capacity Limitation. If the Annual Capac-
ity Limitation for any calendar year
exceeds the aggregate amount of Annual
Capacity Limitation allocated for a cal-
endar year under paragraph (g)(1) of this
section, the Annual Capacity Limitation
for the succeeding calendar year will be
increased by the amount of such excess.
No amount of Capacity Limitation may
be carried to any calendar year after the
third calendar year following the applica-
ble year (as defined in section 45Y(d)(3)
of the Code).
(h) Reservations of Capacity Limita-
tion allocation for facilities that meet cer-
tain Additional Selection Criteria—(1) In
general. At least 50 percent of the total
Capacity Limitation in each facility cat-
egory described in paragraph (b) of this
section will be reserved for qualified facil-
ities meeting the Additional Selection Cri-
teria described in paragraph (h)(2) of this
section (relating to ownership criteria) and
paragraph (h)(3) of this section (relating to
geographic criteria) as provided in guid-
ance published in the Internal Revenue
Bulletin. Future guidance published in the
Internal Revenue Bulletin will provide the
amounts reserved for each Program year.
The procedure for using these Additional
Selection Criteria is provided in guidance
published in the Internal Revenue Bulle-
tin. After the reservation of Capacity Lim-
itation for qualified facilities meeting the
Additional Selection Criteria described in
paragraphs (h)(2) and (3) of this section
is established in guidance published in
the Internal Revenue Bulletin, it may be
reallocated later across facility categories
and sub-reservations in the event one cat-
egory or sub-reservation within a category
is oversubscribed and another has excess
capacity.
(2) Ownership criteria—(i) In general.
The ownership criteria are based on char-
acteristics of the applicant that owns the
applicable facility. An applicable facility
will meet the ownership criteria if it is
owned by one of the following:
(A) A Tribal enterprise (as defined in
paragraph (h)(2)(iii) of this section);
(B) An Alaska Native Corporation (as
defined in paragraph (h)(2)(iv) of this sec-
tion);
(C) A Native Hawaiian Organization
(as defined in paragraph (h)(2)(v) of this
section);
(D) A renewable energy cooperative
(as defined in paragraph (h)(2)(vi) of this
section); or
(E) A qualified tax-exempt entity (as
defined in paragraph (h)(2)(vii) of this
section).
(ii) Indirect ownership—(A) Disre-
garded entities. If an applicant wholly
owns an entity that is the owner of an
applicable facility, and the entity is dis-
regarded as separate from its owner for
Federal income tax purposes (disregarded
entity), then the applicant, and not the dis-
regarded entity, is treated as the owner of
the applicable facility for purposes of the
ownership criteria.
(B) Partner qualifying partnership
under ownership criteria. If an appli-
cant is an entity treated as a partnership
for Federal income tax purposes, and an
entity described in paragraphs (h)(2)(i)(A)
through (E) of this section owns at least
a one percent interest (either directly or
indirectly) in each material item of part-
nership income, gain, loss, deduction, and
credit and is a managing member or gen-
eral partner (or similar title) under State or
Tribal law of the partnership (or directly
owns 100 percent of the equity interests
in the managing member or general part-
ner) at all times during the existence of the
partnership, the applicable facility will be
deemed to meet the ownership criteria. If
the partnership becomes the owner of the
facility after an allocation is made to an
entity described in paragraphs (h)(2)(i)(A)

Bulletin No. 2024–38 629 September 16, 2024
through (E) of this section, then the trans-
fer of the facility to the partnership is not
a disqualification event for purposes of
paragraph (m)(5) of this section, so long
as the requirements of paragraph (m)(5)
of this section are satisfied. The original
applicant and the successor partnership
should refer to guidance published in the
Internal Revenue Bulletin for the proce-
dures to request a transfer of the Capac-
ity Limitation allocation to the successor
partnership.
(iii) Tribal enterprise. A Tribal enter-
prise for purposes of the ownership crite-
ria is an entity that is:
(A) Owned at least 51 percent directly
by an Indian Tribal government (as
defined in section 30D(g)(9) of the Code),
or owned at least 51 percent indirectly
through a corporation that is wholly
owned by the Indian Tribal government
and is created under either the Tribal
laws of the Indian Tribal government or
through a corporation incorporated under
the authority of either section 17 of the
Indian Reorganization Act of 1934, 25
U.S.C. 5124, or section 3 of the Oklahoma
Indian Welfare Act, 25 U.S.C. 5203; and
(B) Subject to Tribal government rules,
regulations, and/or codes that regulate the
operations of the entity.
(iv) Alaska Native Corporation. An
Alaska Native Corporation for purposes
of the ownership criteria is defined in sec-
tion 3 of the Alaska Native Claims Settle-
ment Act, 43 U.S.C. 1602(m).
(v) Native Hawaiian Organization. A
Native Hawaiian Organization for pur-
poses of the ownership criteria is defined
in 13 CFR 124.3.
(vi) Renewable energy cooperative.
A renewable energy cooperative for pur-
poses of the ownership criteria is an entity
that develops applicable facilities and is
either:
(A) A consumer or purchasing coop-
erative controlled by its members with
each member having an equal voting right
and with each member having rights to
profit distributions based on patronage as
defined by proportion of volume of elec-
tricity or energy credits purchased (kWh),
volume of financial benefits delivered ($),
or volume of financial payments made
($); and in which at least 50 percent of
the patronage in the qualified facility is
by cooperative members who are low-in-
come households (as defined in section
48E(h)(2)(C)); or
(B) A worker cooperative controlled
by its worker-members with each member
having an equal voting right.
(vii) Qualified tax-exempt entity. A
qualified tax-exempt entity for purposes
of the ownership criteria is:
(A) An organization exempt from the
tax imposed by subtitle A by reason of
being described in section 501(c)(3) or
section 501(d) of the Code;
(B) Any State, the District of Colum-
bia, or political subdivision thereof, or
any agency or instrumentality of any of
the foregoing;
(C) An Indian Tribal government (as
defined in section 30D(g)(9)), a politi-
cal subdivision thereof, or any agency or
instrumentality of any of the foregoing; or
(D) Any corporation described in sec-
tion 501(c)(12) operating on a cooperative
basis that is engaged in furnishing electric
energy to persons in rural areas.
(3) Geographic criteria—(i) In gen-
eral. Geographic criteria do not apply to
Category 2 facilities. To meet the geo-
graphic criteria, a facility must be located
in a county or census tract that is described
in paragraph (h)(3)(ii) or (iii) of this sec-
tion. Applicants who meet the geographic
criteria at the time of application are con-
sidered to continue to meet the geographic
criteria for the duration of the recapture
period unless the location of the facility
changes.
(ii) Persistent Poverty County. A Per-
sistent Poverty County (PPC), which
is, generally, described as any county in
which 20 percent or more of residents
have experienced high rates of poverty
over the past 30 years. For purposes of the
Program, the PPC measure adopted by the
USDA is used to make this determination.
If updated data is released by USDA, a
taxpayer will have a 1-year period follow-
ing the date of the release of the updated
data to be eligible under the previous data.
After the 1-year transition period, the
updated data must be used to determine
eligibility.
(iii) Certain census tracts under Cli-
mate and Economic Justice Screening
Tool. A census tract that is described in the
latest official Climate and Economic Jus-
tice Screening Tool (CEJST), as greater
than or equal to the 90th percentile for
energy burden and greater than or equal to
the 65th percentile for low income, or as
greater than or equal to the 90th percen-
tile for PM2.5 exposure and greater than
or equal to the 65th percentile for low
income.
(A) Energy burden. Energy burden
is defined as average household annual
energy cost in dollars divided by the aver-
age household income.
(B) PM2.5. PM2.5 is defined as fine
inhalable particles with 2.5 or smaller
micrometer diameters. The percentile is
the weight of the particles per cubic meter.
(C) Low-income. Low income, for
purposes of this section, is defined as the
percent of a census tract’s population in
households for which household income
is at or below 200 percent of the Fed-
eral poverty level, not including students
enrolled in higher education.
(i) Sub-reservations of allocation for
Category 1 facilities—(1) In general.
Capacity Limitation reserved for Cate-
gory 1 facilities will be subdivided each
Program year for facilities seeking a Cat-
egory 1 allocation with Capacity Lim-
itation reserved specifically for eligible
residential behind the meter (BTM) facil-
ities, including rooftop solar. The remain-
ing Capacity Limitation is available for
applicants with front of the meter (FTM)
facilities as well as non-residential BTM
facilities. The specific sub-reservation
for eligible residential BTM facilities in
Category 1 is provided in guidance pub-
lished in the Internal Revenue Bulletin
and is established based on factors such as
promoting efficient allocation of Capac-
ity Limitation and allowing like-projects
to compete for an allocation. After the
sub-reservation is established in guidance
published in the Internal Revenue Bulle-
tin, it may be reallocated later in the event
it has excess capacity.
(2) Definitions—(i) Behind the meter
(BTM) facility. For purposes of the Pro-
gram, an applicable facility is BTM if:
(A) It is connected with an electrical
connection between the facility and the
panelboard or sub-panelboard of the site
where the facility is located;
(B) It is to be connected on the cus-
tomer side of a utility service meter before
it connects to a distribution or transmis-
sion system (that is, before it connects to
the electricity grid); and

September 16, 2024 630 Bulletin No. 2024–38
(C) Its primary purpose is to provide
electricity to the utility customer of the
site where the facility is located. This also
includes systems not connected to a grid
and that may not have a utility service
meter, and whose primary purpose is to
serve the electricity demand of the owner
of the site where the system is located.
(ii) Eligible residential BTM facil-
ity. For purposes of paragraph (i)(1) of
this section, an eligible residential BTM
facility is defined as a single-family or
multi-family residential applicable facility
that does not meet the requirements for a
Category 3 facility and is BTM. An appli-
cable facility is residential if it uses energy
to generate electricity for use in a dwelling
unit that is used as a residence.
(iii) FTM facility. For purposes of the
Program, an applicable facility is FTM
if it is directly connected to a grid and its
primary purpose is to provide electricity
to one or more offsite locations via such
grid or utility meters with which it does
not have an electrical connection; alterna-
tively, a FTM facility is defined as a facil-
ity that is not a BTM facility. For the pur-
pose of Category 4 facilities, an applicable
facility is also FTM if 50 percent or more
of its electricity generation on an annual
basis is exported physically to the broader
electricity grid.
(j) Process of application evaluation—
(1) In general. Applications for a Capac-
ity Limitation allocation will be evaluated
according to the procedures specified in
guidance published in the Internal Reve-
nue Bulletin. If a facility category is over-
subscribed, a lottery system may be used
to allocate Capacity Limitation to simi-
larly situated applicants.
(2) Information required as part of
application. With each application for a
Capacity Limitation allocation, applicants
are required to submit information, docu-
mentation, and attestations to demonstrate
eligibility for an allocation and project
viability as specified in guidance pub-
lished in the Internal Revenue Bulletin.
(3) No administrative appeal of Capac-
ity Limitation allocation decisions. An
applicant may not administratively appeal
decisions regarding Capacity Limitation
allocations.
(k) Placed in service—(1) Require-
ment to report date placed in service. For
any facility that receives an allocation
of Capacity Limitation, the owner of the
facility must report to the DOE the date
the eligible property was placed in ser-
vice. This report is made through the same
portal used to submit the original applica-
tion for allocation.
(2) Requirement to submit final eligibil-
ity information at placed in service time.
At the time that the owner reports that eli-
gible property has been placed in service,
the owner also must confirm information
about the facility and submit additional
documentation to prove the facility is still
eligible to maintain the allocation and the
increased applicable percentage under
section 48E(h)(1) as specified in guidance
published in the Internal Revenue Bulle-
tin.
(3) DOE confirmation. The DOE will
review the placed in service documenta-
tion and attestations to determine if the
facility meets the eligibility criteria for
the owner to claim an increased applica-
ble percentage. The DOE then provides
a recommendation to the IRS regarding
whether the facility continues to meet
the eligibility requirements for the facil-
ity to retain its allocation or if the facil-
ity should be disqualified (as provided in
paragraph (m) of this section). Based on
the DOE’s recommendation and under-
lying facts and circumstances analysis,
the IRS will decide whether the facility
should retain its allocation or if the facil-
ity should be disqualified and will notify
the DOE of its decision. Each applicant
must receive confirmation from the IRS
that the DOE has reviewed the placed in
service submissions, and that eligibility
is confirmed, prior to the owner (or a
partner or shareholder in the case of a
partnership or S corporation) claiming
the increased credit amount on Form
3468, Investment Credit (or Form 3800,
General Business Credit), or successor
form, or, if eligible, making a transfer
election under section 6418 of the Code,
or an elective payment election under
section 6417 of the Code.
(4) Definition of placed in service. For
purposes of this section, eligible property
is considered placed in service in the ear-
lier of the following taxable years:
(i) The taxable year in which, under
the taxpayer’s depreciation practice, the
period for depreciation with respect to
such eligible property begins; or
(ii) The taxable year in which the eli-
gible 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.
(l) Facilities placed in service prior
to an allocation award—(1) In general.
Applicable facilities must be placed in
service after being awarded an allocation
of Capacity Limitation.
(2) Rejection or rescission. An applica-
tion for an applicable facility that is placed
in service prior to submission of the appli-
cation will be rejected. If a facility is
placed in service after the application is
submitted, but prior to the allocation of
Capacity Limitation, and the facility is
awarded an allocation, the allocation will
be rescinded.
(m) Disqualification. A facility will
be disqualified and lose its allocation if
prior to or upon the facility being placed
in service an occurrence described in one
of paragraphs (m)(1) through (5) of this
section takes place.
(1) The location where the facility will
be placed in service changes.
(2) The maximum net output of the
facility increases such that it exceeds
the less than five megawatts AC require-
ment provided in section 48E(h)(2)(A)(ii)
or the nameplate capacity decreases by
the greater of 2 kW or 25 percent of the
Capacity Limitation awarded in the allo-
cation.
(3) The facility cannot satisfy the finan-
cial benefits requirements under section
48E(h)(2)(B)(ii) and paragraph (e) of this
section as planned, if applicable, or cannot
satisfy the financial benefits requirements
under section 48E(h)(2)(C) or paragraph
(f) of this section as planned, if applicable.
(4) The eligible property that is part
of the facility that received the Capacity
Limitation allocation is not placed in ser-
vice within four years after the date the
applicant was notified of the allocation of
Capacity Limitation to the facility.
(5) The facility received a Capacity
Limitation allocation based, in part, on
meeting the ownership criteria and own-
ership of the facility changes prior to the
facility being placed in service, unless the
original applicant transfers the facility to
an entity treated as a partnership for Fed-
eral income tax purposes and retains at

Bulletin No. 2024–38 631 September 16, 2024
least a one percent interest (either directly
or indirectly) in each material item of part-
nership income, gain, loss, deduction, and
credit of such partnership and is a manag-
ing member or general partner (or similar
title) under State or Tribal law of the part-
nership (or directly owns 100 percent of
the equity interests in the managing mem-
ber or general partner) at all times during
the existence of the partnership.
(n) Recapture of section 48E(h)
Increase to the section 48E(a) credit—(1)
In general. Section 48E(h)(5) provides for
recapturing the benefit of any increase in
the credit allowed under section 48E(a)
by reason of section 48E(h) with respect
to any property that ceases to be property
eligible for such increase (but that does
not cease to be investment credit property
within the meaning of section 50(a) of the
Code). Section 48E(h) provides that the
period and percentage of such recapture
must be determined under rules similar
to the rules of section 50(a). Therefore,
if, at any time during the five year recap-
ture period beginning on the date that an
applicable facility under section 48E(h)
is placed in service, there is a recapture
event under paragraph (n)(3) of this sec-
tion with respect to such property, then
the Federal income tax imposed on the
taxpayer by chapter 1 of the Code for the
taxable year in which the recapture event
occurs is increased by the recapture per-
centage of the benefit of the increase in the
section 48E credit. The recapture percent-
age is determined according to the table
provided in section 50(a)(1)(B).
(2) Exception to application of recap-
ture. Such recapture may not apply
with respect to any property if, within
12 months after the date the applicant
becomes aware (or reasonably should
have become aware) of such property
ceasing to be property eligible for such
increase in the credit allowed under sec-
tion 48E(a), the eligibility of such prop-
erty for such increase pursuant to section
48E(h) is restored. Such restoration of an
increase pursuant to section 48E(h) is not
available more than once with respect to
any facility.
(3) Recapture events. Any of the fol-
lowing circumstances result in a recapture
event if the property ceases to be eligi-
ble for the increased credit under section
48E(h):
(i) Property described in section 48E(h)
(2)(A)(iii)(II) fails to provide financial
benefits;
(ii) Property described under section
48E(h)(2)(B) ceases to allocate the finan-
cial benefits equitably among the occu-
pants of the dwelling units, such as not
allocating to residents the required net
electricity savings of the electricity, as
required by paragraph (e) of this section;
(iii) Property described under section
48E(h)(2)(C) ceases to provide at least
50 percent of the financial benefits of the
electricity produced to qualifying house-
holds as described under section 48E(h)
(2)(C)(i) or (ii), or fails to provide those
households the required minimum 30 per-
cent bill credit discount rate, as required
by paragraph (f) of this section;
(iv) For property described under sec-
tion 48E(h)(2)(B), the residential rental
building the facility is a part of ceases to
participate in a covered housing program
or any other affordable housing program
described in section 48E(h)(2)(B)(i), as
applicable; or
(v) A facility increases its maximum net
output or nameplate capacity such that the
facility’s maximum net output or name-
plate capacity is 5 MW AC or greater.
(4) Section 50(a) recapture. Any event
that results in recapture under section
50(a) also will result in recapture of the
benefit of the increase in the section 48E
credit by reason of section 48E(h). The
exception to the application of recapture
provided in paragraph (n)(2) of this sec-
tion does not apply in the case of a recap-
ture event under section 50(a).
(o) Applicability date. This section
applies to qualified facilities placed in ser-
vice after December 31, 2024, and during a
taxable year ending after [the date the final
regulations are filed for public inspection
by the Office of the Federal Register].
Douglas W. O’Donnell,
Deputy Commissioner.
(Filed by the Office of the Federal Register August 30,
2024, 8:45 a.m., and published in the issue of the Fed-
eral Register for September 03, 2024, 89 FR 71193)

Bulletin No. 2024–38 i September 16, 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.

September 16, 2024 ii Bulletin No. 2024–38
Numerical Finding List
1
Bulletin 2024–38
Announcements:
2024-26, 2024-27 I.R.B. 14
2024-27, 2024-27 I.R.B. 14
2024-28, 2024-28 I.R.B. 39
2024-29, 2024-29 I.R.B. 71
2024-31, 2024-34 I.R.B. 533
2024-32, 2024-35 I.R.B. 535
2024-30, 2024-36 I.R.B. 581
Notices:
2024-47, 2024-27 I.R.B. 1
2024-52, 2024-27 I.R.B. 2
2024-53, 2024-27 I.R.B. 4
2024-54, 2024-28 I.R.B. 24
2024-55, 2024-28 I.R.B. 31
2024-56, 2024-29 I.R.B. 64
2024-57, 2024-29 I.R.B. 67
2024-58, 2024-30 I.R.B. 120
2024-59, 2024-32 I.R.B. 348
2024-60, 2024-34 I.R.B. 515
2024-61, 2024-34 I.R.B. 520
2024-62, 2024-36 I.R.B. 570
2024-63, 2024-36 I.R.B. 573
Proposed Regulations:
REG-124593-23, 2024-28 I.R.B. 40
REG-109032-23, 2024-31 I.R.B. 332
REG-120137-19, 2024-31 I.R.B. 336
REG-119283-23, 2024-32 I.R.B. 351
REG-102161-23 2024-33 I.R.B. 502
REG-103529-23, 2024-33 I.R.B. 512
REG-105128-23, 2024-35 I.R.B. 536
REG-108920-24, 2024-38 I.R.B. 607
Revenue Procedures:
2024-26, 2024-27 I.R.B. 7
2024-29, 2024-30 I.R.B. 121
2024-30, 2024-30 I.R.B. 183
2024-27, 2024-31 I.R.B. 300
2024-28, 2024-31 I.R.B. 326
2024-32, 2024-34 I.R.B. 523
2024-34, 2024-38 I.R.B. 604
Revenue Rulings:
2024-13, 2024-28 I.R.B. 18
2024-14, 2024-28 I.R.B. 18
2024-15, 2024-32 I.R.B. 340
2024-16, 2024-35 I.R.B. 534
2024-17, 2024-36 I.R.B. 568
2024-18, 2024-37 I.R.B. 584
Treasury Decisions:
10002, 2024-29 I.R.B. 56
9999, 2024-30 I.R.B. 72
10000, 2024-31 I.R.B. 185
10003, 2024-32 I.R.B. 342
10001 2024-33 I.R.B. 412
10004 2024-33 I.R.B. 489
9998 2024-34 I.R.B. 412
10005 2024-34 I.R.B. 510
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. 2024–38 iii September 16, 2024
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2024–38
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.

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Washington, DC 20224
Official Business
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