,Section 45X production tax credits (PTCs) remain
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Posted On: 07/10/2025 9:17:02 AM
,Section 45X production tax credits (PTCs) remain transferable under the One Big Beautiful Bill Act (OBBBA), but with new restrictions.
Key takeaways:
OBBBA preserves the ability to transfer Section 45X credits, which are used for advanced manufacturing of clean energy components.
However, transferability for Section 45X credits is terminated for components sold after December 31, 2027.
The OBBBA also introduces restrictions related to Foreign Entities of Concern (FEOCs) that may impact credit eligibility and transferability for Section 45X credits.
For tax years beginning after the enactment of OBBBA, the credits are unavailable to "Prohibited Foreign Entities" and "Foreign Influenced Entities" and also if a component receives "material assistance" from a Prohibited Foreign Entity or is produced under an arrangement that grants a Specified
Foreign Entity "effective control" over the production process.
While transferability remains an option, the accelerated phase-outs and restrictions related to FEOCs could reduce the overall value of these elections and impact monetization strategies.
Important Note: It's essential to consult with a tax advisor to understand how these restrictions apply to your specific situation and to navigate the complexities of claiming and transferring Section 45X credits under the new law.
icymi
Key takeaways:
OBBBA preserves the ability to transfer Section 45X credits, which are used for advanced manufacturing of clean energy components.
However, transferability for Section 45X credits is terminated for components sold after December 31, 2027.
The OBBBA also introduces restrictions related to Foreign Entities of Concern (FEOCs) that may impact credit eligibility and transferability for Section 45X credits.
For tax years beginning after the enactment of OBBBA, the credits are unavailable to "Prohibited Foreign Entities" and "Foreign Influenced Entities" and also if a component receives "material assistance" from a Prohibited Foreign Entity or is produced under an arrangement that grants a Specified
Foreign Entity "effective control" over the production process.
While transferability remains an option, the accelerated phase-outs and restrictions related to FEOCs could reduce the overall value of these elections and impact monetization strategies.
Important Note: It's essential to consult with a tax advisor to understand how these restrictions apply to your specific situation and to navigate the complexities of claiming and transferring Section 45X credits under the new law.
icymi
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