Economic Development

N.C. State Senate Introduces Bill Granting Tax Credit for "Property" Serving Renewable Energy Efforts

Last week, the North Carolina State Senate introduced a bill that seeks to extend renewable-energy tax credits applicable to eligible property — which is defined as specific “machinery and equipment or real property” — that is placed into service before the end of the calendar year 2020, at which point the proposed credit sunsets.  The bill is SB 447.

The tax credit is equal to 35% of the “costs” of the renewable energy property.  The credit is not available “to the extent the cost of the renewable energy property was provided by public funds”, excluding “grants made under section 1603 of the American 25 Recovery and Reinvestment Tax Act of 2009”.

In terms of when the credit is to be taken, in terms of “taxable year”, there are limits depending on whether the property is for business purposes or nonbusiness purposes.  In the case of renewable energy property that serves a nonbusiness purpose, the credit must be taken for the taxable year in which the property is placed in service. For all other renewable energy property, the entire credit may not be taken for the taxable year in which the property is placed in service but must  be taken in five equal installments beginning with the taxable year in which the property is placed in service.

The proposed law is entitled the Energy Investment Act, and is expected to meet a companion bill from the North Carolina State House.

Assuming a bill close to SB 447’s current form comes out of the General Assembly, it is unclear how the Governor will react.  We are reminded that the Governor’s proposed budget is favorable to tax treatment as to some renewable energy technologies, but notably excluding solar energy.

“It’s hooked up to my toaster.  So, I’m going to claim a tax credit.  Abs and money; what else is there?”

Mike Thelen practices in Womble, Carlyle’s Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

Categories: Economic Development

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