Section 45(a) provides a renewable electricity production credit for
any taxable year in an amount equal to the product of 1.5 cents multiplied
by the kilowatt-hours of electricity—
(A) produced by the taxpayer (i) from qualified energy resources, and
(ii) at a qualified facility during the credit period beginning on the date
the facility was originally placed in service; and
(B) sold by the taxpayer to an unrelated person during the taxable year.
Under § 45(b)(1), the amount of the credit determined under
§ 45(a) is reduced by an amount which bears the same ratio to the
amount of the credit (determined without regard to § 45(b)(1)) as—
(A) the amount by which the reference price for the calendar year in
which the sale occurs exceeds 8 cents, bears to
(B) 3 cents.
Under § 45(b)(2), the 1.5 cent amount in § 45(a)
is adjusted by multiplying that amount by the inflation adjustment factor
for the calendar year in which the sale occurs.
Under § 45(c)(1)(A), the term “qualified energy resource”
includes wind.
Under section 45(d)(1), in the case of a facility using wind to produce
electricity, the term “qualified facility” means any facility
owned by the taxpayer that is originally placed in service after December
31, 1993, and before January 1, 2008.
Under § 45(b)(3), the amount of the credit determined under
§ 45(a) (determined after the application of § 45(b)(1)
and (2)) with respect to any project for any taxable year (the otherwise allowable
credit for the project) is reduced if specified governmental assistance has
been provided with respect to the project. The amount of the reduction is
equal to the otherwise allowable credit for the project multiplied by the
lesser of one-half or a fraction—
(A) the numerator of which is the sum, for the taxable year and all
prior taxable years, of the specified governmental assistance provided with
respect to the project; and
(B) the denominator of which is the aggregate amount of additions to
the capital account for the project for the taxable year and all prior taxable
years.
The following governmental assistance is taken into account in determining
the numerator of the fraction:
(i) grants provided by the United States, a state, or a political subdivision
of a state for use in connection with the project;
(ii) proceeds of an issue of state or local government obligations used
to provide financing for the project the interest on which is exempt from
tax under § 103,
(iii) the aggregate amount of subsidized energy financing provided (directly
or indirectly) under a federal, state, or local program provided in connection
with the project, and
(iv) the amount of “any other credit allowable” with respect
to any property that is part of the project.
The amounts under the preceding sentence for any taxable year are determined
as of the close of the taxable year.
Neither § 45(b)(3)(A)(iv), which provides for the reduction
on account of otherwise allowable credits, nor the legislative history underlying
section 45 (H.R. Rep. No. 102-1018 (1992) (Conf. Rep.), at 404, 405, 1993-1
C.B. 273, 274) contains any reference to states or localities. Accordingly,
the term “any other credit allowable” in § 45(b)(3)(A)(iv)
will be construed to include only federal tax credits allowable under the
Code with respect to property that is part of a project, and not to include
state or local credits. Thus, Corporation P’s
§ 45 credit is not reduced under § 45(b)(3) on account
of the State X tax credits. The result would be the
same if, instead of a wind facility, Corporation P had
constructed a qualified facility using another qualified energy resource subject
to § 45(b)(3).
