Internal Revenue Bulletin 2006-11 (PDF rendition): IRS Announcements

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 200
6-11
March 13, 2006
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
T.D. 9250, page 588.
Final regulations under sections 367(a) and (b) of the Code
concern transfers pursuant to section 304(a)(1). Rev. Ruls.
91–5 and 92–86 modified.
T.D. 9251,
page 590.
Final regu
lations under section 951(a) of the Code provide spe-
cial rules
to ensure that earnings and profits of a controlled for-
eign corpo
ration attributable to a section 304 transaction will
not be allo
cated in a manner that results in the avoidance of in-
come tax a
nd to ensure that earnings and profits of a controlled
foreign c
orporation are not allocated to certain preferred stock
in a manne
r inconsistent with the economic interest that such
stock rep
resents.
Notice 2006–22, page 593.
Low-income housing tax credit; private activity bonds.
Resident populations of the 50 states, the District of Columbia,
Puerto Rico, and the insular areas are provided for purposes
of determining the 2006 calendar year (1) state housing credit
ceiling under section 42(h) of the Code, (2) private activity bond
volume cap under section 146, and (3) private activity bond
volume limit under section 142(k)(5).
Notice 2006–24, page 595.
This notice establishes the qualifying advanced coal project
program under section 48A of the Code.
Notice
2006–25, page 609.
This not
ice establishes the qualifying gasification project pro-
gram un
der section 48B of the Code.
Notice 2006–26, page 622.
This notice provides procedures that manufacturers may follow
to certify property as either an Eligible Building Envelope Com-
ponent or Qualified Energy Property, as well as guidance re-
garding the conditions under which taxpayers seeking to claim
the section 25C nonbusiness energy property credit may rely
on a manufacturer’s certification.
Notice 2006–27, page 626.
This notice provides a procedure that an eligible contractor
may follow to certify that a dwelling unit, other than a manu-
factured home, is an energy efficient home that satisfies the
requirements of sections 45L(c)(1)(A) and (B) of the Code.
Notice 2006–28, page 628.
This notice provides a procedure that an eligible contractor
may follow to certify that a manufactured home is an energy ef-
ficient home that satisfies the requirements of section 45L(c)(2)
or (3) of the Code.
ADMINISTRATIVE
Notice 2006–23, page 594.
Because Patriot’s Day falls on Monday, April 17, this notice pro-
vides individual taxpayers residing in Maine, Maryland, Massa-
chusetts, New Hampshire, New York, Vermont, and the District
of Columbia an additional day to file their federal income tax
returns and make their payments (until April 18, 2006). This
includes the payment of the first installment of estimated tax
for 2007.
Announcement 2006–15, page 632.
This document contains corrections to final and temporary reg-
ulations (T.D. 9192, 2005–15 I.R.B. 866) relating to guidance
concerning the determination of the tax attributes that are avail-
able for reduction and the method for reducing those attributes
when a member of a consolidated group excludes discharge of
indebtedness income from gross income under section 108 of
the Code.
Fi
nding 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 by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
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, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement 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 rulings 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.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al 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, Leg-
islation 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 Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d 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 c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
March 13, 20062006–11 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 367.—Foreign
Corporations
26 CFR 1.367(a)–3: Treatment of transfers of stock
or securities to foreign corporations.
T.D. 9250
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 1
Application of Section 367
in Cross Border Section
304 Transactions; Certain
Transfers of Stock Involving
Foreign Corporations
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations that address the interaction of
section 304 and section 367. These regu-
lations provide that section 367(a) and (b)
do not apply to a deemed section 351 ex-
change resulting from a section 304(a)(1)
transaction. These regulations may apply
to taxpayers transferring stock to related
foreign corporations.
DATES:Effective Date: This regulation is
effective February 21, 2006.
Applicability Dates: For dates of ap-
plicability, see §1.367(a)–3(e)(1)(G) and
§1.367(b)–6(a)(1).
FOR FURTHER INFORMATION
CONTACT: Tasheaya L. Warren Ellison,
(202) 622–3870 (not a toll-free call).
SUPPLEMENTARY INFORMATION:
Background
On May 25, 2005, the IRS and Trea-
sury published in theFederal Regis-
tera notice of proposed rulemaking
(REG–127740–04, 2005–24 I.R.B. 1254
[70 FR 30036]) under section 367(a) and
(b) of the Internal Revenue Code (pro-
posed regulations) pursuant to the regu-
latory authority under section 367. The
proposed regulations would provide that
if, pursuant to section 304(a)(1), a U.S.
person is treated as transferring stock of a
domestic or foreign corporation to a for-
eign corporation in exchange for stock of
such foreign corporation in a transaction to
which section 351(a) applies, such deemed
section 351 exchange is not a transfer to
a foreign corporation subject to section
367(a). The proposed regulations would
further provide that if, pursuant to section
304(a)(1), a foreign corporation is treated
as acquiring the stock of another foreign
corporation in a transaction to which sec-
tion 351(a) applies, such deemed section
351 exchange is not an acquisition subject
to section 367(b).
A public hearing wasnotheldwithre-
spect to the proposed regulations because
no requests to speak were received. How-
ever, several written comments were re-
ceived.
After consideration of the comments,
the proposed regulations are adopted, as
revised by this Treasury decision. The
comments received and the revisions are
discussed below.
Explanation of Provisions and
Summary of Comments
A.Nonapplication of Section 367(a) and
(b) to Deemed Section 351 Exchanges
Section 304(a)(1) generally provides
that, for purposes of sections 302 and 303,
if one or more persons are in control of
each of two corporations and in return for
property one of the corporations (the ac-
quiring corporation) acquires stock in the
other corporation (the issuing corporation)
from the person (or persons) so in control,
then such property shall be treated as a
distributioninredemption of the acquir-
ing corporation stock. To the extent the
distribution is treated as a distribution to
which section 301 applies, the transferor
and the acquiring corporation are treated
as if (1) the transferortransferred the stock
of the issuing corporation to the acquiring
corporation in exchange for stock of the
acquiring corporation in a transaction to
which section 351(a) applies, and (2) the
acquiring corporation then redeemed the
stock it is treated as having issued. Under
section 301(c)(1), the distribution is first
treated as a dividend to the extent of cer-
tain earnings and profits of the acquiring
corporation and the issuing corporation.
See sections 316 and 304(b). Then under
section 301(c)(2) and (3), the remain-
ing portion of the distribution is applied
against and reduces the adjusted basis of
the stock, and finally is treated as gain
from the sale or exchange of property.
Section 367(a)(1) provides that if, in
connection with certain nonrecognition
transactions, including section 351, a
United States person transfers property
to a foreign corporation, such foreign
corporation shall not, for purposes of de-
termining the extent to which gain shall be
recognized on such transfer, be considered
to be a corporation. In addition, certain
section 351 exchanges can cause the ex-
changing shareholder to include in income
a deemed dividend under section 367(b).
§1.367(b)–4.
Under current law, certain section
304(a)(1) transactions can also be subject
to section 367. The result of this overlap-
ping application is considerable complex-
ity, uncertainty, and the risk of multiple
income inclusions. In such a transaction, a
U.S. person could recognize income (div-
idend or capital gain) equal to the built-in
gain in the stock of the issuing corporation
under section 367, and income (dividend
or capital gain) pursuant to section 304.
The total income recognized could exceed
the fair market value of the transferred
stock of the issuing corporation.
The proposed regulations would ex-
clude from the application of sections
367(a) and (b) a deemed section 351
exchange that arises by reason of a trans-
action described in section 304(a)(1).
The IRS and the Treasury believe that
the interests of the government are pro-
tected, and the policies underlying section
367(a) and (b) are preserved, in a section
304(a)(1) transaction without regard to
the application of section 367. The IRS
and Treasury believe that, in most or all
cases, the income recognized in a section
304 transaction will equal or exceed the
2006–11 I.R.B.588March 13, 2006

transferor’s inherent gain in the stock of
the issuing corporation transferred to the
foreign acquiring corporation. Elimina-
tion of the application of section 367(a)
and (b) in this context will also serve the
interests of sound tax administration by
creating greater certainty and simplicity
in these transactions, and by avoiding the
over-inclusion of income that could result
when section 367 and section 304 both ap-
ply to such transactions. As a result, this
Treasury decision finalizes the proposed
regulations and makes section 367(a) and
(b) inapplicable to deemed section 351
exchanges pursuant to section 304(a)(1)
transactions.
Commentators did note that in certain
cases, depending on how the basis and dis-
tribution rules are applied, the amount of
income recognized under section 304(a)
may not equal or exceed the transferor’s
inherent gain in the stock of the issuing
corporation. In the example cited, P, a do-
mestic corporation, owns all the stock of
F1 and F2, both of which are foreign cor-
porations. P has an adjusted basis of $0
in its F1 stock and $100x in its F2 stock.
P’s stock of F1 and F2 each has a fair mar-
ket value of $100x. Neither F1 nor F2
has current or accumulated earnings and
profits. P sells its F1 stock to F2 for its
fair market value of $100x in a transaction
subject to section 304(a)(1). Under sec-
tion 304(a)(1), the transaction is treated as
if P had transferred its F1 stock to F2 in
exchange for F2 stock in a transaction to
which section 351(a) applies, and then F2
had redeemed such deemed issued stock.
These commentatorspositthat P in the
above example may not recognize income
or gain because the adjusted basis of both
the F2 stock that is treated as being issued
in the deemed section 351 exchange, and
the adjusted basis of the F2 stock already
held by P prior to the transaction, is avail-
able for reduction under section 301(c)(2).
On these particular facts (i.e., no earnings
and profits in either the acquiring corpora-
tion or the issuing corporation), this basis
position would mean that income or gain
is not recognized as a result of the trans-
action. The IRS and the Treasury believe,
however, that current law does not pro-
vide for the recovery of the basis of any
shares other than the basis of the F2 stock
deemed to be received by P in the sec-
tion 351(a) exchange (which would take a
basis equal to P’s basis in the F1 stock).
Thus, in the case described, P would recog-
nize $100x of gain under section 301(c)(3)
(the built-in gain on the F1 stock), and P
would continue to have a $100x basis in
its F2 stock that it holds after the transac-
tion. This issue will be addressed as part of
a larger project regarding the recovery of
basis in all redemptions treated as section
301 distributions. This larger project will
be the subject of future guidance. Com-
ments are requested about the appropriate
treatment of basis in such redemptions.
B.Adjustments under Section 304(b)(6)
Section 304(b)(6) provides that in the
case of any acquisition to which section
304(a) applies, where the acquiring or is-
suing corporation is a foreign corporation,
the Secretary shall prescribe regulations,
as appropriate, in order to eliminate a mul-
tiple inclusion of any item in income and to
provide appropriate basis adjustments (in-
cluding modifications to the application of
sections 959 and 961). The preamble to
the proposed regulations requested com-
ments on basis adjustments under section
304(b)(6). The preamble also requested
comments regarding similar adjustments
that could be made outside the context of
section 304(b)(6).
Several comments were received in re-
sponse to this request, and will be consid-
ered in a separate guidance project. The
IRS and Treasury request additional com-
ments on section 304(b)(6), particularly
comments that would take into account the
effect of section 362(e), enacted on Octo-
ber 22, 2004, by the American Jobs Cre-
ation Act of 2004 (Public Law 108–357).
Comments also were received regard-
ing the application of section 959 to pre-
viously taxed amounts in connection with
section 304(a)(1) transactions. These
comments are being considered in a sep-
arate guidance project under section 959,
and therefore are not addressed in these
final regulations.
C.Transfer of Issuing Stock in Return for
Property and Stock of Acquiring
The proposed regulations would apply
to exclude a section 351 exchange from the
application of section 367(a) only to the
extent the exchange is treated as such by
reason of section 304(a)(1). Thus, section
367(a) would continue to apply to applica-
ble transfers of property subject to section
351 by reason other than the operation of
section 304(a)(1).
One commentator notes that the pro-
posed regulations would not address the
treatment of stock sales for an amount less
than the fair market value of the trans-
ferred stock where the acquiring corpora-
tion would be deemed to issue stock to the
transferor other than as a result of the ap-
plication of section 304(a)(1). See, for ex-
ample, section 367(c)(2). The commen-
tator states that in such a case the trans-
fer would be, in part, a section 304(a)(1)
transaction and, in part, a section 351(a)
exchange (other than by reason of sec-
tion 304(a)(1)). The commentator requests
guidance on such transactions, including,
for example, whether such a transaction
would be bifurcated and, if so, how the ba-
sis in the transferred stock would be allo-
cated between the two parts of the trans-
action. The same bifurcation and related
issues occur in section 304(a)(1) transac-
tions where the acquiring corporation ac-
tually issues its own stock in partial con-
sideration for the stock of the issuing cor-
poration.
As was the case with the proposed reg-
ulations, these final regulations only apply
to the extent of deemed section 351 ex-
changes resulting from section 304(a)(1)
transactions. In addition, these regulations
could apply to certain transactions that are,
in part, still subject to the stock trans-
fer rules of section 367(a) (e.g., a section
304(a)(1) transaction in which both acquir-
ing stock and property are used as consid-
eration). The issues raised by this com-
mentator are relevant to a wide range of
transactions, and are not limited to section
304 transactions that are subject to these
regulations. As a result, the IRS and Trea-
sury believe that the resolution of these is-
sues is beyond the scope of this project,
and this comment is not addressed in these
final regulations.
D.Effective Dates
The proposed regulations stated that
the rules would apply to section 304(a)(1)
transactions occurring on or after the date
of publication of the regulations in the
Federal Register. Several commenta-
tors requested that the final regulations
be made retroactive at the election of the
taxpayer.
March 13, 20065892006–11 I.R.B.

These final regulations adopt the gen-
eral effective date contained in the pro-
posed regulations and therefore apply to
section 304(a)(1) transactions occurring
on or after February 21, 2006. In response
to the comments received, however, the fi-
nal regulations provide that taxpayers may
rely on the final regulations for all (but
not less than all) section 304(a)(1) trans-
actions that occurred in all their open tax
years; in such cases, any gain recognition
agreements filed pursuant to §1.367(a)–8
with respect to such transactions shall ter-
minate and have no further effect.
Effect on other Documents
Rev. Rul. 91–5, 1991–1 C.B. 114, and
Rev. Rul. 92–86, 1992–2 C.B. 199, are
modified to the extent inconsistent with
these regulations.
Special Analyses
The IRS and the Treasury have deter-
mined that the adoption of these regula-
tionsisnotasignificant regulatory action
as defined in Executive Order 12866.
Therefore, a regulatory assessment is not
required. It has alsobeen determined that
section 553(b) of the Administrative Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations and because
these regulations do not impose a collec-
tion of information on small entities, a
Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) does not apply. Pursuant to section
7805(f) of the Internal Revenue Code, the
notice of proposed rulemaking was sub-
mitted to the Chief Counsel for Advocacy
of the Small BusinessAdministration for
comment on its impact on small business.
Drafting Information
The principal author of these regula-
tions is Tasheaya L. Warren Ellison, Of-
fice of the Associate Chief Counsel (Inter-
national). However, other personnel from
the IRS and Treasury participated in their
development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.367(a)–3 is amended
as follows:
1. A sentence is added to paragraph
(a) immediately following the second sen-
tence.
2. The new fourth sentence of para-
graph (a) is amended by removing the lan-
guage “However” and adding “In addi-
tion” in its place.
3. Adding new paragraph (e)(1)(G).
The additions read as follows:
§1.367(a)–3 Treatment of transfers of
stock or securities to foreign corporations.
(a)In general. * * * However, if, pur-
suant to section 304(a)(1), a U.S. person is
treated as transferring stock of a domestic
or foreign corporation to a foreign corpora-
tion in exchange for stock of such foreign
corporation in a transaction to which sec-
tion 351(a) applies, such deemed section
351 exchange is not a transfer to a foreign
corporation subject to section 367(a). * * *
*****
(e) * **(1) * * *
(G) Except as otherwise provided in
this paragraph (e)(1)(G), the third sentence
of paragraph (a) of this section shall ap-
ply to section 304(a)(1) transactions occur-
ring on or after February 21, 2006. How-
ever, taxpayers may rely on the third sen-
tence of paragraph (a) of this section for all
section 304(a)(1) transactions occurring in
open tax years; in such cases any gain
recognition agreements filed pursuant to
§1.367(a)–8 with respect to such transac-
tions shall terminate and have no further
effect.
*****
Par. 3. In §1.367(b)–4, a sentence is
added to paragraph (a) immediately fol-
lowing the first sentence to read as follows:
§1.367(b)–4 Acquisition of foreign
corporate stock or assets by a foreign
corporation in certain nonrecognition
transactions.
(a)Scope. * * * However, if pursuant to
section 304(a)(1), a foreign acquiring cor-
poration is treated as acquiring the stock of
a foreign acquired corporation in a transac-
tion to which section 351(a) applies, such
deemed section 351 exchange is not an ac-
quisition subject to section 367(b). * * *
*****
Par. 4. In §1.367(b)–6, paragraph
(a)(1) is amended by adding a sentence to
the end to read as follows:
§1.367(b)–6 Effective dates and
coordination rule
(a)Effective date—(1)In general.
* * * The second sentence of paragraph
(a) in §1.367(b)–4 shall apply to section
304(a)(1) transactions occurring on or af-
ter February 21, 2006; however, taxpayers
may rely on this sentence for all section
304(a)(1) transactions occurring in open
tax years.
*****
Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.
Approved February 8, 2006.
Eric Solomon,
Acting Deputy Assistant
Secretary of the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on February 17,
2006, 8:45 a.m., and published in the issue of the Federal
Register for February 21, 2006, 71 F.R. 8802)
Section 951.—Amounts
Included in Gross Income of
United States Shareholders
26 CFR 1.951–1: Amounts included in gross income
of United States shareholders.
T.D. 9251
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 1
Special Rules Regarding
Certain Section 951ProRata
Share Allocations
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
2006–11 I.R.B.590March 13, 2006

SUMMARY: This document contains fi-
nal regulations under section 951(a) of the
Internal Revenue Code (Code) regarding
a United States shareholder’spro rata
share of a controlled foreign corporation’s
(CFC’s) subpart F income, previously ex-
cluded subpart F income withdrawn from
investment in less developed countries,
and previously excluded subpart F income
withdrawn from foreign base country
shipping operations. These regulations are
intended to ensure that a CFC’s earnings
and profits for a taxable year attributable
to a section 304 transaction will not be
allocated in a manner that results in the
avoidance of Federal income tax. These
regulations are also intended to ensure
that earnings and profits of a CFC are not
allocated to certain preferred stock in a
manner inconsistent with the economic
interest that such stock represents.
DATES:Effective Date:These regulations
are effective February 22, 2006.
Applicability Date:For dates of appli-
cability, see §1.951–1(e)(3)(v), (e)(4)(ii)
and (e)(7).
FOR FURTHER INFORMATION
CONTACT: Jefferson VanderWolk, (202)
622–3810 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On August 6, 2004, the IRS pub-
lished in theFederal Registeranoticeof
proposed rulemaking (REG–129771–04,
2004–2 C.B. 453) under section 951 of
the Code. After consideration of com-
ments received, the proposed regulations
were modified and adopted as final with
the publication of T.D. 9222, 2005–40
I.R.B. 614, on August 25, 2005 (70 FR
49864). In response to comments, the IRS
published at the same time in the Federal
Register a notice of proposed rulemaking
(REG–129782–05, 2005–40 I.R.B. 675
[70 FR 49894]) under section 951 of the
Code. No written comments were received
in response to that notice of proposed rule-
making. No public hearing was requested
or held on the notice of proposed rulemak-
ing. The proposed regulations are adopted
as final regulations with the modifications
discussed below.
Explanation of Changes
Section 1.951–1(e) definespro rata
share for purposes of section 951(a) of
the Code. The general rule, set forth in
§1.951–1(e)(3)(i), provides for the allo-
cation of current earnings and profits to
different classes of stock on the basis of
the respective amounts of such earnings
and profits that would be distributed with
respect to each class if such earnings and
profits were distributed on the last day of
theCFC’staxableyearonwhichitisa
CFC.
Section 1.951–1(e)(3)(v) provides a
special rule that modifies the general rule
regarding the allocation of a CFC’s current
earnings and profits to more than one class
of stock. The special rule applies where a
CFC has earnings and profits and subpart
F income for its taxable year attributable
to a transaction described in section 304
of the Code and that transaction is part of
a plan a principal purpose of which is to
avoid Federal incometaxation by allocat-
ing the subpart F income resulting from
the section 304 transaction disproportion-
ately to a tax-indifferent party. Pursuant
to the rule, such earnings and profits are
allocated to each class of stock of the CFC
in accordance with the value of such class
relative to all other classes.
Several practitioners noted in oral com-
ments that proposed §1.951–1(e)(6),Ex-
ample 9, which illustrates the application
of proposed §1.951–1(e)(3)(v), presented
facts whose characterization under other
Code sections could be unclear under the
circumstances. In response to these com-
ments, the IRS and Treasury Department
have revised the example in order to limit
the issues presented.
A comment on the rules originally
proposed on August 6, 2004, requested
guidance to eliminate inappropriate dis-
tortions between subpart F inclusions and
economic realization that taxpayers may
achieve if accumulated but unpaid div-
idends with respect to preferred stock
are not discounted to present value for
purposes of determining the hypothetical
distribution. As a partial response to that
comment, proposed §1.951–1(e)(4)(ii)
provided a special rule requiring accumu-
lated but unpaid dividends with respect
to mandatorily redeemable cumulative
preferred stock be taken into account at
present value for purposes of the hypo-
thetical distribution. Comments were
requested regarding the treatment of cu-
mulative preferred stock that does not have
a mandatory redemption date or that is
subject to a shareholder-level agreement,
such as a purchase option. In addition,
the preamble stated that the IRS and the
Treasury Department anticipated that any
such rules would be effective for taxable
years of a controlledforeign corporation
beginning on or after January 1, 2006. No
further comments were received beyond
the original comment.
The IRS and Treasury Department
agree with the commentator that accrued
but unpaid dividends generally present
possibilities for distortion between sub-
part F income inclusions and economic
income realization. These distortions are
similar to those that can arise from stock
with discretionary distribution rights. Ac-
cordingly, §1.951–1(e)(4)(ii) adds a rule
that generally treats cumulative preferred
stock with accrued but unpaid dividends
in the same manner as stock with discre-
tionary distribution rights (as defined in
§1.951–1(e)(3)(ii)). Earnings and profits
are allocated to such stock on the basis of
the value of such stock relative to the value
of other classes of stock outstanding.
There are two exceptions to this gen-
eral rule. First, to the extent that dividends
are paid with respect to such stock during
the year, earnings and profits equal to the
amount of such dividends are first allo-
cated to that class of stock. Additional
earnings and profits are allocated to that
class of stock only in the amount (if any)
by which the value-based allocation of
earnings and profits to that class of stock
exceeds the amount of such dividends.
Second, the final regulations preserve the
special present-value rule (with technical
modifications) for certain mandatorily re-
deemable cumulative preferred stock.
Consistent with the comment received,
and as provided in the preamble to the pro-
posed regulations, these rules are effective
for taxable years of a controlled foreign
corporation beginning on or after January
1, 2006.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory
March 13, 20065912006–11 I.R.B.

assessment is not required. It has also
been determined thatsection 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regu-
lations and because these regulations do
not impose a collection of information
on small entities, a Regulatory Flexibility
Analysis under the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking preced-
ing these regulations was submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Drafting Information
The principal author of these regula-
tions is Jeffrey Vinnik of the Office of the
Associate Chief Counsel (International).
However, other personnel from the IRS
and Treasury Department participated in
their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.951–1 is amended
by revising paragraphs (e)(3)(v), (e)(4)(ii),
and the first sentence of paragraph (e)(7),
and adding paragraph (e)(6)Example 9.
The revisions and addition read as fol-
lows:
§1.951–1 Amounts included in gross
income of United States shareholders.
*****
(e) * * *
(3) * * *
(v)Earnings and profits attributable to
certain section 304 transactions.Fortax-
able years of a controlled foreign corpo-
ration beginning on or after January 1,
2006, if a controlled foreign corporation
has more than one class of stock outstand-
ing and the corporation has earnings and
profits and subpart F income for a taxable
year attributable to a transaction described
in section 304, and such transaction is part
of a plan a principal purpose of which is
the avoidance of Federal income taxation,
the amount of such earnings and profits al-
located to any one class of stock shall be
that amount which bears the same ratio to
the remainder of such earnings and profits
as the value of all shares of such class of
stock, determined on the hypothetical dis-
tribution date, bears to the total value of all
shares of all classes of stock of the corpo-
ration, determined on the hypothetical dis-
tribution date.
(4)***(i)***
(ii)Certain cumulative preferred stock.
For taxable years of a controlled foreign
corporation beginning on or after January
1, 2006, if a controlled foreign corpora-
tion has one or more classes of preferred
stock with cumulative dividend rights,
such stock shall be considered for the
purposes of this section as stock with dis-
cretionary distribution rights. As a result,
the provisions of paragraph (e)(3)(ii) of
this section shall apply for purposes of al-
locating earnings and profits to such stock,
except that earnings and profits shall first
be allocated to the stock under paragraph
(e)(3)(i) of this section to the extent of
any dividends paid with respect to the
stock during the taxable year. Additional
earnings and profits will be allocated to
the stock only in an amount equal to the
excess (if any) of the amount of earnings
and profits allocated to the stock under
paragraph (e)(3)(ii) of this section over the
amount of such dividends. Notwithstand-
ing the foregoing, if a class of redeemable
preferred stock withcumulative dividend
rights has a mandatory redemption date,
and all dividend arrearages with respect
to such stock compound at least annually
at a rate that is not lower than the appli-
cable Federal rate (as defined in section
1274(d)(1)) (AFR) that applies on the date
the stock is issued for the term from such
issuedatetothemandatoryredemption
date, based on a comparable compound-
ing assumption, such stock shall not be
considered for purposes of this section
as stock with discretionary distribution
rights.
*****
(6) * * *
Example 9.(i)Facts. In 2006, FC10, a con-
trolled foreign corporation within the meaning of sec-
tion 957(a), has outstanding 100 shares of common
stock and 100 shares of 6-percent, voting, preferred
stock with a par value of $10x per share. All of the
commonstockisheldbyCorpH,aforeigncorpora-
tion, which invested $1000x in FC10 in exchange for
the common stock. All of the preferred stock is held
by Corp J, a domestic corporation, which invested
$5000x in FC10 in exchange for the preferred stock.
Corp H is unrelated to Corp J. In 2006, FC10 bor-
rows $3000x from a bank and invests $5000x in pre-
ferred stock issued by FC11, a foreign corporation the
commonstockofwhichisownedbyCorpJ.CorpJ’s
adjusted basis in its FC11 common stock is $5000x.
FC11, which has no current or accumulated earnings
and profits, distributes the $5000x to Corp J. Subse-
quently, in 2007, FC10 sells the FC11 preferred stock
to FC12, a wholly-owned foreign subsidiary of FC11
that has $5000x of accumulated earnings and profits,
for $5000x in a transaction described in section 304.
FC10 repays the bank loan in full. For 2007, FC10
has $5000x of earnings and profits, all of which is
subpart F income attributable to a section 304 divi-
dend arising from FC10’s sale of the FC11 preferred
stock to FC12. At all relevant times, the value of the
common stock of FC10 is $1000x and the value of the
preferred stock of FC10 is $5000x.
(ii)Analysis. The acquisition and sale of the FC11
preferred stock by FC10 was part of a plan a princi-
pal purpose of which was the avoidance of Federal
income tax by depleting the earnings and profits of
FC12 and allowing FC11 to make a distribution to
Corp J that it characterizes entirely as a return of ba-
sis. FC10 has $5000x of earnings and profits for 2007
attributable to a dividend from a section 304 transac-
tion which was part of such plan. Under paragraph
(e)(3)(v) of this section, these earnings and profits are
allocated to the common and preferred stock of FC10
in accordance with the relative value of each class of
stock ($1000x and $5000x, respectively). Thus, for
taxable year 2007, $833x (1/6 x $5000x = $833x) of
these earnings and profitsis allocated to FC10’s com-
mon stock and $4167x (5/6 x $5000x = $4167x) is
allocated to its preferred stock.
(7)Effective dates. Except as provided
in paragraphs (e)(3)(v) and (e)(4)(ii) of this
section, this paragraph (e) applies for tax-
able years of a controlled foreign corpora-
tion beginning on or after January 1, 2005.
***
*****
Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.
Approved February 8, 2006.
Eric Solomon,
Acting Deputy Assistant
Secretary of the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on February 21,
2006, 8:45 a.m., and published in the issue of the Federal
Register for February 22, 2006, 71 F.R. 8943)
2006–11 I.R.B.592March 13, 2006

Part III. Administrative, Procedural, and Miscellaneous
2006 Calendar Year Resident
Population Estimates
Notice 2006–22
This notice informs (1) state and lo-
cal housing credit agencies that allocate
low-income housing tax credits under
§ 42 of the Internal Revenue Code and
(2) states and other issuers of tax-exempt
private activity bonds under § 141, of
the proper population figures to be used
for calculating the 2006 calendar year
population-based component of the state
housing credit ceiling (Credit Ceiling)
under § 42(h)(3)(C)(ii), the 2006 calen-
dar year volume cap (Volume Cap) under
§ 146, and the 2006 volume limit (Volume
Limit) under § 142(k)(5).
The population figures both for the
population-based component of the Credit
Ceiling and for the Volume Cap are de-
termined by reference to § 146(j). That
section provides generally that determina-
tions of population for any calendar year
are made on the basis of the most recent
census estimate of the resident population
of a state (or issuing authority) released
by the U.S. Census Bureau before the
beginning of such calendar year. Section
142(k)(5) provides that the Volume Limit
is based on the State population.
The population-based component of
the Credit Ceiling and the Volume Cap
are adjusted for inflation pursuant to
§§ 42(h)(3)(H) and 146(d)(2), respec-
tively. The adjustments for the 2006 cal-
endar year were published in Rev. Proc.
2005–70, 2005–47 I.R.B. 979. Section
3.07 of Rev. Proc. 2005–70 provides
that, for calendar year 2006, the amounts
used under § 42(h)(3)(C)(ii) to calculate
the Credit Ceiling is the greater of $1.90
multiplied by the State population (see
the resident population figures provided
below) or $2,190,000. Further, section
3.15 of Rev. Proc. 2005–70 provides
that the amounts used under § 146(d)(1)
to calculate the Volume Cap for calendar
year 2006 is the greater of $80 multiplied
by the State population (see the resident
population figures provided below) or
$246,610,000.
The proper population figures for calcu-
lating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2006 cal-
endar year are the estimates of the resi-
dent population of the 50 states, the Dis-
trict of Columbia, and Puerto Rico released
by the U.S. Census Bureau on Decem-
ber 22, 2005, in Press Release CB05–187.
The proper population figures for calcu-
lating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2006 calen-
dar year for the insular areas (American
Samoa, Guam, Northern Mariana Islands,
and U.S. Virgin Islands) are the figures re-
leased electronically by the U.S. Census
Bureau on July 17, 2003, and referenced in
Census Bureau Tip Sheet TP03–16, dated
August 8, 2003. For convenience, these
estimates are reprinted below.
Resident P
opulation Figures
Alabama4,557,808
Alaska663,661
American
Samoa
57,881
Arizona5,939,292
Arkansas2,779,154
California36,132,147
Colorado4,665,177
Conne
cticut
3,510
,297
Delaware843,524
D.C.550,521
Florida17,789,864
Georgia9,072,576
Guam168,564
Hawaii1,275,194
I
daho
1
,429,096
Illinois12,763,371
Indiana6,271,973
Iowa2,966,334
Kansas2,744,687
Kentucky4,173,405
March 13, 20065932006–11 I.R.B.

Louisiana4,523,628
Maine1,321,505
Maryland5,600,388
Massachusetts6,398,743
Michigan10,120,860
Minnesota5,132,799
Mississipp
i
2,921,088
Missouri5,800,310
Montana935,670
Nebraska1,758,787
Nevada2,414,807
New Hamps
hire
1,309,94
0
New Jersey8,717,925
New Mexico1,928,384
New York19,254,630
North Carolina8,683,242
North Dakota636,677
North
ern Mariana Islands
80,36
2
Ohio11,464,042
Oklahoma3,547,884
Oregon3,641,056
Pen
nsylvania
12,
429,616
Puerto Rico3,912,054
Rhode Island1,076,189
South Carolina4,255,083
S
outh Dakota
7
75,933
Tennessee5,962,959
Texas22,859,968
U.S. Virgin Islands108,708
Utah2,469,585
Vermont623,050
Virginia7,567,465
Washington6,287,759
West Virginia1,816,856
Wisconsin5,536,201
Wyoming509,294
The principal authors of this notice are
Christopher J. Wilson, Office of the As-
sociate Chief Counsel (Passthroughs and
Special Industries) and Timothy L. Jones,
Office of the Division Counsel/Associate
Chief Counsel (Tax-Exempt and Govern-
ment Entities). For further information re-
garding this notice, contact Mr. Wilson at
(202) 622–3040 (not a toll-free call).
Patriots’ Day Filings and
Payments
Notice 2006–23
This notice provides guidance regard-
ing the impact of Patriots’ Day on the April
17, 2006, due date for filing Federal tax
documents and making Federal tax pay-
2006–11 I.R.B.594March 13, 2006

ments. For filing season 2006 (tax year
2005), individual income taxpayers living
in Maine, Massachusetts, New Hampshire,
New York, Vermont, Maryland, and the
District of Columbia have until Tuesday,
April 18, 2006, to file documents in paper
or electronic form that are otherwise due
on April 17, 2006. These documents in-
clude U.S. individual income tax returns in
the Form 1040 series and Form 4868,Ap-
plication for Automatic Extension of Time
To File U.S. Individual Income Tax Return.
Individual income taxpayers in these states
and the District of Columbia also have un-
til April 18, 2006, to make Federal tax pay-
ments otherwise due on April 17, 2006, in-
cluding the first installment of estimated
tax for tax year 2006.
The principal author of this notice is
John M. Moran of the Office of Associate
Chief Counsel, Procedure & Administra-
tion (Administrative Provisions and Judi-
cial Practice Division). For further in-
formation regarding this notice, contact
John M. Moran at (202) 622–4940 (not a
toll-free call).
Qualifying Advanced Coal
Project Program
Notice 2006–24
SECTION 1. PURPOSE
This notice establishes the qualify-
ing advanced coal project program under
§ 48A(d) of the Internal Revenue Code.
The purpose of the program is the deploy-
ment of advanced coal-based generation
technologies.
SECTION 2. BACKGROUND
.01 Section 46 provides that the amount
of the investment credit for any taxable
year is the sum of the credits listed in § 46.
Section 1307(a) of the Energy Policy Act
of 2005, Pub. L. 109–58, 119 Stat. 594
(August 8, 2005) (the “Act”), amended
§46toaddtwonewcreditstothatlist:
the qualifying advanced coal project credit
and the qualifying gasification project
credit.
.02 The qualifying advanced coal
project credit is provided under § 48A,
as added by § 1307(b) of the Act. Sec-
tion 48A(a) provides that the qualifying
advanced coal project credit for a taxable
year is an amount equal to (1) 20 percent
of the qualified investment (as defined
in § 48A(b)) for that taxable year in cer-
tified qualifying advanced coal projects
(as defined in § 48A(c)(1) and (e)) using
an integrated gasification combined cycle
(IGCC) (as defined in § 48A(c)(7)), and
(2) 15 percent of the qualified investment
for that taxable year in other certified qual-
ifying advanced coal projects.
.03 Section 48A(d)(3)(A) provides
that the aggregate credits allowed under
§ 48A(a) may not exceed $1.3 billion.
Section 48A(d)(3)(B) provides that (i)
$800 million of credits are to be allocated
to IGCC projects, and (ii) $500 million of
credits are to be allocated to projects that
use other advanced coal-based generation
technologies (as defined in § 48A(c)(2)
and (f)).
.04 Section 48A(e)(3)(A) provides
that the credits for IGCC projects must
be allocated in accordance with the pro-
cedures set forth in § 48A(d), and in
relatively equal amounts to (i) projects
using bituminous coal as a primary feed-
stock, (ii) projects using subbituminous
coal as a primary feedstock, and (iii)
projects using lignite as a primary feed-
stock. Further, § 48A(e)(3)(B) provides
that IGCC projects that include (i) green-
house gas capture capability (as defined
in § 48A(c)(5)), (ii) increased by-product
utilization, and (iii) other benefits must
be given high priority in the allocation of
credits for IGCC projects.
.05 The at-risk rules in § 49 and the re-
capture and other special rules in § 50 ap-
ply to the qualifyingadvanced coal project
credit. Further, the qualifying advanced
coal project credit generally is allowed in
the taxable year in which the eligible prop-
erty (as defined in § 48A(c)(3)) is placed
in service by the taxpayer. Pursuant to
§ 48A(D)(2)(E), a taxpayer that receives
a certification under § 48A(d)(2)(D) has 5
years from the date of issuance of the cer-
tification to place the qualifying advanced
coal project in service.
SECTION 3. QUALIFYING
ADVANCED COAL PROJECT
PROGRAM
Section 48A(d)(1) provides that the
Secretary, in consultation with the Sec-
retary of Energy, shall establish a quali-
fying advanced coalproject program for
the deployment of advanced coal-based
generation technologies. The Treasury
Department and the Internal Revenue Ser-
vice are establishing this program under
the rules set forth in sections 4 through 9
of this notice.
SECTION 4. ESTABLISHMENT OF
QUALIFYING ADVANCED COAL
PROJECT PROGRAM
.01In General. The Service will con-
sider a project under the qualifying ad-
vanced coal project program only if the
U.S. Department of Energy (“DOE”) pro-
vides a certification of feasibility and con-
sistency with energy policy goals (“DOE
certification”) for the project. Accord-
ingly, a taxpayer must submit, for each
qualifying advanced coal project: (1) an
application for certification by the DOE
(“application for DOE certification”), and
(2) an application for certification under
§ 48A(d)(2) by the Service (“application
for § 48A certification”). Both applica-
tions may be submitted only during the
3-year period beginning on February 21,
2006. Certifications will be issued and
credits will be allocated to projects in an-
nual allocation rounds. The initial allo-
cation round will be conducted in 2006.
If necessary, additional allocation rounds
will be conducted in 2007 and 2008.
.02Program Specifications.
(1) The Service will determine the
amount of the qualifying advanced coal
project credits allocated to a qualifying
advanced coal project at the time the Ser-
vice accepts the application for § 48A
certification for that project in accordance
with section 4.02(10) of this notice (see
section 5 of this notice for the require-
ments applicable to the application for
DOE certification and the application for
§ 48A certification).
(2) The qualifying advanced coal
project credits of $1.3 billion and the
applications for certification will be sepa-
rated into the following four pools:
(a) Projects using an advanced
coal-based generation technology other
than IGCC. The aggregate amount of
qualifying advanced coal project credit for
this pool is $500 million. The maximum
amount of credits that will be allocated to
a project is $125 million.
(b) IGCC projects using bituminous
coal as a primary feedstock. The aggre-
March 13, 20065952006–11 I.R.B.

gate amount of qualifying advanced coal
project credit for this pool is $267 million.
The maximum amount ofcredits that will
be allocated to a project is $133.5 million.
(c) IGCC projects using subbituminous
coal as a primary feedstock. The aggre-
gate amount of qualifying advanced coal
project credit for this pool is $267 million.
The maximum amount ofcredits that will
be allocated to a project is $133.5 million.
(d) IGCC projects using lignite as a pri-
mary feedstock. The aggregate amount of
qualifying advanced coal project credit for
this pool is $266 million. The maximum
amount of credits that will be allocated to
a project is $133 million.
(3) For projects using an advanced
coal-based generation technology other
than IGCC, the aggregate credit of $500
million for this pool as described in section
4.02(2)(a) of this notice will be allocated in
the initial round of allocations to projects
providing the highest ratio of total name-
plate generating capacity to requested
allocation of credits.
(4) For each IGCC pool described in
section 4.02(2)(b), (c), and (d) of this no-
tice, the aggregate credit for that pool will
be allocated as follows in the initial round
of allocations:
(a) The aggregate credit will be allo-
cated first to the projects entitled to priority
under § 48A(e)(3)(B) for greenhouse gas
capture capability or increased by-product
utilization.
(b)Iftherequestedallocationofcred-
its for these priority projects exceeds the
aggregate credit forthe pool, the credit
for that pool will be allocated to the prior-
ity projects providing the highest ratio of
total nameplate generating capacity to re-
quested allocation of credits.
(c) If the requested allocation of credits
for the priority projects in a pool does not
exceed the aggregate credit for the pool,
the remaining amount of the credit will be
allocated to the nonpriority projects pro-
viding the highest ratio of total nameplate
generating capacity to requested allocation
of credits.
(5) If the aggregate credit for a pool
is not fully allocated in the initial round
of allocations in 2006, similar allocation
rounds will be conducted in 2007 and 2008
until the aggregate credit is fully allocated.
Generally, the results of each year will be
announced.
(6) If the same project would otherwise
be allocated credits under both the qualify-
ing advanced coal project program under
this notice and the qualifying gasification
project program under Notice 2006–25,
2006–11 I.R.B. 609, the following rules
apply:
(a) If the project is allocated the full
amount of the qualifying advanced coal
project credit requested by the taxpayer, no
qualifying gasification project credit will
be allocated to the project;
(b) If the project is allocated the full
amount of the qualifying gasification
project credit requested by the taxpayer,
no qualifying advanced coal project credit
will be allocated to the project;
(c) If the project is allocated less than
the full amount of the qualifying advanced
coal project credit requested by the tax-
payer, the qualifying gasification project
credit may be allocated to the project with
respect to the qualified investment under
§ 48B for which a qualifying advanced
coal project credit is not allowed under
§48A;and
(d) If the project is allocated less than
the full amount of the qualifying gasifi-
cation project credit requested by the tax-
payer, the qualifying advanced coal project
credit may be allocated to the project with
respect to the qualified investment under
§ 48A for which a qualifying gasification
project credit is not allowed under § 48B.
(7) For each allocation round there will
be an annual application period during
which a taxpayer may file its application
for § 48A certification. The Service will
consider a project in an allocation round
only if the application for § 48A certifica-
tion for the project is submitted during the
application period for that round and the
DOE provides the DOE certification for
the project before the end of the applica-
tion period.
(8) For the initial allocation round con-
ducted in 2006, the application period be-
gins on February 21, 2006, and ends on
October 2, 2006. Any completed appli-
cation for § 48A certification received by
the Service before October 3, 2006, will be
deemed to be submitted by the taxpayer on
October 2, 2006. For 2007, the application
period begins on October 3, 2006, and ends
on October 1, 2007, and any completed ap-
plication for § 48A certification received
by the Service after October 2, 2006, and
before October 2, 2007, will be deemed to
be submitted by the taxpayer on October
1, 2007. For 2008, the application period
begins on October 2, 2007, and ends on
October 1, 2008, and any completed ap-
plication for § 48A certification received
by the Service after October 1, 2007, and
before October 2, 2008, will be deemed to
be submitted by the taxpayer on October
1, 2008. For purposes of this notice, an
application that is submitted by U.S. mail
will be treated as received by the Service
on the date of the postmark and an applica-
tion submitted by a private delivery service
will be treated as received by the Service
on the date recorded or the date marked in
accordance with § 7502(f)(2)(C).
(9) See section 5.02 of this notice and
Appendix B to this notice for the infor-
mation to be submitted to the DOE in an
application for DOEcertification. Ap-
pendix B to this notice also provides the
instructions and address for filing the ap-
plication for DOE certification. The DOE
will determine the feasibility of the project
and its consistency with energy policy
goals and, if the project is determined to
be feasible and consistent with energy pol-
icy goals, will provide a DOE certification
for the project to the Service. If an appli-
cation for DOE certification is postmarked
on or before June 30 of a calendar year,
the DOE will determine the feasibility of
the project and its consistency with energy
policy goals and (for projects determined
to be feasible and consistent) provide the
DOE certification by October 1 of that
calendar year.
(10) By November 30 of the calendar
year in which an application for § 48A cer-
tification is deemed to be submitted (as de-
termined under section 4.02(8) of this no-
tice), the Service will accept or reject the
taxpayer’s application for § 48A certifica-
tion and will notify the taxpayer, by letter,
of its decision.
(11) If the taxpayer’s application for
§ 48A certification is accepted, the ac-
ceptance letter will state the amount of
the credit allocated to the project. If a
credit is allocated to a taxpayer’s project,
the taxpayer will be required to execute a
closing agreement in the form set forth in
Appendix A to this notice. By January 31
of the following year, the taxpayer must
execute and return the closing agreement
to the Service at the appropriate address
listed in section 5.04 of this notice or listed
in later guidance published in the Internal
2006–11 I.R.B.596March 13, 2006

Revenue Bulletin. The Service will exe-
cute and return the closing agreement to
the taxpayer by March 31 of such follow-
ing year. The executed closing agreement
applies only to the accepted taxpayer. Ac-
cordingly, any successor in interest must
execute a new closing agreement with the
Service. If the successor in interest does
not execute a new closing agreement, the
following rules apply:
(a) In the case of an interest acquired at
or before the time the qualifying advanced
coal project is placed in service, any credit
allocated to the project will be fully for-
feited (and rules similar to the recapture
rules of § 50(a) apply with respect to qual-
ified progress expenditures); and
(b) In the case of an interest acquired af-
ter the qualifying advanced coal project is
placed in service, the project ceases to be
investment credit property and the recap-
ture rules of § 50(a) (and similar rules with
respect to qualified progress expenditures)
apply.
SECTION 5. APPLICATIONS FOR
CERTIFICATIONS
.01In General. An application for
§ 48A certification and a separate ap-
plication for DOE certification must be
submitted for each qualifying advanced
coal project. If an application for DOE
certification does not include all of the in-
formationrequiredbysection5.02ofthis
notice and meet the requirements in sec-
tions 7.01 and 7.02 of this notice, the DOE
may decline to accept the application. If
an application for § 48A certification does
not include all of the information listed in
section 5.03 of this notice and meet the
requirements in sections 7.01 and 7.02
of this notice, the application will not be
accepted by the Service.
.02Information Required in the Appli-
cation for DOE Certification. An applica-
tion for DOE certification must include all
of the information requested in Appendix
B to this notice and all of the following:
(1) The name, address, and taxpayer
identification number of the taxpayer;
(2) The name and telephone number of
a contact person;
(3) The name and address (or other
unique identifying designation) of the
qualifying advanced coal project;
(4) A statement specifying whether the
project is an IGCC project or a qualifying
advanced coal project that uses another ad-
vanced coal-based technology;
(5) In the case of an IGCC project, a
statement specifying the type of coal (bi-
tuminous coal, subbituminous coal, or lig-
nite) that will be the primary feedstock. An
application for DOE certification with re-
spect to an IGCC project will not be con-
sidered unless one of these types of coal
is the primary feedstock. For purposes of
§ 48A(e)(3)(A), a type of coal is the pri-
maryfeedstockonlyifatalltimesmore
than 50 percent of the cumulative total fuel
input (coal and any other fuel input) for the
project will consist of that type of coal;
(6) The estimated total cost of the
project and the estimated total qualified
investment in the eligible property that
will be part of the project;
(7) The amount of the qualifying ad-
vanced coal project credit requested for the
project. The amount requested must not
exceed the maximum amount provided in
section 4.02(2) of this notice;
(8) If the taxpayer is or will be request-
ing an amount of the qualifying gasifica-
tion project credit under § 48B for the same
project, a statement specifying the credit
the taxpayer prefers to receive;
(9) A statement specifying whether the
project is a new electric generation unit
(as defined in § 48A(c)(6)), a retrofit of
an existing electric generation unit, or a
repower of an existing electric generation
unit; and
(10) The exact total nameplate generat-
ing capacity of the project.
.03InformationRequiredintheAppli-
cation for § 48A Certification.Pursuantto
§ 48A(d)(2)(B), an application for § 48A
certification must include all of the follow-
ing:
(1) The name, address, and taxpayer
identification number of the taxpayer;
(2) The name and telephone number of
a contact person. If necessary, attach any
required power of attorney, preferably on
Form 2848,Power of Attorney and Decla-
ration of Representative;and
(3)Apapercopyofthecompletedap-
plication for DOE certification submitted
with respect to the project in accordance
with section 5.02 of this notice.
.04Instructions and Address for Filing
§ 48A Application. Applications for § 48A
certification should be marked: SECTION
48AAPPLICATIONFORCERTIFICA-
TION. There is no user fee for these ap-
plications.
(1) Applications submitted by U.S. mail
must be sent to:
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Applications submitted by a private de-
livery service must be sent to:
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
1111 Constitution Ave., N.W.
Washington, DC 20224
(2) Applications may also be hand de-
livered Monday through Friday between
the hours of 8 a.m. and 4 p.m. to:
Courier’s Desk
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
1111 Constitution Avenue, N.W.
Washington, DC 20224
SECTION 6. ISSUANCE OF
CERTIFICATION
.01In General. Section 48A(d)(2)(D)
provides that a taxpayer shall have 2
years from the date of acceptance of the
§ 48A application during which to pro-
vide evidence that the criteria set forth in
§ 48A(e)(2) have been met. Pursuant to
§ 48A(e)(2), a project shall be eligible for
certification only if (A) the taxpayer has
received all federal and state environmen-
tal authorizations or reviews necessary
to commence construction of the project,
and (B) the taxpayer, except in the case
of a retrofit or repower of an existing
generation unit, has purchased or entered
into a binding contract for the purchase of
the main steam turbine or turbines for the
project, except that this contract may be
contingent upon receiptof a certification
under § 48A(d)(2). Section 48A(d)(2)(E)
provides that a taxpayer that receives a
certification has 5 years from the date of
issuance of the certification to place the
project in service and that the certification
March 13, 20065972006–11 I.R.B.

is void if the project is not placed in ser-
vice by the end of that five-year period.
.02Requirements for Certification.
Within 2 years from the date that the Ser-
vice accepts the taxpayer’s application for
§ 48A certification under section 4.02(10)
of this notice, the taxpayer must submit
to the Service documentation establishing
that the requirements of § 48A(e)(2) are
satisfied. See also sections 7.01 and 7.02
of this notice for other requirements that
must be satisfied. The taxpayer should
mark the package “SECTION 48A CER-
TIFICATION REQUIREMENTS” and
send it to the appropriate address listed
in section 5.04 of this notice or listed in
later guidance published in the Internal
Revenue Bulletin.
.03Service’s Action on Certification.
After receiving the material in section
6.02 of this notice, the Service will de-
cide whether or not to certify the project
and will notify the taxpayer, by letter, of
that decision. If the Service certifies the
project, the date of this letter is the date of
issuance of the certification.
SECTION 7. OTHER REQUIREMENTS
.01Signature. Each submission un-
der sections 5 and 6 of this notice must
be signed and dated by the taxpayer. A
stamped signature or faxed signature is not
permitted.
.02Penalties of Perjury Statement.
(1) Each submission under sections 5
and 6 of this notice must be accompa-
nied by the followingdeclaration: “Under
penalties of perjury, I declare that I have
examined this submission, including ac-
companying documents, and, to the best
of my knowledge and belief, all of the
facts contained herein are true, correct, and
complete.”
(2) The declaration must be signed and
dated by the taxpayer. The person sign-
ing for the taxpayer must have personal
knowledge of the facts. A stamped signa-
ture or faxed signature is not permitted.
.03Effect of an Acceptance, Alloca-
tion, or Certification. An acceptance,
allocation, or certification by the Service
under this notice is not a determination
that a project qualifies for the qualifying
advanced coal project credit under § 48A.
The Service may, upon examination (and
after any appropriate consultation with
DOE), determine that the project does not
qualify for this credit.
.04No Right to a Conference or Appeal.
A taxpayer does not have a right to a con-
ference relating to any matters under this
notice. Further, a taxpayer does not have
a right to appeal the decisions made under
this notice (including the acceptance or re-
jection of the application for DOE or § 48A
certification, the amount of credit allocated
to the project, or whether or not to certify
the project) to an Associate Chief Counsel
or any other official of the Service.
SECTION 8. REVIEW AND
REDISTRIBUTION
.01In General. Section 48A(d)(4)(A)
provides that the credits allocated under
§ 48A must be reviewed not later than Au-
gust 8, 2011. Pursuant to § 48A(d)(4)(B),
credits available under § 48A(d)(3)(B)(i)
and (ii) may be reallocated if (i) there is an
insufficient quantity of qualifying applica-
tions for certification pending at the time
of the review; or (ii) any certification made
pursuant to § 48A(d)(2) has been revoked
pursuant to § 48A(d)(2)(D). If credits un-
der § 48A(d)(3)(B)(i) and (ii) are available
for reallocation, § 48A(d)(4)(C) authorizes
the conduct of an additional program for
applications for certification.
.02Review and Redistribution of Cred-
its.
(1)In general. If, after the allocation
round in 2008, the entire credit for a pool
is not fully subscribed (i.e., the aggregate
credit for the pool has not been fully allo-
cated), the remainingcredits from that pool
will be reallocated to pools that have been
fully subscribed. Credits from pools not
fully subscribed will be reallocated to fully
subscribed pools in proportion to the ag-
gregate amounts of credit specified for the
fully subscribed pools in section 4.02(2) of
this notice. Future guidance will prescribe
the procedures applicable to applications
for certification with respect to the reallo-
cated credits.
(2)Reduction or forfeiture of allocated
credits. Under the closing agreement set
forthinAppendixAtothisnotice,the
qualifying advancedcoal project credits
allocated under section 4 of this notice will
be reduced or forfeited in certain situa-
tions. A taxpayer must notify the Service
of the amount of any reduction or forfei-
ture required under the closing agreement.
This notification must be sent to the appro-
priateaddresslistedinsection5.04ofthis
notice or listed in later guidance published
in the Internal Revenue Bulletin.
The amount of any reduction or for-
feiture of the allocated credits will be re-
turned to the appropriate allocation pool
and included in the aggregate credit re-
maining to be allocated in the allocation
round following the reduction or forfei-
ture. If the reduction or forfeiture occurs
after the allocation round in 2008, future
guidance will prescribe procedures appli-
cable to applications for certification with
respect to the returned credits.
SECTION 9. QUALIFIED PROGRESS
EXPENDITURES
.01 Section 48A(b)(3) provides that
rules similar to the rules of § 46(c)(4)
and (d) (as in effect on the day before the
enactment of the Revenue Reconciliation
Act of 1990) shall apply for purposes of
§ 48A. Former §§ 46(c)(4) and 46(d) pro-
vided the rules for claiming the investment
credit on qualified progress expenditures
(as defined in former § 46(d)(3)) made
by a taxpayer during the taxable year for
the construction of progress expenditure
property (as defined in former § 46(d)(2)).
.02 In the case of self-constructed prop-
erty (as defined in former § 46(d)(5)(A)),
former § 46(d)(3)(A) defined qualified
progress expenditures to mean the amount
that is properly chargeable (during the
taxable year) to capital account with re-
spect to that property. With respect to a
qualifying advancedcoal project that is
self-constructed property, amounts paid or
incurred are chargeable to capital account
at the time and to the extent they are prop-
erly includible in computing basis under
the taxpayer’s method of accounting (for
example, after applying the requirements
of § 461, including the economic perfor-
mance requirement of § 461(h)).
.03 To claim the qualifying advanced
coal project credit on the qualified
progress expenditures paid or incurred
by a taxpayer during the taxable year for
construction of a qualifying advanced coal
project, the taxpayer must make an elec-
tion under the rules set forth in § 1.46–5(o)
of the Income Tax Regulations. A tax-
payer may not make the qualified progress
expenditures election for a qualifying
advanced coal project until the taxpayer
2006–11 I.R.B.598March 13, 2006

has received an acceptance letter for the
project under section 4.02(10) of this no-
tice.
.04 If a taxpayer makes the qualified
progress expenditures election pursuant to
section 9.03 of this notice, rules similar
to the recapture rules in § 50(a)(2)(A)-(D)
apply. In addition tothe cessation events
listed in § 50(a)(2)(A), examples of other
events that will cause the project to cease
being a qualifying advanced coal project
are:
(1) Failure to satisfy any of the certifi-
cation requirements in § 48A(e)(2) within
2 years from the date that the Service ac-
cepted the taxpayer’s application for § 48A
certification for the project under section
4.02(10) of this notice;
(2) Failure to receivea certification for
the project in accordance with section 6.03
of this notice;
(3) Failure to place the project in service
within 5 years from the date of issuance of
the certification undersection6.03ofthis
notice; or
(4) In the case of an IGCC project
that was entitled to priority under
§ 48A(e)(3)(B), failure to provide the
priority benefit on the date the project is
placed in service.
SECTION 10. EFFECTIVE DATE
This notice is effective February 21,
2006.
SECTION 11. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2003.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 4, 5, 6, 7, 8, and Ap-
pendix B of this notice. This information
is required to obtain an allocation of qual-
ifying advanced coal project credits. This
informationwillbeusedbytheServiceto
verify that the taxpayer is eligible for the
qualifying advancedcoal project credits.
The collection of information is required
to obtain a benefit. The likely respondents
are business or other for-profit institutions.
The estimated total annual reporting
burden is 4,950 hours.
The estimated annual burden per re-
spondent varies from 70 to 150 hours, de-
pending on individual circumstances, with
an estimated average of 110 hours. The es-
timated number of respondents is 45.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 12. DRAFTING
INFORMATION
The principal author of this notice is
Douglas H. Kim of the Office of Associate
Chief Counsel (Passthroughs & Special In-
dustries). For furtherinformation regard-
ing this notice, contact Mr. Kim at (202)
622–3110 (not a toll-free call).
March 13, 20065992006–11 I.R.B.

APPENDIX A
CLOSING AGREEMENT
Under § 7121 of the Internal Revenue Code, [insert taxpayer’s name, address, and identifying number] (“Taxpayer”) and the
Commissioner of Internal Revenue (“Commissioner”) make the following closing agreement:
WHEREAS:
1. On or before October [insert date and year], Taxpayer submitted to the Internal Revenue Service (“IRS”), an application for
certification under the qualifying advancedcoal project program described in Notice2006–24 (“Application for § 48A Certifica-
tion”);
2. Taxpayer’s Application for § 48A Certification is for the qualifying advanced coal project (the“Project”) described below—
(1) The Project will use [insert either “an integrated gasification combined cycle (as defined in § 48A(c)(7))” or “an advanced
coal-based technology (as defined in § 48A(c)(2) and (f)) other than an integrated gasification combined cycle”];
(2) The Project will be located at [insert address or other identifying designation];
(3) The Project is [insert either: “a new electric generation unit (as defined in § 48A(c)(6))”; “a retrofit of an existing electric
generation unit (as defined in § 48A(c)(6))”; or “a repower of anexisting electric generation unit (as defined in § 48a(c)(6)”);
(4) The Project will have a totalnameplate generating capacity of [insert number] megawatts;
[If the Project is an integrated gasification combined cycle project, insert:
(5) At all times more than 50 percent of the cumulative total fuel input (coal and any other fuel input) for the Project will be
[insert either: “bituminous coal”; “subbituminous coal”; or “lignite”];
(6) The Project is entitled to priority under § 48A(e)(3)(B) for [insert either: “greenhouse gascapture capability (as defined
in § 48A(c)(5))”; “increased by-product utilization”; or “both greenhouse gas capturecapability (as defined in § 48A(c)(5)) and
increased by-product utilization”];]and
3. On or before November 30, [insert year],the IRS accepted Taxpayer’s Application for § 48A Certification for the Project and
allocated a qualifying advanced coal project credit under § 48A in the amount of $[insert number] to the Project.
NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:
1. The total amount of the qualifying advanced coal project credit to be claimed forthe Project under § 48A(a) must not exceed
$[insert the number in WHEREAS clause #3].
2. If Taxpayer fails to satisfy any of thecertification requirements in § 48A(e)(2)within 2 years of [insert date of acceptance
letter issued under section 4.02(10) of Notice 2006–24], or if theIRS does not issue a certification for the Project under Notice
2006–24, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to
the Project is fully forfeited.
3. If the Project is not placed in service by Taxpayer within 5 years of the date of issuance of the certification as determined under
section 6.03 of Notice 2006–24, the qualifying advanced coalproject credit in the amount of $[insert the number in WHEREAS
clause #3] allocated to the Project is fully forfeited.
4. If the Project does not have a total nameplate generating capacity of [insert the number in WHEREAS clause #2(4)] megawatts
on the date the Project is placed in service, the qualifying advanced coal project credit in the amount of $[insert the number in
WHEREAS clause #3] allocated to the Project is reduced proportionately.
[If the Project is not an integrated gasification combined cycle project, insert:
5. If the Project fails to satisfy any of the requirements in § 48A(e)(1) for a qualifying advanced coal project—
2006–11 I.R.B.600March 13, 2006

(1) at the time the Project is placed in service, the qualifying advanced coal project credit in the amount of $[insert the number
in WHEREAS clause #3] allocated to the Project is fully forfeited; and
(2) after the Project is placed in service (and after satisfying all such requirements at the time the Project is placed in service),
the Project ceases to be investment credit property and the recapturerules of § 50(a) apply.]
[If the Project is an integrated gasification combined cycle project, insert:
5. (1) If the Project fails to satisfy any of the requirements in § 48A(e)(1) for a qualifying advanced coal project—
(a) at the time the Project is placed in service, the qualifyingadvanced coal project credit in the amount of $[insert the
number in WHEREAS clause #3] allocatedto the Project is fully forfeited; and
(b) after the Project is placed in service (and after satisfying all such requirements at the time the Project is placed in
service), the Project ceases to be investment creditproperty and the recapture rules of § 50(a) apply.
(2) If at any time more than 50 percent of the cumulative totalfuel input (coal and any other fuel input) for the Project is not
[insert the primary feedstock in WHEREASclause #2(5)], the Project ceases to be investment credit property and the recapture
rules of § 50(a) apply.
(3) If the Project fails to provide [insert priority benefits in WHEREAS clause #2(6)] at the time the Project is placed in
service, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the
Project is fully forfeited.]
6. Taxpayer will not claim the qualifying gasification projectcredit under § 48B for any qualified investment for which the
qualifying advanced coal projectcredit is allowed under § 48A.
7. If Taxpayer elects to claim the qualifying advanced coal project credit on the qualified progress expenditures paid or incurred
by Taxpayer during the taxable year for construction of a qualifying advanced coal project, rules similar to the recapture rules in
§ 50(a)(2)(A) through (D) apply.
8. This agreement applies only to Taxpayer. Any successor in interest must execute a new closing agreement with the IRS. If the
interest is acquired at or before the time the Project is placed in service and the successor in interest fails to execute a new closing
agreement, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to
the Project is fully forfeited. If the interest is acquired after the time the Project is placed in service and the successor in interest fails
to execute a new closing agreement, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.
THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:
1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;
2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including
anystatedexceptionfor§7122)notwithstanding any law or rule of law; and
3. If it relates to a tax period ending after the date of this Closing Agreement, it is subject to any law enacted after such date,
whichappliestothetaxperiod.
By signing, the parties certify that they have readand agreed to the terms of this Closing Agreement.
Taxpayer: [insert name and identifying number]
By:
Date Signed:
[insert name]
Title:[insert title]
[insert taxpayer’s name]
March 13, 20066012006–11 I.R.B.

Commissioner of Internal Revenue
By:
Date Signed:
[insert name]
Title:Associate Chief Counsel, Passthroughs and Special Industries, CC:PSI
I have examined the specific matters involved and recommend the acceptance of the proposed agreement.
(Receiving Officer)
(Title)
Date Signed
I have reviewed the specific matters involved and recommend the acceptance of the proposed agreement.
(Reviewing Officer)
(Title)
Date Signed
2006–11 I.R.B.602March 13, 2006

APPENDIX B
APPLICATION FOR DOE CERTIFICATION
REQUEST FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE
Pursuant to Notice 2006–24 establishing the Qualifying AdvancedCoal Project Program, the Internal Revenue Service (“IRS”)
will allocate a credit under § 48A of the Internal Revenue Code to a project only if, among other things, the IRS receives from the
Department of Energy (“DOE”) a certification of feasibility and consistency with energy policy goals (“DOE certification”) for
the project. This DOE certification shall assure that the applications selected meet the requirements of § 48A and the intent of
§ 48A to provide credits to projects that are both technically and economically feasible.
The IRS and DOE seek to certify applications that demonstrate a high likelihood of being successfully implemented by the
applicants. To qualify, projects must be economically feasible and use the appropriate cleancoal technology.
This request for submission of supplemental application information:
1. Describes the information to be provided by the applicant seeking a DOE certification, and
2. Lists the evaluation criteria, and Program Policy Factors to be used by DOE in the evaluation of applications.
In conducting this evaluation, the DOE may utilize assistance and advice from qualified personnel from other Federal agencies
and/or non-conflicted contractors. DOE will obtain assurances in advance from all evaluators that application information shall be
kept confidential and used only for evaluation purposes. DOE reserves the right torequest clarifications and/or supplemental
information from some or all applicants through written submissions and/or oral presentations.
Notice is given that DOE may determine whether or not to providea DOE certification to the IRS at any time after the application
has been received, without further exchanges or discussions. Therefore, all applicantsare advised to submit their most complete
and responsive application.
Applications will not be returned.
SUBMISSION INFORMATION FOR DOE CERTIFICATION APPLICATION
A. General
This request, together with the information in sections 5.02, 7.01, and 7.02 of Notice 2006–24 includes all the information needed
to complete an application for DOE certification. All applications shall be prepared in accordance with this request in order to
provide a standard basis for evaluation and to ensure thateach application will be uniform as to format and sequence.
Each application should clearly demonstrate the applicant’scapability, knowledge, and experience in regard to the requirements
described herein.
Applicants should fully address the requirements of Notice 2006–24 and this request andnotrely on the presumed background
knowledge of reviewers. DOE may reject anapplication that does not follow the instructions regarding the organization and
content of the application when the nature of the deviation and/or omission precludes meaningful review of the application.
B. Unnecessarily Elaborate Applications
Unnecessarily elaborate brochures or other presentations beyond those sufficient to present a complete and effective application
are not desired. Elaborate art work, graphics andpictures are neither required nor encouraged.
C. Application Submission for DOE Certification
The application submission to DOE must include the information and documentation required by sections 5.02, 7.01, and 7.02
of Notice 2006–24.
A project will not be considered in the allocation round conducted in a calendar year unless the application for DOE certification
of the project is postmarked by June 30 of that calendar year. Two paper copies and one electronic version on a floppy disc or a
CD of the Application must be submitted to:
Melissa Robe
National Energy Technology Laboratory
3610 Collins Ferry Road
Morgantown, WV 26507
March 13, 20066032006–11 I.R.B.

Note that under section 5 of Notice 2006–24, one paper copy must be sent to the IRS as part of the application for IRS certification.
The project will not be considered in the allocation round conducted in a calendar year unless the application is submitted to the
IRS by the date specified for that calendar year in section 4.02(8) of Notice 2006–24.
THE INFORMATION REQUIRED BY THIS REQUEST MUST BE SUBMITTED USING THE FORMAT AND THE
HEADINGS OF THE “PROJECT INFORMATION MEMORANDUM” AS DESCRIBED BELOW.
To aid in evaluation, applications shall be clearly and concisely written and logically assembled. All pages of each part shall be
appropriately numbered and identified with the name of the applicant and the date.
The application, including the Project Information Memorandum, MUST be formatted in one of the following software
applications:
Microsoft Word
tm
2002 or later edition
Microsoft Excel
tm
2002 or later edition
Adobe Acrobat
tm
PDF 6.0 or later edition
Financial models should be submitted using the Excel
tm
spreadsheet and must include calculation formulas and assumptions.
The applicant is responsible for the integrity and structureof the electronic files. The DOE will not be responsible for
reformatting, restructuring or converting any files submitted under this announcement.
The Project Information Memorandum,excluding Appendices, shall not exceed seventy-five (75) pages. Pages in excess of the
page limitation will not be considered for evaluation. All text shall be typed, singlespaced, using 12 point font, 1 inch margins,
and unreduced 8-1/2-inch by 11-inch pages. Illustrations and charts shall be legible with all text in legible font. Pages shall be
sequentially numbered. Except as otherwise noted herein the page guidelines previously set forth constitute a limitation on the
total amount of material that may be submitted for evaluation.No material may be incorporatedin any application by reference
as a means to circumvent the page limitation.
D. Form of Project Information Memorandum
PROJECT INFORMATION MEMORANDUM
I. SUMMARY AND INTRODUCTION
•Description of the Project
•Financing and Ownership Structure
•Describe the main parties to the project, includingbackground, ownership and related experience
•Current Project Status and Schedule to Beginning of Construction
II. TECHNOLOGY AND TECHNICAL INFORMATION
Provide a description of the proposed technology, including sufficient supporting information (such as process flow
diagrams, equipment descriptions, information on each major process unit andthe total plant, compositions of major
streams, and the technical plan for achieving the goals proposed for the project) as would be needed to allow DOE to
confirm that the technical requirements of § 48A could, in principle, be met. Specifically the applicant should:
2006–11 I.R.B.604March 13, 2006

•Provide evidence sufficient to demonstrate that the proposed technology meets the definition of “Advanced Coal-Based
Generation Technology,” either as integrated gasification combined cycle (IGCC) technology, or other advanced coal-
based electric generation technology meeting the heat rate requirement of 8530 Btu/kWh
•The applicant must provide actual heat rate and heat rate corrected to conditions specified in § 48A(f)(2)
•For projects including existing units, the applicant must provide information sufficient to justify that the proposed
technology meets heat rate requirements specified in § 48A(f)(3)
•Provide evidence sufficient to ensure that the proposed project is designed to meet the following performance require-
ments:
•SO2 percent removal........99 percent
•NOx emissions..................0.07 lbs / MMBTU
•PM emissions....................0.015 lbs / MMBTU
•Hg percent removal..........90 percent
•Provide evidence sufficient to demonstrate that the projectmeets the requirements for qualifying advanced coal projects
as specified under § 48A(e)(1) including:
•The project will power a new electric generation unit or retrofit/repower an existing electric generation unit. At least
50% of the useful output of the project is electrical power.
•The fuel for the project is at least 75% coal (as defined in § 48A(c)(4)), on an energy input basis.
•The project is located at one site and has a total nameplate electric power generatingcapacity of at least 400 MW.
•Provide information and data, includingexamples of prior similar projects completed by applicant, EPC contractor, and
suppliers of major subsystems or equipment which support the capabilities of the applicant to construct and operate the
facility.
•Include the project status and relevant information from ongoing engineering activities. Also include in an appendix any
engineering report or reports used by the applicant to developthe project and to estimate costs and operating performance.
III. PRIORITY FOR INTEGRATED GASIFICATION COMBINED CYCLE PROJECTS
For IGCC Projects, the applicant must submit information sufficient for categorization andprioritization of projects
for certification, including:
•Identification of the primary feedstock (as defined in section 5.02(5) of Notice 2006–24), and all other feedstocks.
•If applicable, evidence demonstrating that the project willbe capable of adding components that can capture, separate
and permanently sequester greenhouse gases.
•A plan showing how project by-products will be marketed and utilized.
•Other benefits, if any.
IV. SITE CONTROL AND OWNERSHIP
•Provide evidence that the applicant owns or controls a sitein the United States of sufficient size to allow the proposed
project to be constructed and operated on a long-term basis.
•Describe the current infrastructure at the site available to meet the needs of the project.
•Provide information supporting applicant’s conclusion that the proposed site canfully meet all environmental, coal sup-
ply, water supply, transmission interconnect, and public policy requirements.
March 13, 20066052006–11 I.R.B.

V. UTILIZATION OF PROJECT OUTPUT
•A projection of the anticipated costs of electricity and other marketable by-products produced by the plant.
•Provide evidence that a majority of the output of the plant is reasonably expectedto be acquired or utilized.
•Describe any energy sales arrangements that exist or that may be contemplated,e.g., Power Purchase Agreement or
Energy Sales Agreement, and summaries of their key terms and conditions.
•Include as an appendix any independent Energy Price Market Study that has been done in connection with this project,
or if no independent market study has been completed, provide a copy of the applicant-prepared market study.
•Identify and describe any firm arrangements to sell non-power output, and provide any evidence of such arrangements. If
the project produces a product in addition to power, include as an appendix any related market study of price and volume
of sales expected for that product.
VI. PROJECT ECONOMICS
Describe the project economics and provide satisfactory evidence of economic feasibility as demonstrated through the
financial forecast and the underlying project assumptions.
Discuss the market potential for the proposed technology beyond the project proposed by the applicant.
Show calculation of the amount of tax credit applied for based on allowable cost.
VII. PROJECT DEVELOPMENT AND FINANCIAL PLAN
Provide the total project budget and major plant costs,e.g., development, operating, capital, construction, and financing
costs. Describe the overall approach to project development and financing sufficient to demonstrate project viability.
Provide a complete explanation of the source and amount of project equity. Provide a complete explanation of the source
and amount of project debt. Provide the audited financial statements for the applicant forthe most recently ended three
fiscal years, and the unaudited quarterly interim financial statements for the current fiscal year.
For internally financed projects, provideevidence that the applicant has sufficient assets to fund the project with its own
resources. Identify any internal approvals required to commit such assets. Include in an appendix copies of any board
resolution or other approval authorizing the applicant to commit funds and proceed with the project.
For projects financed through debt instruments either unsecured or secured by assets other than the project, provide
evidence that the applicant has sufficientcreditworthiness to obtain such financing along with a discussion of the status of
such instruments. Identify any internal approvals requiredto commit the applicant to pursue such financing. Include in an
appendix, copies of any board resolution or other approval authorizing the applicant to commit to such financing.
For projects financed through investor equity contributions, discuss the source and status of each contribution. Discuss
each investor’s financial capability to meet its commitments.Include in an appendix, copiesof any executed investment
agreements.
If financing through a public offering or private placement of either debt or equity is planned for the project, provide the
expected debt rating for the issue and an explanation of applicant’s justification for the rating. Describe the status of any
discussions with prospective investmentbankers or other financial advisors.
For projects employing nonrecourse debt financing, provide a complete discussion of the approach to, and status of,
such financing.
In an appendix, provide (1) an Excel based financial model of the project, with formulas, so that review of the model
calculations and assumptions may be facilitated; providepro-formaproject financial, economic, capital cost, and operating
assumptions, including detail of all project capital costs, development costs, interest during construction, transmission
interconnection costs, other operating expenses, and allother costs and expenses, and (2) a report of an independent
financial analyst in accordance with the instructions in Section G of this Appendix B.
VIII. PROJECT CONTRACT STRUCTURE
Describe the current status of each of the agreements set forth below. Include as an appendix copies of the contracts or
summaries of the key provisions of each of the following agreements:
2006–11 I.R.B.606March 13, 2006

•Power Purchase Agreement (if notfully explained in Section IV)
•Coal Supply: describe the source and price of coal supply for the project. Include as an appendix any studies of coal
supply price and amount that have been prepared. Include a summary of the coal supply contract and a copy of the
contract.
•Coal transportation: explain the arrangements for transporting coal, including costs.
•Operations & Maintenance Agreement: include a summary ofthe terms and conditions of the contract and a copy of the
contract.
•Shareholders Agreement: summarize key terms and include the agreement as an appendix.
•Engineering, Procurement and Construction Agreement: describe the key terms of the existing or expected EPC contract
arrangement, including firm price, liquidated damages, hold-backs, performance guarantees, etc.
•Water Supply Agreement: confirm the amount, source, and cost of water supply.
•Transmission interconnection agreement: explain the requirements to connectto the system and the current status of
negotiations in this respect.
IX. PERMITS INCLUDING EVIRONMENTAL AUTHORIZATIONS
•Provide a completelist of all federal, state, and localpermits, including environmental authorizations or reviews, neces-
sary to commence construction of the project.
•Explain what actions have been taken to date to satisfy the required authorizations and reviews, and the status of each.
•Provide a description of the applicant’s plan to obtain and complete all necessary permits, and environmental authoriza-
tions and reviews.
X. STEAM TURBINE PURCHASE
•If applicant plans to purchase a steam turbine or turbines for the project, indicate the prospective vendors for the turbine
and explain the current status of purchase negotiations, and provide a timeline for negotiation and purchase with expected
purchase date.
XI. PROJECT SCHEDULE
•Provide an overall project schedule which includes technical,business, financial, permitting and other factors to substan-
tiate that the project will meet the 2 year project certification and 5 year placed-in-service requirement.
March 13, 20066072006–11 I.R.B.

APPENDICES
•Independent Financial Report.
•Copy of internal or external engineering reports.
•Copy of site plan, together with evidencethat applicant owns or controls a site.Examples of evidence would include a
deed, or an executed contract to purchase or lease the site.
•Information supporting applicant’s conclusion that the site is fully acceptable as the project site with respect to environ-
ment, coal supply, water supply, transmission interconnect, and public policy reasons.
•Power Purchase or Energy Sales Agreement.
•Energy Market Study.
•Market Study for non-power output.
•Financial Model of project.
•Audited financial statements for the applicant for the most recently ended three fiscal years, and the unaudited quarterly
interim financial statementsfor the current fiscal year.
•For each project contract, if no contractcurrently exists, provide a summaryof the expected terms and conditions.
•List of all federal, state, and local permits, including environmental authorizations or reviews, necessary to commence
construction.
•If an appendix listed above is not provided, include in its place a complete explanation of the reasons for the omission.
E. Evaluation Criteria:
Advanced coal projects: will beevaluated on whether they meet all the requirements of § 48A.
Technical: will be evaluated on whether the applicant has demonstrated the capability to accomplish the technical objectives.
Site: will be evaluated on the basis that the site requirement for ownership or control has been met, and that the site is suitable for
the proposed project.
Economic: will be evaluated on whether the project has demonstrated economic feasibility,taking into consideration the submitted
financial and project development and structural information and financial plan.
Schedule: will be evaluated on the applicant’s ability to meet the 2 year project certification andthe 5 year placed-in-service
requirement.
F. Program Policy Factors to be used by DOE in the evaluation of applications and a description of how they will be applied.
These factors, while not indicators of the applicant’s merit,e.g., technical excellence, cost, applicant’s ability, etc., may be
essential to the process of selecting the application(s) that, individually or collectively, will bestachieve the objectives of the
authorizing legislation. Such factors are often beyond the control of the applicant. Applicants should recognize that some very
good applications may not receive selection for certification because they do not fit within a mix of projects and technologies
that maximize the probability of achieving the overall objective of deployment of advanced coal-based generation technology.
Therefore, the following Program PolicyFactors may be used individually or collectively by DOE following application of
evaluation criteria to determine which of the applications shall receivecertification by DOE.
•Diversity of technologyapproaches and methods
•Geographic distribution of potential markets
•Presentation of unique environmental, economic, or performance benefits
2006–11 I.R.B.608March 13, 2006

G. Instructions for independent financial reports
The applicant shall provide an independent report by a qualified Independent Financial Analyst (such as a bank, investment
bank, or other independent financial advisoryfirm). In the report, the Independent Financial Analyst shall describe qualifications
and experience that establish the Analyst’s competence to evaluate project financing for projects similar in scope and size to
the Applicant’s project. The Independent Financial Analyst shall provide a thorough, independent review of the Applicant’s
approach to project financing. The report shall include the opinion of the Independent Financial Analyst as to the Applicant’s
likelihood to achieve financial closure in accordance with the Applicant’s financing plan.
Required Certification by Independent Financial Analyst:
The report shall be certified by the Independent Financial Analyst, who shall (a) acknowledge that the report has been
prepared for submission to the Department of Energy as a partof an application by applicant for an investment credit,
and (b) certify that the Independent Financial Analyst has no obligation to the applicant and has acted to the best of its
ability as an independent expert.
At a minimum, the Independent Financial Analyst shall:
•Review the financial model.
•Review the project financial assumptions, including economic, capital costs, operating assumptions, and all project de-
velopment costs.
•Review the financial calculations, including rates of return and coverage ratios.
•Confirm the calculation of the amount of the tax credit applied for.
•Review the project development cost budget.
•Review and comment on the source of funding and evidence of funding.
•Review and comment on project debt and equity sources.
•Confirm that the application includes the required financial reports and debt ratings.
•Describe and comment on the capabilities of the applicant to provide the required financing for the project, and the
likelihood of obtaining financing from a source other than theapplicant, if such financing is required by the project.
Qualifying Gasification Project
Program
Notice 2006–25
SECTION 1. PURPOSE
This notice establishes the qualify-
ing gasification project program under
§ 48B(d) of the Internal Revenue Code.
The purpose of this program is to consider
and award certifications for qualified in-
vestment eligible for credits under § 48B
to qualifying gasification project sponsors.
SECTION 2. BACKGROUND
.01 Section 46 provides that the amount
of the investment credit for any taxable
year is the sum of the credits listed in § 46.
Section 1307(a) of the Energy Policy Act
of 2005, Pub. L. 109–58, 119 Stat. 594
(August 8, 2005) (the “Act”), amended
§46toaddtwonewcreditstothatlist:
the qualifying advanced coal project credit
and the qualifying gasification project
credit.
.02 The qualifying gasification project
credit is provided under § 48B, as added
by § 1307(b) of the Act. Section 48B(a)
provides that the qualifying gasification
project credit for a taxable year is an
amount equal to 20 percent of the quali-
fied investment (as defined in § 48B(b))
for that taxable year in qualifying gasifi-
cation projects. Pursuant to § 48B(d)(1),
the aggregate amount of credits allocated
to all qualifying gasification projects may
not exceed $350 million.
.03 The term “qualifying gasifica-
tion project” is defined in § 48B(c)(1)
as meaning any project that (A) employs
gasification technology, (B) will be car-
ried out by an eligible entity (as defined
in § 48B(c)(7)), and (C) includes a qual-
ified investment of which an amount not
to exceed $650 millionis certified under
the qualifying gasification program as
eligible for credit under § 48B. Pursuant
to § 48B(c)(2), gasification technology
is any process that converts a solid or
liquid product from coal (as defined in
§ 48B(c)(6)), petroleum residue (as de-
fined in § 48B(c)(8)), biomass (as defined
in § 48B(c)(4)), or other materials that are
recovered for their energy or feedstock
value into a synthesis gas composed pri-
marily of carbon monoxide and hydrogen
for direct use or subsequent chemical or
physical conversion.
.04 The qualifying gasification project
credit generally is allowed in the taxable
year in which the eligible property (as de-
fined in § 48B(c)(3)) is placed in service
by the taxpayer. Further, the at-risk rules
in § 49 and the recapture and other special
March 13, 20066092006–11 I.R.B.

rules in § 50 apply to the qualifying gasifi-
cation project credit.
SECTION 3. QUALIFYING
GASIFICATION PROJECT PROGRAM
Section 48B(d)(1)provides that the
Secretary, in consultation with the Secre-
tary of Energy, shall establish a qualifying
gasification project program to consider
and award certifications for qualified in-
vestment eligible for credits under § 48B
to qualifying gasification project sponsors.
The Treasury Department and the Internal
Revenue Service are establishing the qual-
ifying gasification project program under
the rules set forth in sections 4 through 8
of this notice. Pursuant to § 48B(d)(2),
certificates of eligibility may be issued
under the program only during the 10-year
period beginning on October 1, 2005.
SECTION 4. ESTABLISHMENT
OF QUALIFYING GASIFICATION
PROJECT PROGRAM
.01In General. The Service will con-
sider a project under the qualifying gasi-
fication project program only if the U.S.
Department of Energy (“DOE”) provides a
certification of feasibility and consistency
with energy policy goals (“DOE certifi-
cation”) for the project. Accordingly, for
each qualifying gasification project, a tax-
payer must submit: (1) an application for
certification by the DOE (“application for
DOE certification”), and (2) an applica-
tion for certification under § 48B by the
Service (“application for § 48B certifica-
tion”). Both applications may be sub-
mitted only during the 3-year period be-
ginningonFebruary21,2006. Certifi-
cations will be issued and credits will be
allocated to projects in annual allocation
rounds. The initial allocation round will
be conducted in 2006. If necessary, addi-
tional allocation rounds will be conducted
in 2007 and 2008.
.02Program Specifications.
(1) The Service will determine the
amount of the qualifying gasification
project credits allocated to a qualifying
gasification project at the time the Ser-
vice accepts the application for § 48B
certification for that project in accordance
with section 4.02(9) of this notice. The
qualified investment in the project will be
certified as eligible for the credit to the
extent such investment does not exceed
the amount of the credit allocated to the
project multiplied by five. See section 5 of
this notice for the requirements applicable
to the application for DOE certification
and the application for § 48B certification.
(2) The certification for a project can-
not apply to more than $650 million of the
qualified investment in the project. Thus,
the maximum amount of qualifying gasifi-
cation project credits that will be allocated
to a project is $130 million.
(3) The aggregate credit of $350 million
will be allocated as follows in the initial
round of allocations conducted in 2006:
(a) The aggregate credit will be al-
located first to the projects that have
carbon capture capability (as defined in
§ 48B(c)(5)), use renewable fuel, or have
project teams with experience that demon-
strates successful and reliable operations
of the gasification technology on the do-
mestic fuels identified in § 48B(c)(2).
(b) If the requested allocation of credits
for these priority projects exceeds the ag-
gregate credit of $350 million, the credit
will be allocated to the priority projects
providing the highest ratio of the total
amount of synthesis gas to be supplied
by the project (“nameplate capacity”) to
requested allocation of credits.
(c) If the requested allocation of cred-
its for the priority projects does not exceed
the aggregate credit of $350 million, the re-
maining amount of the credit will be allo-
cated to the nonpriority projects providing
the highest ratio of nameplate capacity to
requested allocation of credits.
(4) If the aggregate credit of $350 mil-
lion is not fully allocated in the initial
round of allocations in 2006, similar allo-
cation rounds will be conducted in 2007
and 2008 until the aggregate credit of $350
million is fully allocated. Generally, the
results of each year will be announced.
(5) If the same project would otherwise
be allocated credits under both the qualify-
ing gasification project program under this
notice and the qualifying advanced coal
project program under Notice 2006–24,
2006–11 I.R.B. 595, the following rules
apply:
(a) If the project is allocated the full
amount of the qualifying advanced coal
project credit requested by the taxpayer, no
qualifying gasification project credit will
be allocated to the project;
(b) If the project is allocated the full
amount of the qualifying gasification
project credit requested by the taxpayer,
no qualifying advanced coal project credit
will be allocated to the project;
(c) If the project is allocated less than
the full amount of the qualifying advanced
coal project credit requested by the tax-
payer, the qualifying gasification project
credit may be allocated to the project with
respect to the qualified investment under
§ 48B for which a qualifying advanced
coal project credit is not allowed under
§ 48A; and
(d) If the project is allocated less than
the full amount of the qualifying gasifi-
cation project credit requested by the tax-
payer, the qualifying advanced coal project
credit may be allocated to the project with
respect to the qualified investment under
§ 48A for which a qualifying gasification
project credit is not allowed under § 48B.
(6) For each allocation round, there will
be an annual application period during
which a taxpayer may file its application
for § 48B certification. The Service will
consider a project in an allocation round
only if the application for § 48B certifica-
tion for the project is submitted during the
application period for that round and the
DOE provides the DOE certification for
the project before the end of that applica-
tion period.
(7) For the initial allocation round con-
ducted in 2006, the application period be-
gins on February 21, 2006, and ends on
October 2, 2006. Any completed appli-
cation for § 48B certification received by
the Service before October 3, 2006, will be
deemed to be submitted by the taxpayer on
October 2, 2006. For 2007, the application
period begins on October 3, 2006, and ends
on October 1, 2007, and any completed ap-
plication for § 48B certification received
by the Service after October 2, 2006, and
before October 2, 2007, will be deemed to
be submitted by the taxpayer on October
1, 2007. For 2008, the application period
begins on October 2, 2007, and ends on
October 1, 2008, and any completed ap-
plication for § 48B certification received
by the Service after October 1, 2007, and
before October 2, 2008, will be deemed to
be submitted by the taxpayer on October
1, 2008. For purposes of this notice, an
application that is submitted by U.S. mail
will be treated as received by the Service
on the date of the postmark and an applica-
tion submitted by a private delivery service
will be treated as received by the Service
2006–11 I.R.B.610March 13, 2006

on the date recorded or the date marked in
accordance with § 7502(f)(2)(C).
(8) See section 5.02 of this notice and
Appendix B to this notice for the infor-
mation to be submitted to the DOE in an
application for DOEcertification. Ap-
pendix B to this notice also provides the
instructions and address for filing the ap-
plication for DOE certification. The DOE
will determine the feasibility of the project
and its consistency with energy policy
goals and, if the project is determined to
be feasible and consistent with energy pol-
icy goals, will provide a DOE certification
for the project to the Service. If an appli-
cation for DOE certification is postmarked
on or before June 30 of a calendar year,
the DOE will determine the feasibility of
the project and its consistency with energy
policy goals and (forprojects determined
to be feasible and consistent) provide the
DOE certification by October 1 of that
calendar year.
(9) By November 30 of the calendar
year in which an application for § 48B cer-
tification is deemed to be submitted (as de-
termined under section 4.02(7) of this no-
tice), the Service will accept or reject the
taxpayer’s application for § 48B certifica-
tion and will notify the taxpayer, by letter,
of its decision.
(10) A taxpayer that receives an accep-
tance letter under section 4.02(9) of this
notice has 7 years from the date of the ac-
ceptance letter to place the project in ser-
vice and if the project is not placed in ser-
vice by the end of that period then the ac-
ceptance letter is void.
(11) If the taxpayer’s application for
§ 48B certification is accepted, the ac-
ceptance letter will state the amount of
the credit allocated to the project and the
amount of qualified investment that is
certified as eligible for the credit. If a
credit is allocated to a taxpayer’s project,
the taxpayer will be required to execute a
closing agreement in the form set forth in
Appendix A to this notice. By January 31
of the following year, the taxpayer must
execute and return the closing agreement
to the Service at the appropriate address
listed in section 5.04 of this notice or listed
in later guidance published in the Internal
Revenue Bulletin. The Service will exe-
cute and return the closing agreement to
the taxpayer by March 31 of such follow-
ing year. The executed closing agreement
applies only to the accepted taxpayer. Ac-
cordingly, any successor in interest must
execute a new closing agreement with the
Service. If the successor in interest does
not execute a new closing agreement, the
following rules apply:
(a) In the case of an interest acquired at
or before the time the qualifying gasifica-
tion project is placed in service, any credit
allocated to the project will be fully for-
feited (and rules similar to the recapture
rules of § 50(a) apply with respect to qual-
ified progress expenditures); and
(b) In the case of an interest acquired
after the qualifying gasification project is
placed in service, the project ceases to be
investment credit property and the recap-
ture rules of § 50(a) (and similar rules with
respect to qualified progress expenditures)
apply.
SECTION 5. APPLICATIONS FOR
CERTIFICATIONS
.01In General. An application for
§ 48B certification and a separate ap-
plication for DOE certification must be
submitted for each qualifying gasifica-
tion project. If an application for DOE
certification does not include all of the in-
formationrequiredbysection5.02ofthis
notice and meet the requirements in sec-
tions 6.01 and 6.02 of this notice, the DOE
may decline to accept the application. If
an application for § 48B certification does
not include all of the information listed in
section 5.03 of this notice and meet the
requirements in sections 6.01 and 6.02
of this notice, the application will not be
accepted by the Service.
.02InformationRequiredintheAppli-
cation for DOE Certification. An applica-
tion for DOE certification must include all
of the information requested in Appendix
B to this notice and all of the following:
(1) The name, address, and taxpayer
identification number of the taxpayer;
(2) The name and telephone number of
a contact person;
(3) The name and address (or other
unique identifying designation) of the
qualifying gasification project;
(4) A statement specifying the pro-
jected placed-in-service date of the quali-
fying gasification project;
(5) The estimated total cost of the
project and the estimated total qualified
investment in the eligible property that
will be part of the project;
(6) The amount of the qualifying gasi-
fication project credit requested for the
project. The amount requested must
not exceed $130 million (the maximum
amount permitted under § 48B(a) and
(c)(1)(C));
(7) If the taxpayer is or will be request-
ing an amount of the qualifying advanced
coal project credit under § 48A for the
same project, a statement specifying the
credit the taxpayer prefers to receive;
(8) The amount of synthesis gas to be
supplied by the qualifying gasification
project (nameplate capacity). The syn-
thesis gas must be composed primarily of
carbon monoxide and hydrogen for direct
use or subsequent chemical or physical
conversion; and
(9) Documentation or other evidence
establishing that the taxpayer is financially
viable without the receipt of additional
federal funding associated with the quali-
fying gasification project.
.03InformationRequiredintheAppli-
cation for § 48B Certification. An appli-
cation for § 48B certification must include
all of the following:
(1) The name, address, and taxpayer
identification number of the taxpayer;
(2) The name and telephone number of
a contact person. If necessary, attach any
required power of attorney, preferably on
Form 2848,Power of Attorney and Decla-
ration of Representative;and
(3)Apapercopyofthecompletedap-
plication for DOE certification submitted
with respect to the project in accordance
with section 5.02 of this notice.
.04Instructions and Address for Filing
§ 48B Application. Applications for § 48B
certification should be marked: SECTION
48B APPLICATION FOR CERTIFICA-
TION. There is no user fee for these ap-
plications.
(1) Applications submitted by U.S. mail
must be sent to:
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Applications submitted by a private de-
livery service must be sent to:
March 13, 20066112006–11 I.R.B.

Internal Revenue Service
Attn: CC:PSI:6, Room 5313
1111 Constitution Ave., N.W.
Washington, DC 20224
(2) Applications may also be hand de-
livered Monday through Friday between
the hours of 8 a.m. and 4 p.m. to:
Courier’s Desk
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
1111 Constitution Avenue, N.W.
Washington, DC 20224
SECTION 6. OTHER REQUIREMENTS
.01Signature. Each submission under
section 5 of this notice must be signed and
dated by the taxpayer. A stamped signa-
ture or faxed signature is not permitted.
.02Penalties of Perjury Statement.
(1) Each submission under section 5 of
this notice must be accompanied by the
following declaration: “Under penalties of
perjury, I declare that I have examined this
submission, including accompanying doc-
uments, and, to the best of my knowledge
and belief, all of the facts contained herein
are true, correct, and complete.”
(2) The declaration must be signed and
dated by the taxpayer. The person sign-
ing for the taxpayer must have personal
knowledge of the facts. A stamped signa-
ture or faxed signature is not permitted.
.03Effect of an Acceptance or Alloca-
tion. An acceptance or allocation by the
Service under this notice is not a deter-
mination that a project qualifies for the
qualifying gasification project credit under
§ 48B. The Service may, upon examina-
tion (and after any appropriate consulta-
tion with DOE), determine that the project
does not qualify for this credit.
.04No Right to a Conference or Appeal.
A taxpayer does not have a right to a con-
ference relating to any matters under this
notice. Further, a taxpayer does not have
a right to appeal the decisions made under
this notice (including the acceptance or re-
jection of the application for DOE or § 48B
certification or the amount of credit allo-
cated to the project) to an Associate Chief
Counsel or any other official of the Ser-
vice.
SECTION 7. REVIEW AND
REDISTRIBUTION
.01In General. Section 48B(d)(1) pro-
vides for the review and redistribution of
credits allocated under the qualifying gasi-
fication project program under rules simi-
lar to the rules of § 48A(d)(4).
.02Review and Redistribution of Cred-
its.
(1)In general. If, after the allocation
round in 2008, the aggregate credit of $350
millionisnotfullysubscribed(i.e.,theag-
gregate credit is not fully allocated), an ad-
ditional program for applications for cer-
tification to allocate the remaining credits
will be conducted. Future guidance will
prescribe the procedures applicable to ap-
plications for certification with respect to
the remaining credits.
(2)Reduction or forfeiture of allocated
credits. Under the closing agreement set
forthinAppendixAtothisnotice,the
qualifying gasification project credits allo-
cated under section 4 of this notice will be
reduced or forfeited in certain situations.
A taxpayer must notify the Service of the
amount of any reduction or forfeiture re-
quired under the closing agreement. This
notification must be sent to the appropriate
addresslistedinsection5.04ofthisnotice
or listed in later guidance published in the
Internal Revenue Bulletin.
The amount of any reduction or for-
feiture of the allocated credits will be re-
turned and included in the aggregate credit
remaining to be allocated in the allocation
round following the reduction or forfei-
ture. If the reduction or forfeiture occurs
after the allocation round in 2008, future
guidance will prescribe procedures appli-
cable to applications for certification with
respect to the returned credits.
SECTION 8. QUALIFIED PROGRESS
EXPENDITURES
.01 Section 48B(b)(3) provides that
rules similar to the rules of § 46(c)(4)
and (d) (as in effect on the day before the
enactment of the Revenue Reconciliation
Act of 1990) shall apply for purposes of
§ 48B. Former §§ 46(c)(4) and 46(d) pro-
vided the rules for claiming the investment
credit on qualified progress expenditures
(as defined in former § 46(d)(3)) made
by a taxpayer during the taxable year for
the construction of progress expenditure
property (as defined in former § 46(d)(2)).
.02 In the case of self-constructed prop-
erty (as defined in former § 46(d)(5)(A)),
former § 46(d)(3)(A) defined qualified
progress expenditures to mean the amount
that is properly chargeable (during the
taxable year) to capital account with re-
spect to that property. With respect to
a qualifying gasification project that is
self-constructed property, amounts paid or
incurred are chargeable to capital account
at the time and to the extent they are prop-
erly includible in computing basis under
the taxpayer’s method of accounting (for
example, after applying the requirements
of § 461, including the economic perfor-
mance requirement of § 461(h)).
.03 To claim the qualifying gasification
project credit on the qualified progress ex-
penditures paid or incurred by a taxpayer
during the taxable year for construction of
a qualifying gasification project, the tax-
payer must make an election under the
rules set forth in § 1.46–5(o) of the In-
come Tax Regulations. The taxpayer may
not make the qualified progress expendi-
tures election for a qualifying gasification
project until the taxpayer has received an
acceptance letter for the project under sec-
tion 4.02(9) of this notice.
.04 If a taxpayer makes the qualified
progress expenditures election pursuant to
section 8.03 of this notice, rules similar
to the recapture rules in § 50(a)(2)(A)-(D)
apply. In addition to the cessation events
listed in § 50(a)(2)(A), examples of other
events that will cause the project to cease
being a qualifying gasification project are:
(1) Failure to place the project in ser-
vice within 7 years from the date of the ac-
ceptance letter under section 4.02(9) of this
notice; or
(2) In the case of a project that was enti-
tled to priority for carbon capture capabil-
ity, failure to providethat priority benefit
on the date the project is placed in service.
SECTION 9. EFFECTIVE DATE
This notice is effective February 21,
2006.
SECTION 10. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
2006–11 I.R.B.612March 13, 2006

Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2002.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 4, 5, 6, 7, and Ap-
pendix B of this notice. This information
isrequiredtoobtainanallocationofqual-
ifying gasification project credits. This in-
formation will be used by the Service to
verify that the taxpayer is eligible for the
qualifying gasification project credits. The
collection of information is required to ob-
tain a benefit. The likely respondents are
business or other for-profit institutions.
The estimated total annual reporting
burden is 1,700 hours.
The estimated annual burden per re-
spondent varies from 50 to 125 hours, de-
pending on individual circumstances, with
an estimated average of 85 hours. The es-
timated number of respondents is 20.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 11. DRAFTING
INFORMATION
The principal author of this notice
is Jennifer Bernardini of the Office of
Associate Chief Counsel (Passthroughs
& Special Industries). For further in-
formation regarding this notice, contact
Douglas H. Kim at (202) 622–3110 (not a
toll-free call).
March 13, 20066132006–11 I.R.B.

APPENDIX A
CLOSING AGREEMENT
Under § 7121 of the Internal Revenue Code, [insert taxpayer’s name, address, and identifying number] (“Taxpayer”) and the
Commissioner of Internal Revenue (“Commissioner”) make the following closing agreement:
WHEREAS:
1. On or before October [insert date and year], Taxpayer submitted to the Internal Revenue Service (“IRS”), an application for
certification under the qualifying gasification project program described in Notice 2006–25 (“Application for § 48B Certification”);
2. Taxpayer’s Application for § 48B Certification is for the qualifying gasification project (the“Project”) described below—
(1) The Project will be located at [insert address or other identifying designation];
(2) The Project will supply [insert number] mcf of synthesis gas that is composed primarily of carbon monoxide and hydrogen
for direct use or subsequent chemical or physical conversion;
(3) The fuels identified in § 48B(c)(2) will at all times cumulatively comprise at least 90 percent of the total fuels (fuels identi-
fied in § 48B(c)(2) and any other fuel input) required by the Projectfor the production of chemical feedstocks, liquid transportation
fuels, or co-production of electricity;
[If the Project is a priority project, insert:
(4) The Project is entitled to priority under Notice 2006–25 [insert either: “for carbon capture capability (as defined in
§ 48B(c)(5)) or use of renewable fuels”; “because the project teamhas experience that demonstratessuccessful and reliable opera-
tions of the gasification technology on domestic fuels identified in § 48B(c)(2)”; or “both for carbon capture capability (as defined
in § 48B(c)(5)) or use of renewable fuels and because the project team has experience that demonstrates successful and reliable
operations of the gasification technology on domestic fuels identified in § 48B(c)(2)”];]and
3. On or before November 30, [insert year], the IRS accepted Taxpayer’s Application for § 48B Certification for the Project and
allocated a qualifying gasification project credit under § 48B in the amount of $[insert number] to the Project.
NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:
1. The total amount of the qualifying gasification project credit to be claimed for the Projectunder § 48B(a) must not exceed
$[insert the number in WHEREAS clause #3].
2. If the Project is not placed in service by Taxpayer within 7 years of [insert date of acceptance letter issued under section
4.02(9) of Notice 2006–25], the qualifying gasification projectcredit in the amount of $[insert the number in WHEREAS clause
#3] allocated to the Project is fully forfeited.
3. If the Project does not supply synthesis gas in the amount of [insert the number in WHEREAS clause #2(2)] on the date the
Project is placed in service, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3]
allocated to the Project isreduced proportionately.
[If the Project is not a priority project for carbon capture capability, for use of renewable fuels, or because the project
team has experience that demonstrates successful and reliable operations of the gasification technology on domestic fuels
identified in § 48B(c)(2), insert:
4. (1) If the Project fails to use gasification technology as defined in § 48B(c)(2) or is not carried out by an eligible entity as
defined in § 48B(c)(7), the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3]
allocated to the Project is fully forfeited.
(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the gasification technology for the Project do not cu-
mulatively comprise at least 90 percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input) required by the
Project for the production of chemical feedstocks, liquid transportation fuels, or co-production ofelectricity, the Project ceases to
be investment credit property and the recapture rules of § 50(a) apply.]
2006–11 I.R.B.614March 13, 2006

[If the Project is a priority project for carbon capture capability, for use of renewable fuels, or because the project team
has experience that demonstrates successful and reliable operations of thegasification technology on domestic fuels
identified in § 48B(c)(2), insert:
4. (1) If the Project fails to use gasification technology as defined in § 48B(c)(2) or is not carried out by an eligible entity as
defined in § 48B(c)(7), the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3]
allocated to the Project is fully forfeited.
(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the gasification technology for the Project do not cu-
mulatively comprise at least 90 percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input) required by the
Project for the production of chemical feedstocks, liquid transportation fuels, or co-production ofelectricity, the Project ceases to
be investment credit property and the recapture rules of § 50(a) apply.
(3) If the Project fails to provide [insert priority benefits in WHEREAS clause#2(4)] on the date the Project is placed in
service, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the
Project is fully forfeited.]
5. Taxpayer will not claim the qualifyingadvanced coal project credit under § 48A for any qualified investment for which the
qualifying gasification projectcredit is allowed under § 48B.
6. If Taxpayer elects to claim the qualifying gasification projectcredit on the qualified progress expenditures paid or incurred
by Taxpayer during the taxable year for construction of a qualifying gasification project, rules similar to the recapture rules in
§ 50(a)(2)(A) through (D) apply.
7. This agreement applies only to Taxpayer. Any successor in interest must execute a new closing agreement with the IRS. If the
interest is acquired at or before the time the Project is placed in service and the successor in interest fails to execute a new closing
agreement, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the
Project is fully forfeited. If the interest is acquired after the time the Project is placed in service andthe successor in interest fails
to execute a new closing agreement, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.
THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:
1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;
2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including
anystatedexceptionfor§7122)notwithstanding any law or rule of law; and
3. If it relates to a tax period ending after the date of this Closing Agreement, it is subject to any law enacted after such date,
whichappliestothetaxperiod.
By signing, the parties certify that they have readand agreed to the terms of this Closing Agreement.
Taxpayer: [insert name and identifying number]
By:
Date Signed:
[insert name]
Title:[insert title]
[insert taxpayer’s name]
Commissioner of Internal Revenue
By:
Date Signed:
[insert name]
Title:Associate Chief Counsel, Passthroughs and Special Industries, CC:PSI
March 13, 20066152006–11 I.R.B.

I have examined the specific matters involved and recommend the acceptance of the proposed agreement.
(Receiving Officer)
(Title)
Date Signed
I have reviewed the specific matters involved and recommend the acceptance of the proposed agreement.
(Reviewing Officer)
(Title)
Date Signed
2006–11 I.R.B.616March 13, 2006

APPENDIX B
APPLICATION FOR DOE CERTIFICATION
REQUEST FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE
Pursuant to Notice 2006–25 establishing the Qualifying Gasification Project Program, the Internal Revenue Service (“IRS”) will
certify that the investment in a project is eligible for a creditunder § 48B of the Internal Revenue Code only if, among other
things, the IRS receives from the Department of Energy (“DOE”) a certification of feasibility and consistency with energy
policy goals (“DOE certification”) for the project. This DOE certification shall assurethat the applications selected meet the
requirements of § 48B and the intent of § 48B to provide creditsto projects that are both technically and economically feasible.
The IRS and DOE seek to certify applications that demonstrate a high likelihood of being successfully implemented by the
applicants. To qualify, projects must be economically feasible and use the appropriate gasification technology.
This request for submission of supplemental application information:
1. Describes the information to be provided by the applicant seeking a DOE certification, and
2. Lists the evaluation criteria, and Program Policy Factors to be used by DOE in the evaluation of applications.
In conducting this evaluation, the DOE may utilize assistance and advice from qualified personnel from other Federal agencies
and/or non-conflicted contractors. DOE will obtain assurances in advance from all evaluators that application information shall be
kept confidential and used only for evaluation purposes. DOE reserves the right torequest clarifications and/or supplemental
information from some or all applicants through written submissions and/or oral presentations.
Notice is given that DOE may determine whether or not to providea DOE certification to the IRS at any time after the application
has been received, without further exchanges or discussions. Therefore, all applicantsare advised to submit their most complete
and responsive application.
Applications will not be returned.
SUBMISSION INFORMATION FOR DOE CERTIFICATION APPLICATION
A. General
This request, together with the information in sections 5.02, 6.01, and 6.02 of Notice 2006–25 includes all the information needed
to complete an application for DOE certification. All applications shall be prepared in accordance with this request in order to
provide a standard basis for evaluation and to ensure thateach application will be uniform as to format and sequence.
Each application should clearly demonstrate the applicant’scapability, knowledge, and experience in regard to the requirements
described herein.
Applicants should fully address the requirements of Notice 2006–25 and this request andnotrely on the presumed background
knowledge of reviewers. DOE may reject anapplication that does not follow the instructions regarding the organization and
content of the application when the nature of the deviation and/or omission precludes meaningful review of the application.
B. Unnecessarily Elaborate Applications
Unnecessarily elaborate brochures or other presentations beyond those sufficient to present a complete and effective application
are not desired. Elaborate art work, graphics andpictures are neither required nor encouraged.
C. Application Submission for DOE Certification
The application submission to DOE must include the information and documentation required by sections 5.02, 6.01, and 6.02
of Notice 2006–25.
A project will not be considered in the allocation round conducted in a calendar year unless the application for DOE certification
of the project is postmarked by June 30 of that calendar year. Two paper copies and one electronic version on a floppy disc or a
CD of the Application must be submitted to:
Melissa Robe
National Energy Technology Laboratory
3610 Collins Ferry Road
Morgantown, WV 26507
March 13, 20066172006–11 I.R.B.

Note that under section 5 of Notice 2006–25, one paper copy must be sent to the IRS as part of the application for IRS certification.
The project will not be considered in the allocation round conducted in a calendar year unless the application is submitted to the
IRS by the date specified for that calendar year in section 4.02(7) of Notice 2006–25.
THE INFORMATION REQUIRED BY THIS REQUEST MUST BE SUBMITTED USING THE FORMAT AND THE
HEADINGS OF THE PROJECT INFORMATION MEMORANDUM AS DESCRIBED BELOW.
To aid in evaluation, applications shall be clearly and concisely written and logically assembled. All pages of each part shall be
appropriately numbered and identified with the name of the applicant and the date.
The application, including the Project Information Memorandum, MUST be formatted in one of the following software
applications:
Microsoft Word
tm
2002 or later edition
Microsoft Excel
tm
2002 or later edition
Adobe Acrobat
tm
PDF 6.0 or later edition
Financial models should be submitted using the Excel
tm
spreadsheet and must include calculation formulas and assumptions.
The applicant is responsible for the integrity and structureof the electronic files. The DOE will not be responsible for
reformatting, restructuring or converting any files submitted under this announcement.
The Project Information Memorandum,excluding Appendices, shall not exceed seventy-five (75) pages. Pages in excess of the
page limitation will not be considered for evaluation. All text shall be typed, singlespaced, using 12 point font, 1 inch margins,
and unreduced 8-1/2-inch by 11-inch pages. Illustrations and charts shall be legible with all text in legible font. Pages shall be
sequentially numbered. Except as otherwise noted herein the page guidelines previously set forth constitute a limitation on the
total amount of material that may be submitted for evaluation.No material may be incorporatedin any application by reference
as a means to circumvent the page limitation.
D. Form of Project Information Memorandum
PROJECT INFORMATION MEMORANDUM
I. SUMMARY AND INTRODUCTION
•Description of the Project
•Financing and Ownership Structure
•Describe the main parties to the project, includingbackground, ownership and related experience
•Current Project Status and Schedule to Beginning of Construction
II. TECHNOLOGY AND TECHNICAL INFORMATION
Provide a description of the proposed technology, including sufficient supporting information (such as process flow
diagrams, equipment descriptions, information on each major process unit andthe total plant, compositions of major
streams, and the technical plan for achieving the goals proposed for the project) as would be needed to allow DOE to
confirm that the technical requirements of § 48B could, inprinciple, be met. Specifically, the applicant should:
•Provide evidence sufficient to demonstrate that the proposed technology will employ gasification technology as defined
in § 48B(c)(2).
•Present information sufficient to justify the total amount of synthesis gas (as defined in § 48B(c)(2)) to be produced by
the project (nameplate capacity).
•Provide evidence sufficient to ensure that fuels defined in §48B(c)(2) will comprise at least 90 percent of the total fuel
input (fuels defined in § 48B(c)(2) andany other fuel input) for the project.
•Identify the domestic industry for which the proposed project is intended to be used.
2006–11 I.R.B.618March 13, 2006

•Identify the specific products and quantities produced by the proposed project, providing sufficient evidence to support
claims.
•Provide information and data, includingexamples of prior similar projects completed by applicant, EPC contractor, and
suppliers of major subsystems or equipment, which support the capabilities of the applicant to construct and operate the
facility.
•Provide evidence that indicates, for projects using nonrenewable fuels, the gasification technology design reflects rea-
sonable consideration for, and is capable of, accommodating equipment necessary to capture carbon dioxide for later use
or sequestration. Include the project status and relevant information from ongoing engineering activities. Also include
in an appendix any engineering report or reports used bythe applicant to develop the project and to estimate costs and
operating performance.
III. SITE CONTROL AND OWNERSHIP
•Provide evidence that the applicant owns or controls a sitein the United States of sufficient size to allow the proposed
project to be constructed and operated on a long-term basis.
•Describe the current infrastructure at the site available to meet the needs of the project.
•Provide information supporting applicant’s conclusion that the proposed site can fully meet all environmental, feedstock
supply, water supply, transportation, and public policy requirements.
IV. UTILIZATION OF PROJECT OUTPUT
•Provide evidence that a market exists for the products of theproposed project as evidenced by contracts or written state-
ments of intent from potential customers.
•Describe any sales arrangements that exist or that may be contemplated and summaries of their key terms and conditions.
•Include as an appendix any independent Market Study that has been done in connection with this project, or if no inde-
pendent market study has been completed, provide a copy of the applicant-prepared market study.
V. PROJECT ECONOMICS
Describe the project economics and provide satisfactory evidence of economic feasibility as demonstrated through the
financial forecast and the underlying project assumptions.
Discuss the market potential for the proposed technology beyond the project proposed by the applicant.
Show calculation for the amount of tax credit applied for based on allowable cost.
VI. PROJECT DEVELOPMENT AND FINANCIAL PLAN
Provide the total project budget and major plant costs,e.g., development, operating, capital, construction, and financing
costs. Describe the overall approach to project development and financing sufficient to demonstrate project viability.
Provide a complete explanation of the source and amount of project equity. Provide a complete explanation of the source
and amount of project debt. Provide the audited financialstatements for the applicant for the most recently ended
three fiscal years, and the unaudited quarterly interim financial statements for the current fiscal year. Applicant should
demonstrate that the award recipient is financially viable without the receipt of additionalfederal funding associated
with the proposed project.
For internally financed projects, provideevidence that the applicant has sufficient assets to fund the project with its own
resources. Identify any internal approvals required to commit such assets. Include in an appendix copies of any board
resolution or other approval authorizing the applicant to commit funds and proceed with the project.
For projects financed through debt instruments either unsecured or secured by assets other than the project, provide
evidence that the applicant has sufficientcreditworthiness to obtain such financing along with a discussion of the status of
such instruments. Identify any internal approvals requiredto commit the applicant to pursue such financing. Include in an
appendix, copies of any board resolution or other approval authorizing the applicant to commit to such financing.
For projects financed through investor equity contributions, discuss the source and status of each contribution. Discuss
each investor’s financial capability to meet its commitments.Include in an appendix, copiesof any executed investment
agreements.
March 13, 20066192006–11 I.R.B.

If financing through a public offering or private placement of either debt or equity is planned for the project, provide the
expected debt rating for the issue and an explanation of applicant’s justification for the rating. Describe the status of any
discussions with prospective investmentbankers or other financial advisors.
For projects employing nonrecourse debt financing, provide a complete discussion of the approach to, and status of,
such financing.
In an appendix, provide (1) an Excel based financial model of the project, with formulas, so that review of the model
calculations and assumptions may be facilitated; providepro-formaproject financial, economic, capital cost, and operating
assumptions, including details of all project capital costs, development costs, interest during construction, transmission
interconnection costs, other operating expenses, and allother costs and expenses, and (2) a report of an independent
financial analyst in accordance with the instructions in Section G of this Appendix B.
VII. PROJECT CONTRACT STRUCTURE
Describe the current status of each of the agreements set forth below. Include as an appendix copies of the contracts or
summaries of the key provisions of each of the following agreements:
•Raw Material Input Supply: describe the source and price of raw material inputs for the project. Include as an appendix
any studies of price and amount of raw materials that havebeen prepared. Include a summary of any supply contracts
and a copy of the contracts.
•Transportation: explain the arrangements for transporting project inputs and outputs, including costs.
•Operations & Maintenance Agreement: include a summary ofthe terms and conditions of the contract and a copy of the
contract.
•Shareholders Agreement: summarize key terms and include the agreement as an appendix.
•Engineering, Procurement and Construction Agreement: describe the key terms of the existing or expected EPC contract
arrangement, including firm price, liquidated damages, hold-backs, performance guarantees, etc.
•Water Supply Agreement: confirm the amount, source, and cost of water supply.
VIII. PERMITS INCLUDING EVIRONMENTAL AUTHORIZATIONS
•Provide a completelist of all federal, state, and localpermits, including environmental authorizations or reviews, neces-
sary to commence construction of the project.
•Explain what actions have been taken to date to satisfy the required authorizations and reviews, and the status of each.
•Provide a description of the applicant’s plan to obtain and complete all necessary permits, and environmental authoriza-
tions and reviews.
IX. PROJECT SCHEDULE
•Provide an overall project schedule which includes technical,business, financial, permitting and other factors to substan-
tiate that the project will meet the 7 year requirement for placing the plant in service.
2006–11 I.R.B.620March 13, 2006

APPENDICES
•Independent Financial Report.
•Copy of internal or external engineering reports.
•Copy of site plan, together with evidencethat applicant owns or controls a site.Examples of evidence would include a
deed, or an executed contract to purchase or lease the site.
•Information supporting applicant’s conclusion that the site is fully acceptable as the project site with respect to environ-
ment, raw material supply, water supply, and public policy reasons.
•Project Market Study.
•Financial Model of project.
•Audited financial statements for the applicant for the most recently ended three fiscal years, and the unaudited quarterly
interim financial statementsfor the current fiscal year.
•Project contracts or summary of thereof.
•If no contract currently exists, provide a summary of the expected terms and conditions.
•List of all federal, state, and local permits, including environmental authorizations or reviews, necessary to commence
construction.
•Copies of any contract or written statements from customers of intent to purchase project products.
If an appendix listed above is not provided, include in its place a complete explanation of the reasons for the omission.
E. Evaluation Criteria:
Industrial Gasification Projects: will be evaluated on whether they meet all the requirements of § 48B.
Technical: will be evaluated on whether the applicant has demonstrated the capability to accomplish the technical objectives.
Site: will be evaluated on the basis that the site requirement for ownership or control has been met, and that the site is suitable for
the proposed project.
Economic: will be evaluated on whether the project has demonstrated economic feasibility,taking into consideration the submitted
financial and project development and structural information and financial plan.
Schedule: will be evaluated on the applicant’s ability to meet the 7 yearplaced-in-service requirement.
F. Program Policy Factors to be used by DOE in the evaluation of applications and a description of how they will be applied.
These factors, while not indicators of the applicant’s merit,e.g., technical excellence, cost, applicant’s ability, etc., may be
essential to the process of selecting the application(s) that, individually or collectively, will bestachieve the objectives of the
authorizing legislation. Such factors are often beyond the control of the applicant. Applicants should recognize that some very
good applications may not receive selection for certification because they do not fit within a mix of projects and technologies that
maximize the probability of achieving the overall objective of deployment of industrial gasification technology. Therefore, the
following Program Policy Factors may be used individually or collectively by DOE following application of evaluation criteria to
determine which of the applications shall receive certification by DOE.
•Diversity of technologyapproaches and methods
•Geographic distribution of potential markets
•Presentation of unique environmental, economic, or performance benefits
March 13, 20066212006–11 I.R.B.

G. Instructions for independent financial reports
The applicant shall provide an independent report by a qualified Independent Financial Analyst (such as a bank, investment
bank, or other independent financial advisoryfirm). In the report, the Independent Financial Analyst shall describe qualifications
and experience that establish the Analyst’s competence to evaluate project financing for projects similar in scope and size to
the Applicant’s project. The Independent Financial Analyst shall provide a thorough, independent review of the Applicant’s
approach to project financing. The report shall include the opinion of the Independent Financial Analyst as to the Applicant’s
likelihood to achieve financial closure in accordance with the Applicant’s financing plan.
Required Certification by Independent Financial Analyst:
The report shall be certified by the Independent Financial Analyst, who shall (a) acknowledge that the report has been
prepared for submission to the Department of Energy as a partof an application by applicant for an investment credit,
and (b) certify that the Independent Financial Analyst has no obligation to the applicant and has acted to the best of its
ability as an independent expert.
At a minimum, the Independent Financial Analyst shall:
•Review the financial model.
•Review the project financial assumptions, including economic, capital costs, operating assumptions, and all project de-
velopment costs.
•Review the financial calculations, including rates of return and coverage ratios.
•Confirm the calculation of the amount of the tax credit applied for.
•Review the project development cost budget.
•Review and comment on the source of funding and evidence of funding.
•Review and comment on project debt and equity sources.
•Confirm that the application includes the required financial reports and debt ratings.
•Describe and comment on the capabilities of the applicant to provide the required financing for the project, and the
likelihood of obtaining financing from a source other than theapplicant, if such financing is required by the project.
Credit for Nonbusiness Energy
Property
Notice 2006–26
SECTION 1. PURPOSE
This notice sets forth interim guidance,
pending the issuance of regulations, relat-
ing to the credit for nonbusiness energy
property under § 25C of the Internal Rev-
enue Code. Specifically, this notice pro-
vides procedures that manufacturers may
follow to certify property as either an El-
igible Building Envelope Component or
Qualified Energy Property, as well as guid-
ance regarding the conditions under which
taxpayers seeking to claim the § 25C credit
may rely on a manufacturer’s certification
(or, in the case of certain windows, an En-
ergy Star label). The Internal Revenue
Service and the Treasury Department ex-
pect that the regulations will incorporate
the rules set forth in this notice.
SECTION 2. BACKGROUND
.01 Section 1333 of the Energy Policy
Act of 2005, Pub. L. No. 109–58, 119 Stat.
594 (2005), added § 25C to the Internal
Revenue Code. Section 25C provides a
credit against tax for the taxable year in an
amount equal to the sum of—
(1) Ten percent of the amount paid or in-
curred by the taxpayer for qualified energy
efficiency improvements (that is, property
described in section 4.01 of this notice) in-
stalled during the taxable year; and
(2) The amount of expenditures for res-
idential energy property (that is, property
described in section 5.01 of this notice)
paid or incurred by the taxpayer during the
taxable year.
.02 Under § 25C(b), the maximum
amount of the credit allowable to a tax-
payer under § 25C(a) for all taxable years
is $500 ($200 in the case of amounts paid
or incurred for exterior windows (includ-
ing storm windows and skylights)). In
addition, the maximum amount of credit
allowed is—
(1) $50 for any advanced main air cir-
culating fan;
(2) $150 for any qualified natural gas,
propane, or oil furnace or hot water boiler;
and
(3) $300 for any item of energy-effi-
cient building property (that is, property
described in section 5.01(1)–(7) of this no-
tice).
.03 Section 25C(g) and § 1333(c) of the
Energy Policy Act provide that the credit
applies to property placed in service after
December 31, 2005, and before January 1,
2008.
2006–11 I.R.B.622March 13, 2006

SECTION 3. REFERENCES TO
INTERNATIONAL ENERGY
CONSERVATION CODE
Manufacturers and taxpayers may treat
any reference in thisnotice to the Interna-
tional Energy Conservation Code (IECC)
as a reference to either the 2001 Supple-
ment of the 2000 International Energy
Conservation Code or the 2004 Supple-
ment of the 2003 International Energy
Conservation Code.
SECTION 4. QUALIFIED ENERGY
EFFICIENCY IMPROVEMENTS
.01Eligible Building Envelope Compo-
nents.
The credit for qualified energy ef-
ficiency improvements is allowed with
respect to the following building envelope
components (Eligible Building Envelope
Components):
(1) An insulation material or system (in-
cluding any vapor retarder or seal to limit
infiltration) that—
(a) Is specifically and primarily de-
signed (within the meaning of section 4.04
of this notice) to reduce heat loss or gain
ofadwellingunitwheninstalledinoron
the dwelling unit; and
(b) May be taken into account in deter-
mining whether the building thermal enve-
lope requirements established by the IECC
are satisfied;
(2) An exterior window, skylight, or
door (other than a storm window or storm
door) that meets or exceeds the prescrip-
tive criteria established by the IECC for
the climate zone in which the window, sky-
light, or door is installed;
(3) A storm window that, in combina-
tion with the exterior window over which it
is installed, meets or exceeds the prescrip-
tive criteria established by the IECC for the
climate zone in which such storm window
is installed;
(4) A storm door that, in combina-
tion with a wood door assigned a default
U-factor by the IECC, does not exceed the
default U-factor requirement assigned to
such combination by the IECC; and
(5) Any metal roof that—
(a) Has appropriate pigmented coat-
ings that are specifically and primarily de-
signed to reduce the heat gain of a dwelling
unit when installed on the dwelling unit;
and
(b) Meets or exceeds Energy Star pro-
gram requirements (as in effect at the time
of installation).
.02Manufacturer’s Certification.
(1)Requirements Applicable to Manu-
facturer.The manufacturer of a building
envelope component may certify to a tax-
payer that the component is an Eligible
Building Envelope Component by provid-
ing the taxpayer with a certification state-
ment that satisfies the requirements of sec-
tion 4.02(4) of this notice. The certifica-
tion statement may be provided by includ-
ing a written copy of the statement with the
packaging of the component, in printable
form on the manufacturer’s website, or in
any other manner that will permit the tax-
payer to retain the certification statement
for tax recordkeeping purposes.
(2)Taxpayer Reliance.Except as pro-
videdinsection4.02(3)and(6)ofthis
notice, a taxpayer may rely on a man-
ufacturer’s certification that a building
envelope component is an Eligible Build-
ing Envelope Component. A taxpayer
is not required to attach the certifica-
tion statement to the return on which the
credit is claimed. However, § 1.6001–1(a)
of the Income Tax Regulations requires
that taxpayers maintain such books and
records as are sufficient to establish the
entitlement to, and amount of, any credit
claimed by the taxpayer. Accordingly, a
taxpayer claiming a credit for an Eligible
Building Envelope Component should
retain the certification statement as part
of the taxpayer’s records for purposes of
§ 1.6001–1(a).
(3)Reliance Permitted Only for Instal-
lation Consistent with Certification.Atax-
payer may rely on a manufacturer’s certifi-
cation that a building envelope component
is an Eligible Building Envelope Compo-
nent—
(a)Inthecaseofanexteriorwindow,
skylight, or door (other than a storm win-
dow or storm door), only if the component
is installed in a climate zone identified in
the certification statement; and
(b) In the case of a storm window, only
if the component is installed over an exte-
rior window of a class identified in the cer-
tification statement and in a climate zone
identified for that class of exterior window.
(4)ContentofManufacturer’sCertifi-
cation Statement.A manufacturer’s certi-
fication statement must contain the follow-
ing:
(a) The name and address of the manu-
facturer;
(b) Identification of the component as
an insulation material or system, an exte-
rior window or skylight, an exterior door,
or a metal roof;
(c) The make, model number, and any
other appropriate identifiers of the compo-
nent;
(d) A statement that the component is
an Eligible Building Envelope Component
that qualifies for the credit allowed under
§25C;
(e) In the case of an exterior window,
skylight, or door (other than a storm win-
dow or storm door), the climate zone or
zones for which the applicable prescriptive
criteria are satisfied;
(f) In the case of a storm window—
(i) The classes of exterior window (e.g.,
single pane; double pane, clear glass; dou-
ble pane, Low-E coating) over which the
storm window may be installed and that, in
combination with the storm window, sat-
isfy the applicable prescriptive criteria for
one or more climate zones; and
(ii) For each such class of exterior win-
dow, the climate zone or zones for which
the applicable prescriptive criteria are sat-
isfied; and
(g) A declaration, signed by a person
currently authorized to bind the manu-
facturer in such matters, in the following
form:
“Under penalties of perjury, I declare
that I have examined this certification
statement, and to the best of my knowl-
edge and belief, the facts are true, correct,
and complete.”
(5)Manufacturer’s Records.A manu-
facturer that certifies to a taxpayer that a
component is an Eligible Building Enve-
lope Component must retain in its records
documentation establishing that the com-
ponent satisfies the applicable conditions
of section 4.01 of this notice including, in
the case of an exterior window, its National
Fenestration Rating Council (NFRC) rat-
ing. The manufacturer must, upon request,
make such documentation available for in-
spection by the Service.
(6)Effect of Erroneous Certification
or Failure to Satisfy Documentation
Requirements.The Service may, upon
examination (and after any appropriate
consultation with the Department of En-
ergy (DOE) or Environmental Protection
Agency (EPA)), determine that a com-
March 13, 20066232006–11 I.R.B.

ponent that has been certified under this
section is not an Eligible Building Enve-
lope Component. In that event, or if the
component’s manufacturer fails to satisfy
the requirements relating to documenta-
tion in section 4.02(5) of this notice, the
manufacturer’s right to provide a certifi-
cation on which future purchasers of the
component can rely will be withdrawn,
and taxpayers purchasing the component
after the date on which the Service pub-
lishes an announcement of the withdrawal
may not rely on the manufacturer’s cer-
tification. Taxpayers may continue to
rely on the certification for components
purchased on or before the date on which
the announcement of the withdrawal is
published (including in cases in which the
component is not installed and the credit is
not claimed until after the announcement
of the withdrawal is published). Manu-
facturers are reminded that an erroneous
certification statement may result in the
imposition of penalties—
(a) Under § 7206 for fraud and making
false statements; and
(b) Under § 6701 for aiding and abet-
ting an understatement of tax liability (in
the amount of $1,000 per return on which
a credit is claimed in reliance on the certi-
fication).
(7)Availability of Certification Infor-
mation.Manufacturers are encouraged to
provide a listing of qualified components
and applicable certification information on
their websites to facilitate taxpayer identi-
fication of qualified components.
.03Special Rule for Energy Star Win-
dows and Skylights.A taxpayer may treat
an exterior window or skylight that bears
an Energy Star label and is installed in the
region identified on the label as an Eligible
Building Envelope Component and may
rely on such Energy Star label, rather than
on a manufacturer’s certification state-
ment, in claiming the § 25C credit.
.04Specifically and Primarily De-
signed.A component is not specifically
and primarily designed to reduce heat loss
or gain of a dwelling unit if its principal
purposes are to provide structural support,
to provide a finished surface, as in the
case of drywall or siding, or to serve any
other function unrelated to the reduction
of heat loss or gain. The principal purpose
of a component serves functions unrelated
to the reduction of heat loss or gain if
production costs attributable to features
other than those that reduce heat loss or
gain exceed production costs attributable
to features that reduce heat loss or gain.
.05Additional Requirements.Atax-
payer may claim a credit with respect to
amounts paid or incurred for an Eligible
Building Envelope Component only if the
following additional requirements are sat-
isfied:
(1) The component is installed in or on
a dwelling unit located in the United States
and, at the time of installation, the dwelling
unit is owned and used by the taxpayer as
the taxpayer’s principal residence (within
the meaning of § 121);
(2) The original use of the component
commences with the taxpayer; and
(3) The component reasonably can be
expected to remain in use for at least five
years. For this purpose, a component will
be treated as reasonably expected to re-
main in use for at least five years if the
manufacturer offers, at no extra charge, at
least a two-year warranty providing for re-
pair or replacement of the component in
the event of a defect in materials or work-
manship. If the manufacturer does not of-
fer such a warranty, all relevant facts and
circumstances are taken into account in de-
termining whether the component reason-
ably can be expected to remain in use for
at least five years.
.06Installation Costs.With respect to
Eligible Building Envelope Components,
the credit is allowed only for amounts paid
or incurred to purchase the components.
The credit is not allowed for amounts paid
or incurred for the onsite preparation, as-
sembly, or original installation of the com-
ponents.
SECTION 5. RESIDENTIAL ENERGY
PROPERTY
.01Qualified Energy Property.The
credit for residential energy property ex-
penditures is allowed with respect to the
followingproperty(QualifiedEnergy
Property):
(1) An electric heat pump water heater
that yields an energy factor of at least 2.0
in the standard DOE test procedure;
(2) An electric heat pump that has
a heating seasonal performance factor
(HSPF) of at least 9, a seasonal energy
efficiency ratio (SEER) of at least 15, and
an energy efficiency ratio (EER) of at least
13;
(3) A closed loop geothermal heat pump
that has an EER of at least 14.1 and a heat-
ing coefficient of performance (COP) of at
least 3.3;
(4) An open loop geothermal heat pump
that has an EER of at least 16.2 and a heat-
ing COP of at least 3.6;
(5) A direct expansion geothermal heat
pump that has an EER of at least 15 and a
heating COP of at least 3.5;
(6) A central air conditioner that
achieves the highest efficiency tier that
has been established by the Consortium
of Energy Efficiency and is in effect on
January 1, 2006;
(7) A natural gas, propane, or oil water
heater that has an energy factor of at least
0.80;
(8) A natural gas, propane, or oil fur-
nace or hot water boiler that achieves an
annual fuel utilization efficiency rate of not
less than 95; and
(9) A fan that is used in a natural gas,
propane, or oil furnace and has an annual
electricity use of no more than 2 percent of
the total annual site energy use of the fur-
nace (as determined in the standard DOE
test procedure).
.02Manufacturer’s Certification.—
(1)Requirements Applicable to Manu-
facturer.The manufacturer of a product
may certify to a taxpayer that the product
is Qualified Energy Property by provid-
ing the taxpayer with a certification state-
ment that satisfies the requirements of sec-
tion 5.02(3) of this notice. The certifica-
tion statement may be provided by includ-
ingawrittencopyofthestatementwiththe
packaging of the product, in printable form
on the manufacturer’s website, or in any
other manner that will permit the taxpayer
to retain the certification statement for tax
recordkeeping purposes.
(2)Taxpayer Reliance.Except as pro-
vided in section 5.02(5) of this notice,
a taxpayer may rely on a manufacturer’s
certification that a product is Qualified En-
ergy Property. A taxpayer is not required
to attach the certification statement to
the return on which the credit is claimed.
However, § 1.6001–1(a) of the Income
Tax Regulations requires that taxpayers
maintain such books and records as are
sufficient to establish the entitlement to,
and amount of, any credit claimed by the
taxpayer. Accordingly, a taxpayer claim-
ing a credit for Qualified Energy Property
should retain the certification statement as
2006–11 I.R.B.624March 13, 2006

part of the taxpayer’s records for purposes
of § 1.6001–1(a).
(3)Content of Manufacturer’s Cer-
tification Statement.A manufacturer’s
certification statement to be provided to
taxpayers who purchase Qualified Energy
Property must contain the following:
(a) The name and address of the manu-
facturer;
(b) The class of Qualified Energy Prop-
erty (as listed in section 5.01 of this notice)
in which the product is included;
(c) The make, model number, and any
other appropriate identifiers of the prod-
uct;
(d) A statement that the product is Qual-
ified Energy Property that qualifies for the
credit allowed under § 25C; and
(e) A declaration, signed by a person
currently authorized to bind the manufac-
turer in these matters, in the following
form:
“Under penalties of perjury, I declare
that I have examined this certification
statement, and to the best of my knowl-
edge and belief, the facts presented are
true, correct, and complete.”
(4)Manufacturer’s Records.Amanu-
facturer that certifies to a taxpayer that a
product is Qualified Energy Property must
retain in its records documentation estab-
lishing that the product satisfies the ap-
plicable conditions of section 5.01 of this
notice. The manufacturer must, upon re-
quest, make such documentation available
for inspection by the Service. The docu-
mentation—
(a) In the case of the EER for a cen-
tral air conditioner or electric heat pump,
must include measurements based on pub-
lished data that are the result of manufac-
turer tests at 95 degrees Fahrenheit and
may be based on the certified data of the
Air Conditioning and Refrigeration Insti-
tute that are prepared in partnership with
the Consortium for Energy Efficiency; and
(b) In the case of a geothermal heat
pump, must be based on testing under the
conditions of ARI/ISO Standard 13256–1
for Water Source Heat Pumps or ARI 870
for Direct Expansion GeoExchange Heat
Pumps, as appropriate, and include ev-
idence that water heating services have
been provided through a desuperheater or
integrated water heating system connected
to the storage water heater tank.
(5)Effect of Erroneous Certification or
Failure to Satisfy Documentation Require-
ments.The Service may, upon examina-
tion (and after any appropriate consulta-
tion with DOE or EPA), determine that a
product that has been certified under this
sectionisnotQualifiedEnergyProperty.
In that event, or if the product’s manufac-
turer fails to satisfy the requirements relat-
ingtodocumentationinsection5.02(4)of
this notice, the manufacturer’s right to pro-
vide a certification on which future pur-
chasers of the product can rely will be
withdrawn, and taxpayers purchasing the
product after the date on which the Service
publishes an announcement of the with-
drawal may not rely on the manufacturer’s
certification. Taxpayers may continue to
rely on the certification for products pur-
chased on or before the date on which the
announcement of the withdrawal is pub-
lished (including in cases in which the
product is not installed and the credit is
not claimed until after the announcement
of the withdrawal is published). Manufac-
turers are reminded that an erroneous certi-
fication statement may result in the impo-
sition of penalties—
(a) Under § 7206 for fraud and making
false statements; and
(b) Under § 6701 for aiding and abet-
ting an understatement of tax liability (in
the amount of $1,000 per return on which
a credit is claimed in reliance on the certi-
fication).
(6)Availability of Certification Infor-
mation.Manufacturers are encouraged
to provide a listing of qualified products
and applicable certification information
on their websites to facilitate taxpayer
identification of qualified products.
.03Additional Requirements.Atax-
payer may claim a credit with respect to
expenditures paid or incurred for Qualified
Energy Property only if the following ad-
ditional requirements are satisfied:
(1) The property is installed on or in
connection with a dwelling unit located in
the United States and, at the time of instal-
lation, the dwelling unit is owned and used
by the taxpayer as the taxpayer’s principal
residence (within the meaning of § 121);
and
(2) The property is originally placed in
service by the taxpayer.
.04Installation Costs.The credit is al-
lowed for amounts paid or incurred to pur-
chase Qualified Energy Property and for
expenditures for labor costs properly allo-
cable to the onsite preparation, assembly,
or original installation of the property.
SECTION 6. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–1989.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 4 and 5. This in-
formation is required to be collected and
retained in order to ensure that property
meets the requirements for the Nonbusi-
ness Energy Credit under § 25C. This
information will be used to determine
whether the propertyfor which manufac-
turers provide certifications is property
that qualifies for the credit. The collec-
tion of information is required to obtain a
benefit from manufacturers’ certification
statements that property qualifies for the
credit. The likely respondents are corpo-
rations, partnerships, and individuals.
The estimated total annual reporting
burden is 350 hours.
The estimated annual burden per re-
spondent varies from 2 hours to 3 hours,
depending on individual circumstances,
with an estimated average burden of 2.5
hours to complete the requests for certi-
fication required under this notice. The
estimated number of respondents is 140.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any Internal Revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 7. DRAFTING
INFORMATION
The principal author of this notice is
Kelly R. Morrison-Lee of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further in-
formation regarding this notice, contact
March 13, 20066252006–11 I.R.B.

Jennifer Bernardini at (202) 622–3120
(not a toll-free call).
Certification of Energy
Efficient Home Credit
Notice 2006–27
SECTION 1. PURPOSE
This notice sets forth a process under
which an eligible contractor who con-
structs a dwelling unit (other than a manu-
factured home) may obtain a certification
thatthedwellingunitisanenergyeffi-
cient home that satisfies the requirements
of § 45L(c)(1)(A) and (B) of the Internal
Revenue Code. This notice also provides
for a public list of software programs
that may be used in calculating energy
consumption for purposes of obtaining
a certification that satisfies the require-
ments of § 45L(d). Guidance relating to
manufactured homes will be provided in a
separate notice.
SECTION 2. BACKGROUND
.01In General. Section 45L provides
a credit to an eligible contractor who con-
structs a qualified new energy efficient
home. For qualified new energy efficient
homes (other than manufactured homes),
the amount of the credit is $2,000. A
dwelling unit qualifies for the credit if—
(1) It is located in the United States;
(2) Its construction is substantially
completed after August 8, 2005;
(3) It meets the energy saving require-
ments of § 45L(c)(1); and
(4) It is acquired from the eligible con-
tractor after December 31, 2005, and be-
fore January 1, 2008, for use as a resi-
dence.
.02Energy Saving Requirements.To
meet the energy saving requirements of
§ 45L(c)(1), a dwelling unit must be cer-
tified to provide a level of heating and
cooling energy consumption that is at least
50 percent below that of a comparable
dwelling unit constructed in accordance
with the standards of section 404 of the
2004 Supplement to the 2003 International
Energy Conservation Code (2004 IECC
Supplement), and to have building enve-
lope component improvements that pro-
vide for a level of heating and cooling en-
ergy consumption that is at least 10 percent
below that of a comparable dwelling unit.
For this purpose, heating and cooling en-
ergy and cost savings must be calculated in
accordance with the procedures prescribed
in Residential Energy Services Network
(RESNET) Publication No. 05–001 (Nov.
17, 2005).
SECTION 3. CERTIFICATION
A contractor must obtain the certifica-
tion required under § 45L(c)(1) with re-
spect to a dwelling unit (other than a man-
ufactured home) from an eligible certifier
before claiming the energy efficient home
credit with respect to the dwelling unit. A
contractor is not required to file the certifi-
cation with the return on which the credit
is claimed. However, § 1.6001–1(a) of the
Income Tax Regulations requires that tax-
payers maintain such books and records
as are sufficient to establish the entitle-
ment to, and amount of, any credit claimed
by the taxpayer. Accordingly, an eligi-
ble contractor claiming a $2,000 credit un-
der § 45L should retain the certification
as part of the eligible contractor’s records
to satisfy this requirement. The certifica-
tion will be treated as satisfying the re-
quirements of § 45L(c)(1) if all construc-
tion has been performed in a manner con-
sistent with the design specifications pro-
vided to the eligible certifier and the certi-
fication contains all of the following:
.01 The name, address, and telephone
number of the eligible certifier.
.02 The address of the dwelling unit.
.03 A statement by the eligible certifier
that—
(1) The dwelling unit has a projected
level of annual heating and cooling en-
ergy consumption that is at least 50 per-
cent below the annual level of heating and
cooling energy consumption of a reference
dwelling unit in the same climate zone;
(2) Building envelope component im-
provements alone account for a level of an-
nual heating and cooling energy consump-
tion that is at least 10 percent below the
annual level of heating and cooling energy
consumption of a reference dwelling unit
in the same climate zone; and
(3) Heating and cooling energy and cost
savings have been calculated in the manner
prescribed in section 2.02 of this notice.
.04 A statement by the eligible certifier
that field inspections of the dwelling
unit (or of other dwelling units under
the sampling protocol described below)
performed by the eligible certifier during
and after the completion of construction
have confirmed that all features of the
home affecting such heating and cooling
energy consumption comply with the
design specifications provided to the
eligible certifier. With respect to builders
who build at least 85 homes a year or
build subdivisions with the same floor
plan using the same subcontractors, the
eligible certifier may use the sampling
protocol found in the current ENERGY
STAR
®
for Homes Sampling Protocol
Guidelines instead of inspecting all of the
homes. The sampling protocols can be
found at the following web address:
http://www.energystar.gov/
index.cfm?c=bldrs_lenders_raters.pt_
homes_policies#SamplingProtocol
.05 A list identifying—
(1) The dwelling unit’s energy effi-
cient building envelope components and
their respective energy performance rating
as required by section 401.3 of the 2004
IECC Supplement; and
(2) The energy efficient heating
and cooling equipment installed in the
dwelling unit and the energy efficiency
performance of such equipment as rated
under applicable Department of Energy
Appliance Standards test procedures.
.06 Identification of the listed software
program used to calculate energy con-
sumption (see section 5 of this notice).
.07 A declaration, applicable to the
certification and any accompanying doc-
uments, signed by a person currently
authorized to bind the eligible certifier in
these matters, in the following form:
“Under penalties of perjury, I declare
that I have examined this certification,
including accompanying documents,
and to the best of my knowledge and
belief, the facts presented in support of
this certification are true, correct, and
complete.”
SECTION 4. DEFINITIONS
The following definitions apply for pur-
poses of this notice:
(1) Building envelope components are
basement walls, exterior walls, floor, roof,
and any other building element that en-
closes conditioned space, including any
boundary between conditioned space and
unconditioned space.
2006–11 I.R.B.626March 13, 2006

(2) A climate zone is a geographical
area within which all locations have simi-
lar long-term climate conditions as defined
in Chapter 3 of the 2004 IECC Supple-
ment.
(3) A dwelling unit is a single unit pro-
viding complete independent living facil-
ities for one or more persons, including
permanent provisions for living, sleeping,
eating, cooking, and sanitation, within a
building that is not more than three stories
above grade in height.
(4) An eligible certifier is a person
that is not related (within the meaning of
§ 45(e)(4)) to the eligible contractor and
has been accredited or otherwise autho-
rized by RESNET (or an equivalent rating
network) to use energy performance mea-
surement methods approved by RESNET
(or the equivalent rating network). An em-
ployee or other representative of a utility
or local building regulatory authority may
qualify as an eligible certifier if the em-
ployee or representative has been accred-
ited or otherwise authorized by RESNET
(or an equivalent rating network) to use
the approved energy performance mea-
surement methods.
(5) An eligible contractor is the person
that constructed a qualified new energy ef-
ficient home.
(6) A manufactured home is a dwelling
unit constructed in accordance with the
Federal Manufactured Home Construction
and Safety Standards (24 C.F.R § 3280).
(7) A reference dwelling unit is a
dwelling unit that iscomparable to the
dwelling unit constructed by the eligible
contractor except that—
(a) The comparable dwelling unit is
constructed in accordance with the mini-
mum standards of Chapter 4 of the 2004
IECC Supplement;
(b) The comparable dwelling unit’s air
conditioners have a Seasonal Energy Effi-
ciency Ratio (SEER) of 13, measured in
accordance with 10 C.F.R. 430.23(m); and
(c) The comparable dwelling unit’s heat
pumpshaveaSEERof13andaHeat-
ing Seasonal Performance Factor (HSPF)
of 7.7, measured in accordance with 10
C.F.R. 430.23(m).
SECTION 5. SOFTWARE PROGRAMS
.01In General.The Internal Revenue
Service will create and maintain a pub-
lic list of software programs that may be
used to calculate energy consumption for
purposes of providing a certification un-
der section 3 of this notice. A software
program will be included on the original
list if the software developer submits the
following information to the Service and
RESNET:
(1) The name, address, and telephone
number of the software developer;
(2) The name or other identifier of the
program as it will appear on the list;
(3) The test results, test runs, and the
software program with which the test was
conducted; and
(4) A declaration by the developer of
the software program, made under penal-
ties of perjury, that the software program
has satisfied all tests required to con-
form to the software accreditation process
prescribed in RESNET Publication No.
05–001 (Nov. 17, 2005).
.02Addresses.Submissions under this
section must be addressed as follows:
Submissions to the Service submitted
by U.S. mail:
Internal Revenue Service
Attn: Program Administrator
CC:PSI:7, Room 4315
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Submissions to the Service submitted
by a private delivery service:
Internal Revenue Service
Attn: Program Administrator
CC:PSI:7, Room 4315
1111 Constitution Ave., N.W.
Washington, DC 20224
Submissions to RESNET:
Residential Energy Services Network
P.O. Box 4561
Oceanside, CA 92052–4561
.03Original and Updated Lists.Asoft-
ware program will be included on the orig-
inal list if the software developer’s sub-
mission is received before March 1, 2006.
The list will be updated as necessary to re-
flect submissions received after February
28, 2006.
.04Removal from Published List.The
Service may, upon examination (and after
appropriate consultation with the Depart-
ment of Energy), determine that a software
program is not sufficiently accurate to jus-
tify its use in calculating energy consump-
tion for purposes of providing a certifica-
tion under section 3 of this notice and re-
move the software program from the pub-
lished list. The Service may undertake an
examination on its own initiative or in re-
sponse to a public request supported by
appropriate analysis of the software pro-
gram’s deficiencies.
.05Effect of Removal from Published
List.A software program may not be used
to calculate energy consumption for pur-
poses of providing a certification that sat-
isfies the requirements of § 45L after the
date on which the software is removed
from the published list. The removal will
not affect the validity of any certification
provided with respect to a dwelling unit on
orbeforethedateonwhichthesoftwareis
removed from the published list.
.06Public Availability of Information.
RESNET may make available for public
review any information provided to it un-
der section 5.01 of this notice.
SECTION 6. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this notice have been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–1995.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 3 and 5. This in-
formation is required to be collected and
retained in order to ensure that a dwelling
unit (other than a manufactured home)
meets the requirements for the energy
efficient home credit under § 45L. This
information will be used to determine
whether property for which certifications
are provided is property that qualifies for
the credit. The collection of information
is required to obtain a benefit. The likely
respondents are corporations and partner-
ships.
March 13, 20066272006–11 I.R.B.

The estimated total annual reporting
burden is 180 hours.
The estimated annual burden per re-
spondent varies from 2.5 hours to 4 hours,
depending on individual circumstances,
with an estimated average burden of 3
hours to complete the certification re-
quired under this notice. The estimated
number of respondents is 45.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any Internal Revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 7. DRAFTING
INFORMATION
The principal author of this notice is
Jennifer C. Bernardini of the Office of
Associate Chief Counsel (Passthroughs
& Special Industries). For further in-
formation regarding this notice, contact
Jennifer C. Bernardini at (202) 622–3120
(not a toll-free call).
Energy Efficient Home Credit;
Manufactured Homes
Notice 2006–28
SECTION 1. PURPOSE
This notice sets forth a process under
which an eligible contractor who con-
structs a manufactured home may obtain
a certification that the dwelling unit is
an energy efficient home that satisfies
therequirementsof§45L(c)(2)or(3)of
the Internal Revenue Code. This notice
also provides for a public list of software
programs that may be used in calculat-
ing energy consumption for purposes of
providing a certification that satisfies the
requirements of § 45L(d). Guidance relat-
ing to other dwelling units will be provided
in a separate notice.
SECTION 2. BACKGROUND
.01In General.Section 45L provides
a credit to an eligible contractor who con-
structs a qualified new energy efficient
home. For qualified new energy efficient
homes that are manufactured homes, the
amount of the credit is $1,000 or $2,000,
depending on the energy savings that are
achieved. A manufactured home qualifies
for the credit if:
(1) It is located in the United States;
(2) Its construction is substantially
completed after August 8, 2005;
(3) It meets the energy saving require-
mentsof§45L(c)(2)or(3);and
(4) It is acquired, directly or indirectly,
from the eligible contractor after Decem-
ber 31, 2005, and before January 1, 2008,
for use as a residence.
.02Energy Saving Requirements.To
meet the energy saving requirements of
§ 45L(c)(2) or (3), a manufactured home
must meet one of the following standards:
(1) To meet the energy saving require-
ments of § 45L(c)(2) and qualify for the
$2,000 credit, a manufactured home must
be certified to provide a level of heating
and cooling energy consumption that is at
least 50 percent below that of a compa-
rable manufactured home constructed in
accordance with the standards of section
404 of the 2004 Supplement to the 2003
International Energy Conservation Code
(2004 IECC Supplement), and to have
building envelope component improve-
ments that provide for a level of heating
and cooling energy consumption that is at
least 10 percent below that of a compa-
rable dwelling unit (see section 3 of this
notice); or
(2) To meet the energy saving require-
ments of § 45L(c)(3) and qualify for the
$1,000 credit, a manufactured home must
either—
(a) be certified to provide a level of
heating and cooling energy consumption
that is at least 30 percent below that of
a comparable manufactured home con-
structed in accordance with the standards
of section 404 of the 2004 IECC Sup-
plement, and to have building envelope
component improvements that provide for
a level of heating and cooling energy con-
sumption that is at least 10 percent below
that of a comparable dwelling unit; or
(b) meet the current requirements es-
tablished by the Administrator of the En-
vironmental Protection Agency under the
ENERGY STAR
®
Labeled Homes Pro-
gram in effect on the date construction is
substantially completed (See section 4 of
this notice).
.03 For purposes of section 2.02 of this
notice, heating and cooling energy and cost
savings must be calculated in accordance
with the procedures prescribed in Residen-
tial Energy Services Network (RESNET)
Publication No. 05–001 (Nov. 17, 2005).
SECTION 3. REQUIREMENTS TO
CLAIM THE $2,000 CREDIT
An eligible contractor must obtain the
certification required under § 45L(c)(2)
with respect to a manufactured home from
an eligible certifier before claiming the
$2,000 energy efficient home credit with
respect to the manufactured home. An
eligible contractor isnot required to attach
the certification to the return on which the
credit is claimed. However, § 1.6001–1(a)
of the Income Tax Regulations requires
that taxpayers maintain such books and
records as are sufficient to establish the
entitlement to, and amount of, any deduc-
tion claimed by the taxpayer. Accordingly,
an eligible contractor claiming a $2,000
credit under § 45L should retain the certi-
fication as part of the eligible contractor’s
records to satisfy this requirement. The
certification will be treated as satisfying
the requirements of § 45L(c)(2) if all con-
struction has been performed in a manner
consistent with the design specifications
provided to the eligible certifier and the
certification contains all of the following:
.01 The name, address, and telephone
number of the eligible certifier;
.02 The dwelling unit’s serial or other
identification number;
.03 A statement by the eligible certifier
that—
(1) The dwelling unit has a projected
level of annual heating and cooling en-
ergy consumption that is at least 50 per-
cent below the annual level of heating and
coolingenergyconsumption of a reference
dwelling unit in the same climate zone;
(2) Building envelope component im-
provements alone account for a level of an-
nual heating and cooling energy consump-
tion that is at least 10 percent below the
annual level of heating and cooling energy
consumption of a reference dwelling unit
in the same climate zone; and
(3) Heating and cooling energy and cost
savings have been calculated in the manner
prescribed in section 2.02(3) of this notice;
.04 A statement by the eligible certifier
that field inspections of the dwelling
2006–11 I.R.B.628March 13, 2006

unit (or of other dwelling units under
the sampling protocol described below)
performed by the eligible certifier after
installation on the permanent site have
confirmed that such heating and cooling
energy consumption complies with the de-
sign specifications provided to the eligible
certifier. With respect to manufacturers
who manufacture at least 85 homes a
year, the certifier may use the sampling
protocol found in the current standards of
the ENERGY STAR
®
Qualified Manufac-
tured Homes — Design, Manufacturing,
Installation, and Certification Procedures,
located at the following web address:
http://www.energystar.gov/
index.cfm?c=bldrs_lenders_raters.pt_
builder_manufactured
.05 A list identifying—
(1) The dwelling unit’s energy effi-
cient building envelope components and
their respective energy performance rating
as required by section 401.3 of the 2004
IECC Supplement; and
(2) The energy efficient heating
and cooling equipment installed in the
dwelling unit and the energy efficiency
performance of such equipment as rated
under applicable Department of Energy
Appliance Standards test procedures;
.06 A statement identifying the listed
software program used to calculate energy
consumption (see section 6 of this notice);
and
.07 A declaration, applicable to the
certification and any accompanying doc-
uments, signed by a person currently
authorized to bind the eligible certifier in
such matters, in the following form:
“Under penalties of perjury, I declare
that I have examined this certification,
including accompanying documents,
and to the best of my knowledge and
belief, the facts presented in support of
this certification are true, correct, and
complete.”
SECTION 4. REQUIREMENTS TO
CLAIM THE $1,000 CREDIT
.01Certified Homes.Except as pro-
vided in section 4.02 of this notice, an el-
igible contractor mustobtain the certifica-
tion required under § 45L(c)(3)(A) with re-
spect to a manufactured home from an el-
igible certifier before claiming the $1,000
energy efficient home credit with respect
to the manufactured home. An eligible
contractor is not required to attach the cer-
tification to the return on which the credit
is claimed. However, § 1.6001–1(a) re-
quires that taxpayers maintain such books
and records as are sufficient to establish the
entitlement to, and amount of, any deduc-
tion claimed by the taxpayer. Accordingly,
an eligible contractor claiming a $1,000
credit under § 45L should retain the cer-
tification as part of the eligible contrac-
tor’s records to satisfy this requirement.
The certification will be treated as satis-
fying the requirements of § 45L(c)(3)(A)
if all construction has been performed in
a manner consistent with the design spec-
ifications provided to the eligible certifier
and the certification contains all of the fol-
lowing:
(1) The name, address, and telephone
number of the eligible certifier;
(2) The dwelling unit’s serial or other
identification number;
(3) A statement by the eligible certifier
that—
(a) The dwelling unit has a projected
level of annual heating and cooling en-
ergy consumption that is at least 30 per-
cent below the annual level of heating and
cooling energy consumption of a reference
dwelling unit in the same climate zone;
(b) Building envelope component im-
provements alone account for a level of an-
nual heating and cooling energy consump-
tion that is at least 10 percent below the
annual level of heating and cooling energy
consumption of a reference dwelling unit
in the same climate zone; and
(c) Heating and cooling energy and cost
savings have been calculated in the manner
prescribed in section 2.02(3) of this notice;
(4) A statement by the eligible certifier
that field inspections of the dwelling
unit (or of other dwelling units under
the sampling protocol described below)
performed by the eligible certifier after
installation on the permanent site have
confirmed that such heating and cooling
energy consumption complies with the
design specifications provided to the
eligible certifier. With respect to man-
ufacturers who manufacture at least 85
homes a year, the certifier may use the
sampling protocol found in the current
standards of the current ENERGY STAR
®
Qualified Manufactured Homes: Guide
for Retailers, located at the following web
address:
http://www.energystar.gov/
index.cfm?c=bldrs_lenders_raters.pt_
builder_manufactured
(5) A list identifying—
(a) The dwelling unit’s energy efficient
building envelope components and their
respective energy performance rating as
required by section 401.3 of the 2004
IECC Supplement; and
(b) The energy efficient heating
and cooling equipment installed in the
dwelling unit and the energy efficiency
performance of the equipment as rated
under applicable Department of Energy
Appliance Standards test procedures;
(6) A statement identifying the listed
software program used to calculate energy
consumption (see section 6 of this notice);
and
(7) A declaration,applicable to the
certification and any accompanying doc-
uments, signed by a person currently
authorized to bind the eligible certifier in
these matters, in the following form:
“Under penalties of perjury, I declare
that I have examined this certification,
including accompanying documents,
and to the best of my knowledge and
belief, the facts presented in support of
this certification are true, correct, and
complete.”
.02Energy Star Homes.An eligible
contractor may claim the $1,000 energy ef-
ficient home credit with respect to a man-
ufactured home by meeting the applica-
ble certification requirements established
by the Administrator of the Environmen-
tal Protection Agency under the ENERGY
STAR
®
Labeled Homes Program in effect
on the date construction is substantially
completed.
SECTION 5. DEFINITIONS
The following definitions apply for pur-
poses of this notice:
.01 Building envelope components are
basement walls, exterior walls, floor, roof,
and any other building element that en-
closes conditioned space, including any
boundary between conditioned space and
unconditioned space;
.02 A climate zone is a geographical
area within which all locations have simi-
lar long-term climate conditions as defined
in Chapter 3 of the 2004 IECC Supple-
ment;
March 13, 20066292006–11 I.R.B.

.03 A dwelling unit is a single unit pro-
viding complete independent living facil-
ities for one or more persons, including
permanent provisions for living, sleeping,
eating, cooking, and sanitation, within a
building that is not more than three stories
above grade in height;
.04 An eligible certifier is a person
that is not related (within the meaning of
§ 45(e)(4)) to the eligible contractor and
has been accredited or otherwise autho-
rized by RESNET (or an equivalent rating
network) to use energy performance mea-
surement methods approved by RESNET
(or an equivalent rating network). An em-
ployee or other representative of a utility
or local building regulatory authority may
qualify as an eligible certifier if the em-
ployee or representative has been accred-
ited or otherwise authorized by RESNET
(or an equivalent rating network) to use
the approved energy performance mea-
surement methods;
.05 An eligible contractor in the case of
a qualified new energy efficient home that
is a manufactured home is the manufac-
tured home producer of the home;
.06 A manufactured home is a dwelling
unit constructed in accordance with the
Federal Manufactured Home Construction
and Safety Standards (24 C.F.R. § 3280);
and
.07 A reference dwelling unit is a
dwelling unit that iscomparable to the
manufactured home produced by the eli-
gible contractor except that—
(a) The comparable dwelling unit is
constructed in accordance with the mini-
mum standards of Chapter 4 of the 2004
IECC Supplement;
(b) The comparable dwelling unit’s air
conditioners have a Seasonal Energy Effi-
ciency Ratio (SEER) of 13, measured in
accordance with 10 C.F.R. 430.23(m); and
(c) The comparable dwelling unit’s heat
pumpshaveaSEERof13andaHeat-
ing Seasonal Performance Factor (HSPF)
of 7.7, measured in accordance with 10
C.F.R. 430.23(m).
SECTION 6. SOFTWARE PROGRAMS
.01In General.The Internal Revenue
Service will create and maintain a pub-
lic list of software programs that may be
used to calculate energy consumption for
purposes of providing a certification under
section 3 or 4 of this notice. A software
program will be included on the list if the
software developer submits the following
information to the Service and RESNET:
(1) The name, address, and telephone
number of the software developer;
(2) The name or other identifier of the
program as it will appear on the list;
(3) The test results, test runs, and the
software program with which the test was
conducted; and
(4) A declaration by the developer of
the software program, made under penal-
ties of perjury, that the software program
has satisfied all tests required to con-
form to the software accreditation process
prescribed in RESNET Publication No.
05–001 (Nov. 17, 2005).
.02Addresses.Submissions under this
section must be addressed as follows:
Submissions to the Service submitted
by U.S. mail:
Internal Revenue Service
Attn: Program Administrator
CC:PSI:7, Room 4315
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Submissions to the Service submitted
by a private delivery service:
Internal Revenue Service
Attn: Program Administrator
CC:PSI:7, Room 4315
1111 Constitution Ave., N.W.
Washington, DC 20224
Submissions to RESNET:
Residential Energy Services Network
P.O. Box 4561
Oceanside, CA 92052–4561
.03Original and Updated Lists.Asoft-
ware program will be included on the orig-
inal list if the software developer’s sub-
mission is received before March 1, 2006.
The list will be updated as necessary to re-
flect submissions received after February
28, 2006.
.04Removal from Published List.The
Service may, upon examination (and af-
ter appropriate consultation with the De-
partment of Energy), determine that a soft-
ware program is not sufficiently accurate
tojustifyitsuseincalculatingenergycon-
sumption for purposes of providing a cer-
tification under sections 3 and 4 of this
noticeandremovethesoftwarefromthe
published list. The Service may undertake
an examination on its own initiative or in
response to a public request supported by
appropriate analysis of the software pro-
gram’s deficiencies.
.05Effect of Removal from Published
List.A software program may not be used
to calculate energy consumption for pur-
poses of providing a certification that sat-
isfies the requirements of § 45L after the
date on which the software is removed
from the published list. The removal will
not affect the validity of any certification
provided with respect to a dwelling unit on
orbeforethedateonwhichthesoftwareis
removed from the published list.
.06Public Availability of Information.
RESNET may make available for public
review any information provided to it un-
der section 6.01 of this notice.
SECTION 7. SALES TO DEALERS
.01In General.In the case of a manu-
factured home sold by an eligible contrac-
tor to a dealer of manufactured homes, the
eligible contractor may rely on a statement
by the dealer to establish the date on which
a manufactured home is acquired, that it is
located in the United States, and that it is
acquired for use as a residence. The eligi-
ble contractor is not required to attach the
statement to the return on which the credit
is claimed. However, § 1.6001–1(a) re-
quires that taxpayers maintain such books
and records as are sufficient to establish the
entitlement to, and amount of, any deduc-
tion claimed by the taxpayer. Accordingly,
an eligible contractor claiming a $1,000
credit under § 45L should retain the state-
ment as part of its records to satisfy this
requirement, and is not entitled to rely on
the statement unless the statement is so re-
tained.
.02ContentofStatement.The eligible
contractor may not rely on the statement
by the dealer unless the statement specifies
the date of the retail sale of the manufac-
tured home, that the dealer delivered the
manufactured home to the purchaser at an
address in the United States, and that the
dealer has no knowledge of any informa-
tion suggesting that the purchaser will use
the manufactured home other than as a res-
2006–11 I.R.B.630March 13, 2006

idence. The statement must also contain
the following information:
(1) The name, address, and telephone
number of the dealer; and
(2) A declaration, applicable to the
statement made by a dealer and any ac-
companying documents, signed by a per-
son currently authorized to bind the dealer
in such matters, in the following form:
“Under penalties of perjury, I declare
that to the best of my knowledge and
belief, the facts presented with respect
to this sale transaction are true, correct,
and complete.”
SECTION 8. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this notice have been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–1994.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 3, 4, 6, and 7. This
information is required to be collected and
retained in order to ensure that a manufac-
tured home meets the requirements for the
energy efficient home credit under § 45L.
This information will be used to determine
whether property forwhich certifications
are provided is property that qualifies for
the credit. The collection of information is
required to obtain a benefit. The likely re-
spondents are corporations, partnerships,
and individuals.
The estimated total annual reporting
burden is 75 hours.
The estimated annual burden per re-
spondent varies from 3.5 hours to 5 hours,
depending on individual circumstances,
with an estimated average burden of 4
hours to complete the certification re-
quired under this notice. The estimated
number of respondents is 15.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this notice is
Jennifer C. Bernardini of the Office of
Associate Chief Counsel (Passthroughs
& Special Industries). For further in-
formation regarding this notice, contact
Jennifer C. Bernardini at (202) 622–3120
(not a toll-free call).
March 13, 20066312006–11 I.R.B.

Part IV. Items of General Interest
Guidance Under Section 1502;
Application of Section 108 to
Members of a Consolidated
Group; Correction
Announcement 2006–15
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to final regulations.
SUMMARY: This document corrects final
regulations, (T.D. 9192, 2005–15 I.R.B.
866) that were published in the Federal
Register on Tuesday, March 22, 2005 (70
FR 14395), that govern the application of
section 108 when a member of a consol-
idated group realizes discharge of indebt-
edness income.
DATES: This correction is effective on
March 22, 2005.
FOR FURTHER INFORMATION
CONTACT: Amber Cook, (202)
622–7530 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations, temporary regu-
lations, and removal of temporary regula-
tions (T.D. 9192) that is the subject of this
correction is under section 1502 of the In-
ternal Revenue Code.
Need for Correction
As published, T.D. 9192 contains an er-
ror that may prove to be misleading and is
in need of clarification.
Correction of Publication
Accordingly, the publication of the
final regulations, temporary regulations,
and removal of temporary regulations
(T.D. 9192) that were the subject of FR
Doc. 05–5528, are corrected as follows:
PART 1—INCOME TAXES
1. The authority citation for 26 CFR
part 1 continues to read as follows:
Authority: 26 U.S.C. 7805, unless oth-
erwise noted. Section 1.1502–11 also is-
sued under 26 U.S.C. 1502.
Sec. 1.1502–11 [Corrected]
2. In Sec. 1.1502–11, paragraph (c)(5),
Example 3, (ii)(E), remove the words “take
into account its $80 of excluded COD.”
and add in their place the words “take
into account its $80 of excluded COD in-
come.”.
Cynthia E. Grigsby,
Acting Chief, Publications
and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel,
(Procedure and Administration).
(Filed by the Office of the Federal Register on April 15, 2005,
8:45 a.m., and published in the issue of the Federal Register
for April 18, 2005, 70 F.R. 20049)
2006–11 I.R.B.632March 13, 2006

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 ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis 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
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings 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.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes 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 pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis 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 rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis 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 fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
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—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
March 13, 2006i2006–11 I.R.B.

Numerical Finding List
1
Bulletin 2006–1 through 2006–11
Announcements:
2006-1, 2006-1 I.R.B.260
2006-2, 2006-2 I.R.B.300
2006-3, 2006-3 I.R.B.327
2006-4, 2006-3 I.R.B.328
2006-5, 2006-4 I.R.B.378
2006-6, 2006-4 I.R.B.340
2006-7, 2006-4 I.R.B.342
2006-8, 2006-4 I.R.B.344
2006-9, 2006-5 I.R.B.392
2006-10, 2006-5 I.R.B.393
2006-11, 2006-6 I.R.B.420
2006-12, 2006-6 I.R.B.421
2006-13, 2006-7 I.R.B.462
2006-14, 2006-8 I.R.B.516
2006-15, 2006-11 I.R.B.632
Notices:
2006-1, 2006-4 I.R.B.347
2006-2, 2006-2 I.R.B.278
2006-3, 2006-3 I.R.B.306
2006-4, 2006-3 I.R.B.307
2006-5, 2006-4 I.R.B.348
2006-6, 2006-5 I.R.B.385
2006-7, 2006-10 I.R.B.559
2006-8, 2006-5 I.R.B.386
2006-9, 2006-6 I.R.B.413
2006-10, 2006-5 I.R.B.386
2006-11, 2006-7 I.R.B.457
2006-12, 2006-7 I.R.B.458
2006-13, 2006-8 I.R.B.496
2006-14, 2006-8 I.R.B.498
2006-15, 2006-8 I.R.B.501
2006-16, 2006-9 I.R.B.538
2006-17, 2006-10 I.R.B.559
2006-18, 2006-8 I.R.B.502
2006-19, 2006-9 I.R.B.539
2006-20, 2006-10 I.R.B.560
2006-22, 2006-11 I.R.B.593
2006-23, 2006-11 I.R.B.594
2006-24, 2006-11 I.R.B.595
2006-25, 2006-11 I.R.B.609
2006-26, 2006-11 I.R.B.622
2006-27, 2006-11 I.R.B.626
2006-28, 2006-11 I.R.B.628
Proposed Regulations:
REG-107722-00, 2006-4 I.R.B.354
REG-104385-01, 2006-5 I.R.B.389
REG-122380-02, 2006-10 I.R.B.563
REG-137243-02, 2006-3 I.R.B.317
REG-133446-03, 2006-2 I.R.B.299
Proposed Regulations— Continued:
REG-113365-04, 2006-10 I.R.B.580
REG-148568-04, 2006-6 I.R.B.417
REG-106418-05, 2006-7 I.R.B.461
REG-138879-05, 2006-8 I.R.B.503
REG-143244-05, 2006-6 I.R.B.419
REG-146459-05, 2006-8 I.R.B.504
Revenue Procedures:
2006-1, 2006-1 I.R.B.1
2006-2, 2006-1 I.R.B.89
2006-3, 2006-1 I.R.B.122
2006-4, 2006-1 I.R.B.132
2006-5, 2006-1 I.R.B.174
2006-6, 2006-1 I.R.B.204
2006-7, 2006-1 I.R.B.242
2006-8, 2006-1 I.R.B.245
2006-9, 2006-2 I.R.B.278
2006-10, 2006-2 I.R.B.293
2006-11, 2006-3 I.R.B.309
2006-12, 2006-3 I.R.B.310
2006-13, 2006-3 I.R.B.315
2006-14, 2006-4 I.R.B.350
2006-15, 2006-5 I.R.B.387
2006-16, 2006-9 I.R.B.539
Revenue Rulings:
2006-1, 2006-2 I.R.B.261
2006-2, 2006-2 I.R.B.261
2006-3, 2006-2 I.R.B.276
2006-4, 2006-2 I.R.B.264
2006-5, 2006-3 I.R.B.302
2006-6, 2006-5 I.R.B.381
2006-7, 2006-6 I.R.B.399
2006-8, 2006-9 I.R.B.520
2006-9, 2006-9 I.R.B.519
2006-10, 2006-10 I.R.B.557
Tax Conventions:
2006-6, 2006-4 I.R.B.340
2006-7, 2006-4 I.R.B.342
2006-8, 2006-4 I.R.B.344
Treasury Decisions:
9231, 2006-2 I.R.B.272
9232, 2006-2 I.R.B.266
9233, 2006-3 I.R.B.303
9234, 2006-4 I.R.B.329
9235, 2006-4 I.R.B.338
9236, 2006-5 I.R.B.382
9237, 2006-6 I.R.B.394
9238, 2006-6 I.R.B.408
9239, 2006-6 I.R.B.401
9240, 2006-7 I.R.B.454
9241, 2006-7 I.R.B.427
9242, 2006-7 I.R.B.422
Treasury Decisions— Continued:
9243, 2006-8 I.R.B.475
9244, 2006-8 I.R.B.463
9246, 2006-9 I.R.B.534
9247, 2006-9 I.R.B.521
9248, 2006-9 I.R.B.524
9249, 2006-10 I.R.B.546
9250, 2006-11 I.R.B.588
9251, 2006-11 I.R.B.590
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2005–27 through 2005–52 is in Internal Revenue Bulletin
2005–52, dated December 27, 2005.
2006–11 I.R.B.iiMarch 13, 2006

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2006–1 through 2006–11
Notices:
2002-35
Clarified and modified by
Notice 2006-16, 2006-9 I.R.B.538
2005-44
Supplemented by
Notice 2006-1, 2006-4 I.R.B.347
2005-66
Supplemented by
Notice 2006-20, 2006-10 I.R.B.560
2005-73
Supplemented by
Notice 2006-20, 2006-10 I.R.B.560
2005-81
Supplemented by
Notice 2006-20, 2006-10 I.R.B.560
2005-98
Supplemented by
Notice 2006-7, 2006-10 I.R.B.559
Proposed Regulations:
REG-131739-03
Corrected by
Ann. 2006-10, 2006-5 I.R.B.393
REG-138647-04
Corrected by
Ann. 2006-4, 2006-3 I.R.B.328
REG-158080-04
Corrected by
Ann. 2006-11, 2006-6 I.R.B.420
Revenue Procedures:
96-52
Superseded by
Rev. Proc. 2006-10, 2006-2 I.R.B.293
97-27
Modified by
Rev. Proc. 2006-11, 2006-3 I.R.B.309
Modified and amplified by
Rev. Proc. 2006-12, 2006-3 I.R.B.310
2002-9
Modified by
Rev. Proc. 2006-11, 2006-3 I.R.B.309
Modified and amplified by
Rev. Proc. 2006-12, 2006-3 I.R.B.310
Rev. Proc. 2006-14, 2006-4 I.R.B.350
Rev. Proc. 2006-16, 2006-9 I.R.B.539
Revenue Procedures— Continued:
2002-17
Modified by
Rev. Proc. 2006-14, 2006-4 I.R.B.350
2003-38
Modified by
Rev. Proc. 2006-16, 2006-9 I.R.B.539
2004-23
Superseded for certain taxable years by
Rev. Proc. 2006-12, 2006-3 I.R.B.310
2004-40
Superseded by
Rev. Proc. 2006-9, 2006-2 I.R.B.278
2005-1
Superseded by
Rev. Proc. 2006-1, 2006-1 I.R.B.1
2005-2
Superseded by
Rev. Proc. 2006-2, 2006-1 I.R.B.89
2005-3
Superseded by
Rev. Proc. 2006-3, 2006-1 I.R.B.122
2005-4
Superseded by
Rev. Proc. 2006-4, 2006-1 I.R.B.132
2005-5
Superseded by
Rev. Proc. 2006-5, 2006-1 I.R.B.174
2005-6
Superseded by
Rev. Proc. 2006-6, 2006-1 I.R.B.204
2005-7
Superseded by
Rev. Proc. 2006-7, 2006-1 I.R.B.242
2005-8
Superseded by
Rev. Proc. 2006-8, 2006-1 I.R.B.245
2005-9
Superseded for certain taxable years by
Rev. Proc. 2006-12, 2006-3 I.R.B.310
2005-12
Section10modifiedandsupersededby
Rev. Proc. 2006-1, 2006-1 I.R.B.1
2005-24
Modified by
Notice 2006-15, 2006-8 I.R.B.501
2005-61
Superseded by
Rev. Proc. 2006-3, 2006-1 I.R.B.122
Revenue Procedures— Continued:
2005-68
Superseded by
Rev. Proc. 2006-1, 2006-1 I.R.B.1
Rev. Proc. 2006-3, 2006-1 I.R.B.122
Revenue Rulings:
55-355
Obsoleted by
T.D. 9244, 2006-8 I.R.B.463
74-503
Revoked by
Rev. Rul. 2006-2, 2006-2 I.R.B.261
77-230
Obsoleted by
T.D. 9249, 2006-10 I.R.B.546
91-5
Modified by
T.D. 9250, 2006-11 I.R.B.588
92-86
Modified by
T.D. 9250, 2006-11 I.R.B.588
Treasury Decisions:
9192
Corrected by
Ann. 2006-15, 2006-11 I.R.B.632
9203
Corrected by
Ann. 2006-12, 2006-6 I.R.B.421
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2005–27 through 2005–52 is in Internal Revenue Bulletin 2005–52, dated December 27,
2005.
March 13, 2006iii2006–11 I.R.B.
U.S. GPO: 2006—320–797/20048