Internal Revenue Bulletin 2023-27 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2023–27
July 3, 2023
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.
EMPLOYEE PLANS
Notice 2023-48, page 1124.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment rates
for June 2023 used under § 417(e)(3)(D), the 24-month
average segment rates applicable for June 2023, and the
30-year Treasury rates, as reflected by the application of
§ 430(h)(2)(C)(iv).
INCOME TAX
REG-101607-23, page 1127.
This item contains proposed regulations concerning the
election under the Inflation Reduction Act of 2022 to treat
the amount of certain tax credits as a payment of Federal
income tax. The proposed regulations describe rules for
the elective payment of these credit amounts in a taxable
year, including definitions and special rules applicable to
partnerships and S corporations and regarding repay-
ment of excessive payments. In addition, the proposed
regulations describe rules related to an IRS pre-filing
registration process that would be required. These pro-
posed regulations affect tax-exempt organizations, State
and local governments, Indian tribal governments, Alaska
Native Corporations, the Tennessee Valley Authority, rural
electric cooperatives, and, in the case of three of these
credits, certain taxpayers eligible to elect the elective pay-
ment of credit amounts in a taxable year. This document
also provides notice of a public hearing on the proposed
regulations.
REG-101610-23, page 1161.
This item contains proposed regulations concerning the
election under the Inflation Reduction Act of 2022 to
transfer certain Federal income tax credits. The proposed
regulations describe the proposed rules for the election to
transfer eligible credits in a taxable year, including defini-
tions and special rules applicable to partnerships and S
corporations and regarding excessive credit transfer or
recapture events. In addition, the proposed regulations
describe rules related to an IRS pre-filing registration pro-
cess that would be required. These proposed regulations
affect eligible taxpayers that elect to transfer eligible cred-
its in a taxable year and the transferee taxpayers to which
eligible credits are transferred.
REG-105595-23, page 1194.
These proposed regulations provide guidance regarding the
elective payment election of the advanced manufacturing
investment credit under section 48D of the Internal Revenue
Code (Code). The proposed regulations reflect changes
made by the CHIPS Act of 2022, and supplement the rules
proposed in the March 2023 proposed regulations. The sec-
tion 48D credit may be claimed for qualified investments in
an advanced manufacturing facility that manufactures fin-
ished semiconductors or finished semiconductor manufac-
turing equipment.
Rev. Rul. 2023-12, page 1111.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, and the long-term tax exempt rate. For purposes of
sections 382, 1274, 1288, 7872 and other sections of the
Code, tables set forth the rates for July 2023.
T.D. 9975, page 1113.
The temporary regulations, TD 9975, provide mandatory infor-
mation and pre-filing registration requirements that must be
completed before elections available under sections 48D(d),
6417, and 6418 of the Internal Revenue Code (Code) may be
made.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
July 3, 2023 Bulletin No. 2023–27

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2023-12
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for July 2023 (the current
month). Table 1 contains the short-
term, mid-term, and long-term applica-
ble federal rates (AFR) for the current
month for purposes of section 1274(d)
of the Internal Revenue Code. Table 2
contains the short-term, mid-term, and
long-term adjusted applicable federal
rates (adjusted AFR) for the current
month for purposes of section 1288(b).
Table 3 sets forth the adjusted fed-
eral long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropri-
ate percentages for determining the
low-income housing credit described
in section 42(b)(1) for buildings placed
in service during the current month.
However, under section 42(b)(2), the
applicable percentage for non-feder-
ally subsidized new buildings placed
in service after July 30, 2008, shall not
be less than 9%. Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder
or a reversionary interest for purposes
of section 7520. Finally, Table 6 con-
tains the blended annual rate for 2023
for purposes of section 7872.
REV. RUL. 2023-12 TABLE 1
Applicable Federal Rates (AFR) for July 2023
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR4.80%4.74%4.71%4.69%
110% AFR5.28%5.21%5.18%5.15%
120% AFR5.77%5.69%5.65%5.62%
130% AFR6.25%6.16%6.11%6.08%
Mid-term
AFR3.85%3.81%3.79%3.78%
110% AFR 4.23%4.19%4.17%4.15%
120% AFR4.62%4.57%4.54%4.53%
130% AFR5.01%4.95%4.92%4.90%
150% AFR5.80%5.72%5.68%5.65%
175% AFR6.78%6.67%6.62%6.58%
Long-term
AFR3.98%3.94%3.92%3.91%
110% AFR4.38%4.33%4.31%4.29%
120% AFR4.79%4.73%4.70%4.68%
130% AFR5.19%5.12%5.09%5.07%
REV. RUL. 2023-12 TABLE 2
Adjusted AFR for July 2023
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR3.63%3.60%3.58%3.57%
Mid-term adjusted AFR2.91%2.89%2.88%2.87%
Long-term adjusted AFR3.01%2.99%2.98%2.97%
Bulletin No. 2023–27 1111 July 3, 2023

REV. RUL. 2023-12 TABLE 3
Rates Under Section 382 for July 2023
Adjusted federal long-term rate for the current month3.01%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
3.01%
REV. RUL. 2023-12 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for July 2023
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.91%
Appropriate percentage for the 30% present value low-income housing credit 3.39%
REV. RUL. 2023-12 TABLE 5
Rate Under Section 7520 for July 2023
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a
remainder or reversionary interest
4.60%

REV. RUL. 2023-12 TABLE 6
Blended Annual Rate for 2023
Section 7872(e)(2) blended annual rate for 20234.65%
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2023. See Rev. Rul. 2023-12, page 1.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2023. See Rev. Rul. 2023-12, page 1.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of July 2023. See Rev.
Rul. 2023-12, page 1.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2023. See Rev. Rul. 2023-12, page 1.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of July 2023. See Rev. Rul.
2023-12, page 1.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2023. See Rev. Rul. 2023-12, page 1.
Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2023. See Rev. Rul. 2023-12, page 1.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of July 2023. See Rev. Rul. 2023-12, page 1.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of July 2023. See Rev. Rul.
2023-12, page 1.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2023. See Rev. Rul. 2023-12, page 1.

July 3, 2023 1112 Bulletin No. 2023–27

Bulletin No. 2023–27 1113 July 3, 2023
26 CFR 1.48D-6T: Elective Payment Election; 26
CFR 1.6417-5T: Additional information and regis-
tration; 26 CFR 1.6418-4T: Additional information
and registration
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
T.D. 9975
Pre-Filing Registration
Requirements for Certain
Tax Credit Elections
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulations.
SUMMARY: This document contains tem-
porary regulations setting forth mandatory
information and registration requirements
for taxpayers planning to make an elec-
tive payment election under the Inflation
Reduction Act of 2022 and the CHIPS Act
of 2022 to treat the amount of certain tax
credits as a payment of Federal income tax,
or in the case of a partnership or S corpora-
tion, to receive a payment in the amount of
such credits. This document also contains
temporary regulations setting forth manda-
tory information and registration require-
ments for taxpayers planning to make an
election to transfer certain Federal income
tax credits under the Inflation Reduction
Act of 2022. These temporary regulations
affect tax-exempt organizations, State and
local governments, Indian tribal govern-
ments, Alaska Native Corporations, the
Tennessee Valley Authority, rural elec-
tric cooperatives, and, in the case of three
credits, certain taxpayers eligible to elect
the elective payment of credit amounts in
a taxable year under section 6417 of the
Internal Revenue Code (Code). These tem-
porary regulations also affect taxpayers eli-
gible to make an elective payment election
instead of claiming the advanced manufac-
turing investment credit under section 48D
of the Code. These temporary regulations
further affect taxpayers eligible to elect to
transfer certain Federal income tax credits
under section 6418 of the Code.
DATES: Effective date: This temporary
regulation is effective on June 21, 2023.
Applicability date: For dates of appli-
cability, see §§1.48D-6T(j), 1.6417-5T(d),
and 1.6418-4T(d).
FOR FURTHER INFORMATION
CONTACT: Concerning these temporary
regulations, Lani M. Sinfield at (202) 317-
5871 (not a toll free number).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
This document amends the Income Tax
Regulations (26 CFR part 1) to add tem-
porary regulations providing information
and registration requirements that must
be completed before elections available
under sections 48D(d), 6417, and 6418 of
the Code may be made.
In accordance with section 7805(e)
(1) of the Code, concurrent with the pub-
lication of this Treasury Decision, the
Department of the Treasury (Treasury
Department) and the IRS are publishing in
the Proposed Rules section of this issue of
the Federal Register three notices of pro-
posed rulemaking that contain proposed
regulations under §§1.48D-6, 1.6417-5,
and 1.6418-4, the text of which is identi-
cal to the text of §§1.48D-6T, 1.6417-5T,
and 1.6418-4T of the temporary regula-
tions. REG-105595-23 provides proposed
regulations under section 48D(d). REG-
101607-23 provides proposed regulations
under sections 6241 and 6417. REG-
101610-23 provides proposed regulations
under section 6418.
Interested persons are directed to the
ADDRESSES and COMMENTS AND
PUBLIC HEARING sections of the pre-
ambles to REG-105595-23, REG-101607-
23, and REG-101610-23 for information
on submitting public comments or the pub-
lic hearings for the proposed regulations.
II. Sections 48D(d), 6417, and 6418
A notice of proposed rulemaking (REG-
105595-23) in the Proposed Rules section
in this issue of the Federal Register pro-
vides a background description of section
48D. A notice of proposed rulemaking
(REG-101607-23) in the Proposed Rules
section in this issue of the Federal
Register provides a background descrip-
tion of section 6417. A notice of proposed
rulemaking (REG-101610-23) in the
Proposed Rules section in this issue of the
Federal Register provides a background
description of section 6418.
Explanation of Provisions
I. Pre-filing Registration Requirements
under Section 48D(d)
Temp. Reg. §1.48D-6T(b)(1) provides
the mandatory pre-filing registration pro-
cess that, except as provided in guidance,
a taxpayer must complete as a condition
of, and prior to, any amount being treated
as a payment against the tax imposed
under §1.48D-6(a)(1), or an amount paid
to a partnership or S corporation pursu-
ant to §1.48D-6(d)(2)(ii)(A). A taxpayer
is required to use the pre-filing registra-
tion process to register each qualified
investment in an advanced manufacturing
facility. A taxpayer that does not obtain a
registration number or report the registra-
tion number on its annual tax return with
respect to an advanced manufacturing
facility is ineligible to receive any elec-
tive payment amount with respect to the
amount of any section 48D credit deter-
mined with respect to that advanced man-
ufacturing facility. However, completion
of the pre-filing registration requirements
and receipt of a registration number does
not, by itself, mean that the taxpayer is
eligible to receive a payment with respect
to the section 48D credits determined with
respect to the advanced manufacturing
facility.
The pre-filing registration require-
ments are that a taxpayer:
(1) must complete the registration pro-
cess electronically through the IRS elec-
tronic portal and in accordance with the
instructions provided therein, unless oth-
erwise provided in guidance;
(2) must satisfy the registration require-
ments and receive a registration number
prior to making a section 48D(d)(1) elec-
tive payment election on the taxpayer’s
tax return for the taxable year at issue;
(3) is required to obtain a registration
number for each qualified investment in

July 3, 2023 1114 Bulletin No. 2023–27
an advanced manufacturing facility with
respect to which a section 48D credit will
be determined and for which the taxpayer
wishes to make a section 48D(d)(1) elec-
tive payment election; and
(4) must provide the specific infor-
mation required to be provided as part
of the pre-filing registration process. The
provision of such information, which
includes information about the taxpayer
and about the qualified investment in an
advanced manufacturing facility, would
allow the IRS to prevent duplication,
fraud, improper payments, or excessive
payments under section 48D. For exam-
ple, verifying information about the tax-
payer would allow the IRS to mitigate
the risk of fraud or improper payments
to entities that are not eligible taxpayers.
Information about the taxpayer’s taxable
year would allow the IRS to ensure that
an elective payment election is timely
made on the entity’s annual tax return.
Information about the advanced manufac-
turing facility, including its address and
coordinates (longitude and latitude), sup-
porting documentation, beginning of con-
struction date, and placed in service date
would allow the IRS to mitigate the risk
of duplication, fraud, and improper pay-
ments for properties that are not advanced
manufacturing facilities.
Temp. Reg. §1.48D-6T(b)(7)(i) pro-
vides that, after a taxpayer completes
pre-filing registration with respect to each
qualified investment in an advanced man-
ufacturing facility with respect to which
the taxpayer intends to elect a section
48D(d) elective payment election for the
taxable year, the IRS will review the infor-
mation provided and will issue a separate
registration number for each qualified
investment for which the taxpayer pro-
vided sufficient verifiable information.
Temp. Reg. §1.48D-6T(b)(7)(ii) pro-
vides that a registration number is valid
only for the taxable year for which it is
obtained. Temp. Reg. §1.48D-6T(b)(7)(iii)
provides that, if an elective payment elec-
tion will be made with respect to a qualified
investment in an advanced manufacturing
facility for a taxable year for which a regis-
tration number under this section has been
obtained for a prior taxable year, the tax-
payer must renew the registration each sub-
sequent year in accordance with applicable
guidance, including attesting that all the
facts previously provided are still correct
or updating any facts that are relevant in
calculating the amount of the section 48D
credit. Temp. Reg. §1.48D-6T(b)(7)(iv)
provides that, if facts change with respect
to the qualified investment in an advanced
manufacturing facility for which a registra-
tion number has been previously obtained,
the taxpayer must amend the registration to
reflect these new facts. The regulations pro-
vide, for example, that if the facility pre-
viously registered for an elective payment
election undergoes a change of ownership
(incident to a corporate reorganization or
an asset sale) such that the new owner has
a different employer identification number
(EIN) than the owner who obtained the
original registration, the original owner
would be required to amend the original
registration to disassociate its EIN from the
advanced manufacturing facility and the
new owner must submit an original reg-
istration (or if the new owner previously
registered other advanced manufacturing
facilities, must amend its original regis-
tration) to associate the new owner’s EIN
with the previously registered advanced
manufacturing facility.
Lastly, Temp. Reg. §1.48D-6(b)(7)
(v) provides that the taxpayer is required
to include the registration number of the
advanced manufacturing facility on the
taxpayer’s annual return for the taxable
year for an election under Temp. Reg.
§1.48D-6(a)(1). The IRS will treat an
elective payment election as ineffective
with respect to any section 48D credit
determined with respect to the advanced
manufacturing facility for which the tax-
payer does not include a valid registration
number on the annual tax return.
II. Pre-filing Registration Requirements
and Additional Information under
Section 6417
Section 6417(d)(5) provides that, as
a condition of, and prior to, any amount
being treated as a payment that is made
by the taxpayer under section 6417(a) or
any payment being made pursuant to sec-
tion 6417(c), the Secretary may require
such information or registration as the
Secretary deems necessary or appropriate
for purposes of preventing duplication,
fraud, improper payments, or excessive
payments.
In general, stakeholders requested addi-
tional information about this provision and
requested that the regulations balance the
need to prevent fraud and abuse with the
burden on taxpayers. Stakeholders recom-
mended that the information required to
be provided to the IRS should be provided
in a manner that facilitates automated pro-
cedures to help catch potential fraud, dis-
courages abusive or otherwise illegitimate
claims, and allows efficient and prompt
review (both before payment and through
audits). Stakeholders recommended that
all required documents and information
should be able to be submitted easily via an
online portal. Stakeholders recommended
that information or registration should be
as consistent as possible across sections
48D(d)(1), 6417(d)(5), and 6418(g)(1).
Temp. Reg. §1.6417-5T provides the
mandatory pre-filing registration pro-
cess. Temp. Reg. §1.6417-5T(a) pro-
vides an overview of this process and
requires an applicable entity or electing
taxpayer to satisfy the pre-filing regis-
tration requirements as a condition of,
and prior to, making an elective payment
election. An applicable entity or electing
taxpayer is required to use the pre-filing
registration process to register itself as
intending to make the elective payment
election, to list all applicable credits it
intends to claim, and to list each appli-
cable credit property that contributed
to the determination of such credits
as part of the pre-filing submission (or
amended submission). An applicable
entity or electing taxpayer that does not
obtain a registration number and report
the registration number on its annual
tax return with respect to an applicable
credit property is ineligible to make an
elective payment election to treat any
elective payment amount with respect
to the amount of any credit determined
with respect to that applicable credit
property as a payment of tax. However,
completion of the pre-filing registration
requirements and receipt of a registration
number does not, by itself, mean that the
applicable entity or electing taxpayer
will receive a payment with respect to
the applicable credits determined with
respect to the applicable credit property.
Temp. Reg. §1.6417-5T(b) provides
the following pre-filing registration
requirements.

Bulletin No. 2023–27 1115 July 3, 2023
First, an applicable entity or electing
taxpayer must complete the pre-filing reg-
istration process electronically through an
IRS electronic portal in accordance with
the instructions provided therein, unless
otherwise provided in guidance. If the
election is by a member of a consolidated
group, the member must complete the
pre-filing registration process as a condi-
tion of, and prior to, making an elective
payment election. See §1.1502-77 (pro-
viding rules regarding the status of the
common parent as agent for its members).
Second, an applicable entity or elect-
ing taxpayer must satisfy the registration
requirements and receive a registration
number prior to making an elective pay-
ment election on the applicable entity’s
tax return for the taxable year at issue.
Third, an applicable entity or electing
taxpayer is required to obtain a registra-
tion number for each applicable credit
property with respect to which an appli-
cable credit will be determined and for
which the applicable entity or electing
taxpayer intends to make an elective pay-
ment election.
Finally, an applicable entity or elect-
ing taxpayer must provide the specific
information required to be provided as
part of the pre-filing registration process.
The provision of such information, which
includes information about the taxpayer,
about the applicable credits, and about
the applicable credit property, will allow
the IRS to prevent duplication, fraud,
improper payments, or excessive pay-
ments under section 6417. For example,
verifying information about the taxpayer
will allow the IRS to mitigate the risk of
fraud or improper payments to entities
that are not applicable entities or electing
taxpayers. Information about the taxpay-
er’s taxable year will allow the IRS to
ensure that an elective payment election
is timely made on the entity’s annual
tax return. Information about applicable
credit properties, including their address
and coordinates (longitude and latitude),
supporting documentation, beginning of
construction date, and placed in service
date will allow the IRS to mitigate the risk
of duplication, fraud, and improper pay-
ments for properties that are not applica-
ble credit properties. Information about
whether an investment tax credit property
was acquired using any Restricted Tax
Exempt Amounts will allow the IRS to
prevent improper payments.
Temp. Reg. §1.6417-5T(c) provides
information about the required registra-
tion number. Temp. Reg. §1.6417-5T(c)
(1) provides that, after an applicable entity
or electing taxpayer completes the pre-fil-
ing registration process as provided in
proposed §1.6417-5(b) for the applicable
credit properties with respect to which the
entity intends to make an elective payment
election in the taxable year, the IRS will
review the information provided and will
issue a separate registration number for
each applicable credit property for which
the applicable entity or electing taxpayer
provided sufficient verifiable information,
as provided in guidance.
Temp. Reg. §1.6417-5T(c)(2) provides
that a registration number is valid only for
the taxable year for which it is obtained.
Temp. Reg. §1.6417-5T(c)(3) provides
that, if an elective payment election will be
made with respect to an applicable credit
property for which a registration number
under proposed §1.6417-5 has been pre-
viously obtained, the applicable entity
or electing taxpayer will be required to
renew the registration each year in accor-
dance with applicable guidance, includ-
ing attesting that all the facts previously
provided are still correct or updating any
facts. Temp. Reg. §1.6417-5T(c)(4) pro-
vides that, if specified changes occur with
respect to one or more applicable credit
properties for which a registration number
has been previously obtained, an applica-
ble entity or electing taxpayer is required
to amend the registration (or may need to
submit a new registration) to reflect these
new facts. For example, one stakeholder
asked that, if a taxpayer becomes a party
to an internal reorganization under section
368(a) (such as a merger or distribution
in a nonrecognition transaction) during
the election period, the elective payment
election should carry over to the successor
entity. The temporary regulations provide
that if a facility previously registered for
an elective payment election undergoes
a change of ownership (incident to a cor-
porate reorganization or an asset sale)
such that the new owner has a different
employer identification number (EIN)
than the owner who obtained the original
registration, the original owner is required
to amend the original registration to
disassociate its EIN from the credit prop-
erty and the new owner must submit an
original registration (or if the new owner
previously registered other credit proper-
ties, must amend its original registration)
to associate the new owner’s EIN with the
previously registered credit property.
Lastly, Temp. Reg. §1.6417-5T(c)
(5) provides that the applicable entity or
electing taxpayer is required to include
the registration number of the applicable
credit property on their annual tax return
for the taxable year. The IRS will treat
an elective payment election as ineffec-
tive with respect to the portion of a credit
determined with respect to an applicable
credit property for which the applica-
ble entity or electing taxpayer does not
include a valid registration number on the
annual tax return.
III. Pre-filing Registration Requirements
and Additional Information under
Section 6418
Section 6418(g)(1) provides that as
a condition of, and prior to, any transfer
of any portion of an eligible credit under
section 6418, the Secretary may require
such information (including, in such form
or manner as is determined appropriate by
the Secretary, such information returns)
or registration as the Secretary deems
necessary for purposes of preventing
duplication, fraud, improper payments, or
excessive payments under this section.
In general, consistent with section
6417, stakeholders requested additional
information about this provision and
requested that the regulations balance the
need to prevent fraud and abuse with the
burden on taxpayers. Stakeholders recom-
mended a registration system that assigns
a transfer number to an eligible taxpayer
that can be used by transferee taxpayers
to claim transferred credits and allows
the IRS to track transfers of eligible
credits. Stakeholders also recommended
that information or registration require-
ments should be as consistent as possible
across sections 48D(d)(1), 6417(d)(5),
and 6418(g)(1). In order to meet the pur-
pose of section 6418(g)(1), the Treasury
Department and the IRS have determined
that it is necessary to establish a manda-
tory registration process that is in place
before the end of the 2023 calendar year,

July 3, 2023 1116 Bulletin No. 2023–27
which is the first full taxable year during
which a transfer election under section
6418 is available.
Temp. Reg. §1.6418-4T generally
provides rules requiring that eligible tax-
payers register before filing the return
on which a transfer election is made and
provide information related to each eligi-
ble credit property for which the eligible
taxpayer intends to transfer a specified
credit portion. Temp. Reg. §1.6418-4T(a),
consistent with section 6418(g)(1),
requires that, as a condition of, and prior
to, making an election to transfer a spec-
ified credit portion, an eligible taxpayer
satisfy the pre-filing registration require-
ments in Temp. Reg. §1.6418-4T(b). After
the required pre-filing registration process
is successfully completed, an eligible
taxpayer will receive a unique registra-
tion number from the IRS for each reg-
istered eligible credit property for which
the eligible taxpayer intends to transfer
a specified credit portion. The Treasury
Department and the IRS intend for this
pre-filling registration process to occur
through an IRS electronic portal (unless
otherwise allowed in guidance). An eligi-
ble taxpayer that does not obtain a regis-
tration number and report the registration
number on its return with respect to an eli-
gible credit property is ineligible to make
a transfer election. However, completion
of the pre-filing registration requirements
and receipt of a registration number does
not, by itself, mean the eligible taxpayer
is eligible to transfer any specified credit
portion determined with respect to the
eligible credit property. The registration
number also must be reported on the eli-
gible taxpayer’s return.
Temp. Reg. §1.6418-4T(b) provides
the following pre-filing registration
requirements.
First, an eligible taxpayer must com-
plete the pre-filing registration process
electronically through an IRS electronic
portal in accordance with the instruc-
tions provided therein, unless otherwise
provided in guidance. If the election is
by a member of a consolidated group,
the member must complete the pre-fil-
ing registration process as a condition of,
and prior to, making an elective payment
election. See §1.1502-77 (providing rules
regarding the status of the common parent
as agent for its members).
Second, an eligible taxpayer must
satisfy the registration requirements and
receive a registration number prior to
making a transfer election for a specified
credit portion on the eligible taxpayer’s
return for the taxable year at issue.
Third, an eligible taxpayer is required
to obtain a registration number for each
eligible credit property with respect to
which a transfer election of a specified
credit portion is made.
Finally, an eligible taxpayer must pro-
vide the specific information required to
be provided as part of the pre-filing reg-
istration process. The provision of such
information, which includes information
about the taxpayer, about the eligible cred-
its, and about the eligible credit property,
will allow the IRS to prevent duplication,
fraud, improper payments, or excessive
transfers under section 6418. For example,
verifying information about the taxpayer
will allow the IRS to mitigate the risk of
fraud or improper transfers. Information
about eligible credit properties, including
their address and coordinates (longitude
and latitude), supporting documentation,
beginning of construction date, and placed
in service date will allow the IRS to mit-
igate the risk of duplication, fraud, and
improper transfers for properties that are
not eligible credit properties.
Temp. Reg. §1.6418-4T(c) provides
rules related to the registration number
that is obtained after the IRS has reviewed
and approved the taxpayer’s submitted
information. First, these rules provide that
a registration number is valid for an eligi-
ble taxpayer only for the taxable year for
which it is obtained, and for a transferee
taxpayer’s taxable year in which the spec-
ified credit portion is taken into account.
Second, Temp. Reg.§1.6418-4T(c) pro-
vides rules for the renewal of a registra-
tion number that has been previously
obtained. The eligible taxpayer is required
to renew the registration with respect
to an eligible credit property each year
in accordance with guidance, including
attesting that all the facts are still correct
or updating any facts. Third, the tem-
porary regulations provide that, if facts
change with respect to an eligible credit
property for which a registration number
has been previously obtained, an eligible
taxpayer is required to amend the regis-
tration to reflect these new facts. Lastly,
the temporary regulations provide that an
eligible taxpayer is required to include the
registration number of the eligible credit
property on the eligible taxpayer’s return
for the taxable year, as provided in Temp.
Reg. §1.6418-2T(b), for an election to be
effective with respect to any eligible credit
determined with respect to any eligible
credit property. The IRS will treat a trans-
fer election as ineffective with respect to
an eligible credit determined with respect
to an eligible credit property for which the
eligible taxpayer does not include a valid
registration number on its return.
A transferee taxpayer is also required
to report the registration number received
from an eligible taxpayer on its return for
the taxable year that the transferee tax-
payer takes the transferred eligible credit
into account.
Applicability Dates
The temporary regulations under
§1.48D-6T apply to taxable years ending
on or after June 21, 2023. The temporary
regulations under §1.48D-6T expire on
June 12, 2026.
The temporary regulations under
§1.6417-5T apply to taxable years ending
on or after June 21, 2023. The temporary
regulations under §1.6417-5T expire on
June 12, 2026.
The temporary regulations under
§1.6418-4T apply to taxable years ending
on or after June 21, 2023. The temporary
regulations under §1.6418-4T expire on
June 12, 2026.
Special Analyses
I. Good Cause
The Administrative Procedure Act (5
U.S.C. Subchapter II) provides an excep-
tion to generally applicable rulemaking
requirements when an agency makes a
finding of good cause (and incorporates
the finding and a brief statement of rea-
sons therefor in the rules issued).
The Treasury Department and the IRS
find that good cause exists for making
these temporary regulations immediately
effective without notice and comment.
The pre-filing registration process is criti-
cal to the implementation of sections 48D,
6417, and 6418. As expressly authorized

Bulletin No. 2023–27 1117 July 3, 2023
by statute to prevent duplication, fraud,
and improper or excessive payments, the
temporary regulations condition elective
payment and transferability on pre-reg-
istration with the IRS.
1
Section 48D
applies to property placed in service after
December 31, 2022, and sections 6417
and 6418 each apply to taxable years
beginning after that date. This means that
filers will be able take advantage of these
provisions for their 2023 tax years.
The Treasury Department and the IRS
believe it is important to immediately put
into effect these pre-registration require-
ments. The pre-registration process col-
lects critical information to minimize
fraudulent elections and prevent duplica-
tion and improper or excessive payments
by ensuring basic eligibility requirements
for eligible credits before the election
is made. Validating certain information
before the annual tax return process will
result in more accurate review of the
veracity of the information and fewer
duplicate, fraudulent, improper, or exces-
sive transfers or payments. In addition,
the pre-filing registration requirement is
expected to reduce the need for recov-
ering erroneous payments and adjusting
return positions via costly, burdensome,
and inefficient examination, appeals, and
litigation processes (which, in the case of
section 6418, could potentially be needed
with respect to both parties to the credit
transfer transaction). Immediate imple-
mentation of these safeguards is important
because it is anticipated that there will be
an immediate and significant increase in
utilization of the tax incentives described
in sections 48D(d), 6417, and 6418 by
entities that have not historically had
return-filing obligations, increasing the
risk of the duplicative, fraudulent, and
improper or excessive payments that the
pre-registration process is intended to
mitigate.
The Treasury Department and the IRS
find that good cause exists for making these
temporary regulations effective without
notice and comment because failure to do
so would be contrary to the public interest.
Without these temporary regulations, the
IRS may not be able to timely and effec-
tively develop and implement a pre-filing
registration system. Lack of a pre-regis-
tration process would create risk for the
public fisc by increasing the likelihood of
duplicate, fraudulent, improper, or exces-
sive payments or transfers. The pre-filing
registration system also must be devel-
oped sufficiently in advance of the filing
season for taxpayers to have time to gather
the necessary information and complete
the registration process and for the IRS
to be able to review the submitted infor-
mation and issue registration numbers.
Failing to pre-register taxpayers who have
never before filed a tax return with the IRS
could significantly delay the processing of
those taxpayers’ returns because proce-
dures to allow them to file an annual tax
return would need to be taken during the
middle of filing season. Such delay would
harm taxpayers and also potentially result
in the IRS owing interest on any refunds
due, further damaging the public fisc.
Additionally, it is in the public interest
to have certainly regarding the require-
ments for pre-registration as far before the
2023 filing season as possible to ensure
the ability to timely and accurately fulfill
the requirements. This certainty is par-
ticularly crucial for those filers already
or soon to be engaged in an activity that
would qualify them to make an elective
payment or transfer election. Taxpayer
certainty is also especially important for
particular populations of affected taxpay-
ers such as entities that have not histori-
cally had return-filing obligations because
they may need significant time to review
and understand the underlying tax law and
the pre-filing registration requirements.
The Treasury Department and the IRS
also find that good cause exists for making
these temporary regulations immediately
effective because it would be imprac-
ticable to comply with the notice and
comments process. The processes estab-
lished in sections 48D, 6417, and 6418
are novel and complex. Determining how
these processes interact with established
tax procedures is complicated and in
some aspects very difficult to reconcile.
The elections under sections 6417 and
6418 apply to numerous credits, each of
which contain different substantive eligi-
bility and other requirements, which had
to be separately analyzed to understand
what information should be collected as
part of the pre-filing registration process.
Developing a previously nonexistent reg-
istration process, new filing portal, and
determining the necessary elements to
protect the fisc has been time consuming.
The Treasury Department and the IRS
have moved quickly to understand these
complex Code sections and determine
technological elements needed to create
the pre-filing registration process and
portal.
To accomplish the purpose of the
pre-filing registration process, the elec-
tronic portal must open by Fall 2023.
The Treasury Department and the IRS
understand the need to carefully consider
all public comments and provide robust
responses to all relevant comments. The
few months available between the publica-
tion of proposed regulations and the open-
ing of the electronic portal is insufficient
time to receive, review, and meaningfully
respond to public comments. Furthermore,
there would not be sufficient time after all
comments are considered to then make
corresponding changes to the electronic
portal, which would require technological
development and user testing.
Comments are being solicited in the
cross-referenced notices of proposed
rulemaking that are in the Proposed
Rules section in this issue of the Federal
Register. Any comments will be consid-
ered before final regulations are issued.
II. Paperwork Reduction Act
The collection of information con-
tained in these temporary regulations
has been submitted to the Office of
Management and Budget for review in
accordance with the Paperwork Reduction
Act. Commenters are strongly encouraged
1
Sections 48D(d)(2)(E) and 6417(d)(5) authorize the Secretary to require such information or registration as the Secretary deems necessary or appropriate for purposes of preventing dupli-
cation, fraud, improper payments, or excessive payments as a condition of, and prior to, any amount being treated as a payment made by or to the taxpayer. Section 6418(g)(1) states that,
as a condition of, and prior to, any transfer of any portion of an eligible credit pursuant to section 6418(a), the Secretary may require such information (including, in such form or manner as
is determined appropriate by the Secretary, such information returns) or registration as the Secretary deems necessary for purposes of preventing duplication, fraud, improper payments, or
excessive payments under section 6418.

July 3, 2023 1118 Bulletin No. 2023–27
to submit public comments electroni-
cally. Submit electronic submissions for
the proposed information collection to
the IRS via email at pra.comments@irs.
gov (indicate REG-101607-23 on the
Subject line). Comments on the collec-
tion of information should be received by
August 14, 2023. Comments are specifi-
cally requested concerning:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information (see below);
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collection of information
may be minimized, including through the
application of automated collection tech-
niques or other forms of information tech-
nology; and
Estimates of capital or start-up costs
and costs of operation, maintenance,
and purchase of services to provide
information.
The collections of information in
these temporary regulations contain
reporting and recordkeeping require-
ments. The recordkeeping requirements
are considered general tax records under
Section 1.6001-1(e). These records are
required for IRS to validate that taxpayers
have met the regulatory requirements and
are entitled to transfer the credits. For PRA
purposes, general tax records are already
approved by OMB under 1545-0047 for
tax-exempt organizations and government
entities; under 1545-0074 for individuals;
and under 1545-0123 for business entities.
These reporting requirements include a
requirement to register with IRS to make
the elective payment election or the trans-
fer election in §§1.48D-6T, 1.6417-5T,
1.6418-4T. This pre-filing registration
requirement is being submitted to OMB
and will be processed in accordance with
the PRA as required by 5 CFR 1320.10.
This collection of information is necessary
to prevent duplication, fraud, improper
payments, or excessive payments under
sections 48D, 6417 and 6418 of the Code.
The IRS is seeking a new OMB control
number (1545-NEW) for the pre-registra-
tion requirements. The respondents are:
(1) Under section 48D, taxpayers eligi-
ble to elect the elective payment election
of the advanced manufacturing invest-
ment credit.
Estimated total annual reporting bur-
den is 271 hours.
Estimated average annual burden per
respondent is 5.41 hours.
Estimated number of respondents is 50.
(2) Under section 6417, tax-exempt
organizations, State and local govern-
ments, Indian tribal governments, Alaska
Native Corporations, the Tennessee Valley
Authority, rural electric cooperatives, and
certain taxpayers eligible to elect the elec-
tive payment of applicable credits in a tax-
able year.
Estimated total annual reporting bur-
den is 126,200 hours.
Estimated average annual burden per
respondent is 6.31 hours.
Estimated number of respondents is
20,000.
(3) Under section 6418, eligible tax-
payers that elect to transfer eligible credits
in a taxable year.
Estimated total annual reporting bur-
den is 308,000 hours.
Estimated average annual burden per
respondent is 6.16 hours.
Estimated number of respondents is
50,000.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
Books or records relating to a collection
of information must be retained if 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 section 6103. The IRS anticipates
opening the electronic portal for pre-filing
registration in Fall 2023, after approval
of the collection of information under the
Paperwork Reduction Act.
III. Regulatory Flexibility Act
For applicability of the Regulatory
Flexibility Act, please refer to the cross-ref-
erence notices of proposed rulemaking
(REG-105595-23, REG-101607-23, and
REG-101610-23) published elsewhere in
this issue of the Federal Register.
IV. Section 7805(f)
Pursuant to section 7805(f), these tem-
porary regulations will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
their impact on small business.
V. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal mandate
that may result in expenditures in any one
year by a state, local, or tribal government,
in the aggregate, or by the private sector,
of $100 million in 1995 dollars (updated
annually for inflation). These temporary
regulations do not include any Federal
mandate that may result in expenditures by
state, local, or tribal governments, or by the
private sector in excess of that threshold.
VI. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on state and local gov-
ernments, and is not required by statute,
or preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
Order. These temporary regulations do
not have federalism implications and do
not impose substantial, direct compliance
costs on state and local governments or
preempt state law within the meaning of
the Executive Order.
VII. Executive Order 12866
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore,
a regulatory impact assessment is not
required.

Bulletin No. 2023–27 1119 July 3, 2023
VIII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs desig-
nated this rule as a major rule as defined
by 5 U.S.C. 804(2). For good cause pur-
suant to 5 U.S.C. 808(2), see part I of this
Special Analyses section.
Drafting Information
The principal author of this tem-
porary regulation is Lani M. Sinfield,
Office of the Associate Chief Counsel
(Passthroughs and Special Industries),
IRS. However, other personnel from the
Treasury Department and the IRS partic-
ipated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Amendments to the Regulations
Accordingly, the Treasury Department
and the IRS amend 26 CFR part 1 as
follows:
PART 1—INCOME TAXES
Paragraph. 1. The authority citation
for part 1 is amended by adding the fol-
lowing entries in numerical order to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.48D-6T also issued under 26
U.S.C. 48D(d)(2)(E) and (6) * * *
* * * * *
Section 1.6417-5T also issued under 26
U.S.C. 6417(d)(5) and (h) * * *
Section 1.6418-4T also issued under 26
U.S.C. 6418(g)(1) and (h)* * *
* * * * *
Par. 2. Section 1.48D-6T is added to
read as follows:
§1.48D-6T Elective payment election.
(a) [Reserved]
(b) Pre-filing registration required—
(1) In general. Pre-filing registration by
any taxpayer (including a partnership
or an S corporation) in accordance with
this paragraph (b) is a condition that
must be successfully completed prior
to making an elective payment election
under section 48D(d)(1) and this section
with respect to qualified property placed
in service by the taxpayer as part of an
advanced manufacturing facility of an
eligible taxpayer. An elective payment
election will not be effective with respect
to the section 48D credit determined with
respect to any such qualified property
placed in service by any taxpayer unless
the taxpayer received a valid registra-
tion number for the taxpayer’s qualified
investment in the advanced manufac-
turing facility of an eligible taxpayer in
accordance with this paragraph (b) and
provided the registration number for each
qualified investment in each advanced
manufacturing facility on its Form 3800,
General Business Credit, attached to the
tax return in accordance with guidance.
For purposes of this section, the term
guidance means guidance published in
the Federal Register or Internal Revenue
Bulletin, as well as administrative guid-
ance such as forms, instructions, publi-
cations, or other guidance on the IRS.
gov website. See §§601.601 and 601.602
of this chapter. However, completion of
the pre-filing registration requirements
and receipt of a registration number does
not, by itself, mean the taxpayer is eligi-
ble to receive a payment with respect to
any section 48D credit determined with
respect to the qualified property.
(2) Manner of registration. Unless oth-
erwise provided in guidance, a taxpayer
must complete the pre-filing registration
process electronically through the IRS
electronic portal and in accordance with
the instructions provided therein.
(3) Members of a consolidated group.
A member of a consolidated group is
required to complete pre-filing registration
as a condition of, and prior to, making an
elective payment election. See §1.1502-77
(providing rules regarding the status of the
common parent as agent for its members).
(4) Timing of pre-filing registration. A
taxpayer must satisfy the pre-filing regis-
tration requirements of this paragraph (b)
and receive a registration number under
paragraph (b)(6) of this section prior to
making any elective payment election
under this section on the taxpayer’s tax
return for the taxable year at issue.
(5) Each qualified investment in an
advanced manufacturing facility must
have its own registration number. A tax-
payer must obtain a registration num-
ber for each qualified investment in an
advanced manufacturing facility of an
eligible taxpayer with respect to which an
elective payment election is made.
(6) Information required to complete
the pre-filing registration process. Unless
modified in future guidance, a taxpayer
must provide the following information to
the IRS to complete the pre-filing registra-
tion process:
(i) The taxpayer’s general informa-
tion, including its name, address, taxpayer
identification number, and type of legal
entity;
(ii) Any additional information required
by the IRS electronic portal;
(iii) The taxpayer’s taxable year, as
determined under section 441 of the Code;
(iv) The type of annual return(s) nor-
mally filed by the taxpayer with the IRS;
(v) A list of each qualified investment
in an advanced manufacturing facility that
the taxpayer intends to use to determine
a section 48D credit for which the tax-
payer intends to make an elective payment
election;
(vi) For each qualified investment in
an advanced manufacturing facility listed
in paragraph (b)(5)(v) of this section, any
further information required by the IRS
electronic portal, such as—
(A) The type of qualified investment in
the advanced manufacturing facility;
(B) Physical location (that is, address
and coordinates (longitude and latitude) of
the advanced manufacturing facility);
(C) Any supporting documentation
relating to the construction, reconstruc-
tion or acquisition of the advanced man-
ufacturing facility (such as, State and
local government permits to operate the
advanced manufacturing facility, certifi-
cations, and evidence of ownership that
ties to the land deed, lease, or other doc-
umented right to use and access any land
upon which the advanced manufacturing
facility is constructed or housed);
(D) The beginning of construction date
and the placed in service date of any qual-
ified property that is part of the advanced
manufacturing facility;
(E) The source of funds the taxpayer
used to acquire the qualified property with

July 3, 2023 1120 Bulletin No. 2023–27
respect to which the qualified investment
was made; and
(F) Any other information that the tax-
payer or entity believes will help the IRS
evaluate the registration request;
(vii) The name of a contact person
for the taxpayer. The contact person is
the person whom the IRS may contact if
there is an issue with the registration. The
contact person must either possess legal
authority to bind the taxpayer or must pro-
vide a properly executed power of attor-
ney on Form 2848, Power of Attorney and
Declaration of Representative;
(viii) A penalties of perjury statement,
effective for all information submitted
as a complete application, and signed by
a person with personal knowledge of the
relevant facts that is authorized to bind the
registrant; and
(ix) Any other information the IRS
deems necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under this
section that is provided in guidance.
(7) Registration number—(i) In gen-
eral. The IRS will review the information
provided and will issue a separate registra-
tion number for each qualified investment
in an advanced manufacturing facility of
an eligible taxpayer for which the tax-
payer making the registration provided
sufficient verifiable information.
(ii) Registration number is only valid
for one year. A registration number is
valid only with respect to the taxpayer that
obtained the registration number under
this section and only for the taxable year
for which it is obtained.
(iii) Renewing registration numbers.
If an elective payment election will be
made with respect to any section 48D
credit determined with respect to a qual-
ified investment in an advanced manu-
facturing facility for a taxable year after a
registration number under this section has
been obtained, the taxpayer must renew
the registration for that subsequent year
in accordance with applicable guidance,
including attesting that all the facts previ-
ously provided are still correct or updating
any facts.
(iv) Amendment of previously submit-
ted registration information if a change
occurs before the registration number is
used. As provided in instructions to the
pre-filing registration portal, if specified
changes occur with respect to a qualified
investment in an advanced manufacturing
facility for which a registration number
has been previously obtained, a taxpayer
must amend the registration (or may need
to submit a new registration) to reflect
these new facts. For example, if an eligible
taxpayer that is the owner of an advanced
manufacturing facility previously reg-
istered for an elective payment election
for a section 48D credit determined with
respect to that advanced manufacturing
facility and the advanced manufacturing
facility undergoes a change of ownership
(incident to a corporate reorganization or
an asset sale) such that the new owner has
a different employer identification number
(EIN) than the owner who obtained the
original registration, the original owner of
the advanced manufacturing facility must
amend the original registration to disas-
sociate its EIN from the advanced manu-
facturing facility and the new owner must
submit separately an original registration
(or if the new owner previously registered
other qualified investments or advanced
manufacturing facilities, must amend its
original registration) to associate the new
owner’s EIN with the previously regis-
tered advanced manufacturing facility.
(v) Registration number is required to
be reported on the return for the taxable
year of the elective payment election. The
taxpayer must include the registration
number of the qualified investment in the
advanced manufacturing facility on the
taxpayer’s return as provided in paragraph
(b) of this section for the taxable year. The
IRS will treat an elective payment elec-
tion as ineffective with respect to a section
48D credit determined with respect to a
qualified investment in an advanced man-
ufacturing facility for which the taxpayer
does not include a valid registration num-
ber on the annual return.
(c) – (i) [Reserved]
(j) Applicability date for pre-filing reg-
istration requirements. The requirements
of paragraph (b) of this section apply
to property placed in service on or after
December 31, 2022, and during a taxable
year ending on or after June 21, 2023.
(k) Expiration date. The applicability
of paragraph (b) of this section expires on
June 12, 2026.
Par. 3. Section 1.6417-5T is added to
read as follows:
§1.6417-5T Additional information and
registration.
(a) Pre-filing registration and election.
An applicable entity or electing taxpayer
is required to satisfy the pre-filing regis-
tration requirements in paragraph (b) of
this section as a condition of, and prior
to, making an elective payment election.
An applicable entity or electing taxpayer
must use the pre-filing registration pro-
cess to register itself as intending to make
the elective payment election, to list all
applicable credits it intends to claim, and
to list each applicable credit property that
contributed to the determination of such
credits as part of the pre-filing submis-
sion (or amended submission). An appli-
cable entity or electing taxpayer that does
not obtain a registration number under
paragraph (c)(1) of this section or report
the registration number on its annual tax
return, as defined in §1.6417-1(b), pur-
suant to paragraph (c)(5) of this section
with respect to an otherwise applicable
credit property, is ineligible to receive any
elective payment amount with respect to
the amount of any credit determined with
respect to that applicable credit property.
However, completion of the pre-filing reg-
istration requirements and receipt of a reg-
istration number does not, by itself, mean
the applicable entity or electing taxpayer is
eligible to receive a payment with respect
to the applicable credits determined with
respect to the applicable credit property.
(b) Pre-filing registration require-
ments—(1) Manner of pre-filing regis-
tration. Unless otherwise provided in
guidance, an applicable entity or electing
taxpayer must complete the pre-filing reg-
istration process electronically through the
IRS electronic portal and in accordance
with the instructions provided therein.
(2) Pre-filing registration and election
for members of a consolidated group.
A member of a consolidated group is
required to complete pre-filing registration
as a condition of, and prior to, making an
elective payment election. See §1.1502-77
(providing rules regarding the status of the
common parent as agent for its members).
(3) Timing of pre-filing registration. An
applicable entity or electing taxpayer must
satisfy the pre-filing registration require-
ments of this paragraph (b) and receive a
registration number under paragraph (c)

Bulletin No. 2023–27 1121 July 3, 2023
of this section prior to making an elective
payment election under §1.6417-2(b) on
the applicable entity’s or electing taxpay-
er’s annual tax return for the taxable year
at issue.
(4) Each applicable credit property
must have its own registration number.
An applicable entity or electing taxpayer
must obtain a registration number for each
applicable credit property with respect to
which it intends to make an elective pay-
ment election.
(5) Information required to complete
the pre-filing registration process. Unless
modified in future guidance, an appli-
cable entity or electing taxpayer must
provide the following information to the
IRS to complete the pre-filing registration
process:
(i) The applicable entity’s or electing
taxpayer’s general information, including
its name, address, taxpayer identification
number, and type of legal entity.
(ii) Any additional information
required by the IRS electronic portal, such
as information regarding the taxpayer’s
exempt status under section 501(a) of the
Code; that the applicable entity is a polit-
ical subdivision of a State, the District of
Columbia, an Indian Tribal government,
or a U.S territory; or that the applicable
entity is an agency or instrumentality of a
State, the District of Columbia, an Indian
Tribal government, or a U.S. territory.
(iii) The taxpayer’s taxable year, as
determined under section 441 of the Code.
(iv) The type of annual tax return(s)
normally filed by the applicable entity or
electing taxpayer, or that the applicable
entity or electing taxpayer does not nor-
mally file an annual tax return with the
IRS.
(v) The type of applicable credit(s) for
which the applicable entity or electing
taxpayer intends to make an elective pay-
ment election.
(vi) For each applicable credit, each
applicable credit property that the appli-
cable entity or electing taxpayer intends
to use to determine the credit for which
the applicable entity or electing taxpayer
intends to make an elective payment
election.
(vii) For each applicable credit prop-
erty listed in paragraph (b)(4)(vi) of this
section, any further information required
by the IRS electronic portal, such as—
(A) The type of applicable credit
property;
(B) Physical location (that is, address
and coordinates (longitude and latitude) of
the applicable credit property);
(C) Any supporting documentation
relating to the construction or acquisition
of the applicable credit property (such as
State, District of Columbia, Indian Tribal,
U.S. territorial, or local government per-
mits to operate the applicable credit prop-
erty; certifications; evidence of ownership
that ties to a land deed, lease, or other
documented right to use and access any
land or facility upon which the applicable
credit property is constructed or housed;
U.S. Coast Guard registration numbers
for offshore wind vessels; and the vehicle
identification number of an eligible clean
vehicle with respect to which a section
45W credit is determined);
(D) The beginning of construction date
and the placed in service date of the appli-
cable credit property;
(E) If an investment-related credit
property (as defined §1.6417-2(c)(3)),
the source of funds the taxpayer used to
acquire the property; and
(F) Any other information that the
applicable entity or electing taxpayer
believes will help the IRS evaluate the
registration request.
(viii) The name of a contact person for
the applicable entity or electing taxpayer.
The contact person is the person whom the
IRS may contact if there is an issue with
the registration. The contact person must
either possess legal authority to bind the
applicable entity or electing taxpayer or
must provide a properly executed power of
attorney on Form 2848, Power of Attorney
and Declaration of Representative.
(ix) A penalties of perjury statement,
effective for all information submitted
as a complete application, and signed by
a person with personal knowledge of the
relevant facts that is authorized to bind the
registrant.
(x) Any other information the IRS
deems necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under this
section that is provided in guidance.
(c) Registration number—(1) In gen-
eral. The IRS will review the information
provided and will issue a separate regis-
tration number for each applicable credit
property for which the applicable entity or
electing taxpayer provided sufficient veri-
fiable information.
(2) Registration number is only valid
for one taxable year. A registration
number is valid only with respect to the
applicable entity or electing taxpayer that
obtained the registration number under
this section and only for the taxable year
for which it is obtained.
(3) Renewing registration numbers.
If an elective payment election will be
made with respect to an applicable credit
property for a taxable year after a regis-
tration number under this section has been
obtained, the applicable entity or electing
taxpayer must renew the registration for
that subsequent taxable year in accordance
with applicable guidance, including attest-
ing that all the facts previously provided
are still correct or updating any facts.
(4) Amendment of previously submit-
ted registration information if a change
occurs before the registration number is
used. As provided in instructions to the
pre-filing registration portal, if specified
changes occur with respect to one or more
applicable credit properties for which a
registration number has been previously
obtained but not yet used, an applicable
entity or electing taxpayer must amend the
registration (or may need to submit a new
registration) to reflect these new facts. For
example, if the owner of a facility previ-
ously registered for an elective payment
election for applicable credits determined
with respect to that facility and the facility
undergoes a change of ownership (inci-
dent to a corporate reorganization or an
asset sale) such that the new owner has a
different employer identification number
(EIN) than the owner who obtained the
original registration, the original owner of
the facility must amend the original reg-
istration to disassociate its EIN from the
applicable credit property and the new
owner must submit separately an original
registration (or if the new owner previ-
ously registered other credit properties,
must amend its original registration) to
associate the new owner’s EIN with the
previously registered applicable credit
property.
(5) Registration number is required to
be reported on the return for the taxable
year of the elective payment election. The
applicable entity or electing taxpayer must

July 3, 2023 1122 Bulletin No. 2023–27
include the registration number of the
applicable credit property on its annual
tax return as provided in §1.6417-2(b)
for the taxable year. The IRS will treat an
elective payment election as ineffective
with respect to an applicable credit deter-
mined with respect to an applicable credit
property for which the applicable entity
or electing taxpayer does not include a
valid registration number on the annual
tax return.
(d) Applicability date. This section
applies to taxable years ending on or after
June 21, 2023.
(e) Expiration date. The applicability
of this section expires on June 12, 2026.
Par. 4. Section 1.6418-4T is added to
read as follows:
§1.6418-4T Additional information and
registration.
(a) Pre-filing registration and election.
As a condition of, and prior to, any speci-
fied credit portion being transferred by an
eligible taxpayer to a transferee taxpayer
pursuant to an election under §1.6418-2,
or a specified credit portion being trans-
ferred by a partnership or S corporation
pursuant to §1.6418-3, the eligible tax-
payer is required to satisfy the pre-filing
registration requirements in paragraph
(b) of this section. An eligible taxpayer
that does not obtain a registration num-
ber under paragraph (c)(1) of this sec-
tion, and report the registration number
on its return pursuant to paragraph (c)
(5) of this section, is ineligible to make a
transfer election for a specified credit por-
tion under §1.6418-2 or §1.6418-3, with
respect to the eligible credit determined
with respect to the specific eligible credit
property for which the eligible taxpayer
has failed to obtain and report a regis-
tration number. However, completion of
the pre-filing registration requirements
and receipt of a registration number does
not, by itself, mean the eligible taxpayer
is eligible to transfer any specified credit
portion determined with respect to the eli-
gible credit property.
(b) Pre-filing registration require-
ments—(1) Manner of pre-filing regis-
tration. Unless otherwise provided in
guidance, eligible taxpayers must com-
plete the pre-filing registration process
electronically through an IRS electronic
portal and in accordance with the instruc-
tions provided therein.
(2) Pre-filing registration and election
for members of a consolidated group.
A member of a consolidated group is
required to complete pre-filing registra-
tion to transfer any eligible credit deter-
mined with respect to the member. See
§1.1502-77 (providing rules regarding the
status of the common parent as agent for
its members).
(3) Timing of pre-filing registration.
An eligible taxpayer must satisfy the
pre-filing registration requirements of this
paragraph (b) and receive a registration
number under paragraph (c) of this section
prior to making a transfer election under
§1.6418-2 or §1.6418-3 for a specified
credit portion on the taxpayer’s return for
the taxable year at issue.
(4) Each eligible credit property must
have its own registration number. An eli-
gible taxpayer must obtain a registration
number for each eligible credit property
with respect to which a transfer election
of a specified credit portion is made.
(5) Information required to complete
the pre-filing registration process. Unless
modified in future guidance, an eligible
taxpayer is required to provide the follow-
ing information to the IRS to complete the
pre-filing registration process:
(i) The eligible taxpayer’s general
information, including its name, address,
taxpayer identification number, and type
of legal entity;
(ii) Any additional information
required by the IRS electronic portal, such
as information establishing that the entity
is an eligible taxpayer;
(iii) The taxpayer’s taxable year, as
determined under section 441;
(iv) The type of annual tax return(s)
normally filed by the eligible taxpayer,
or that the eligible taxpayer does not nor-
mally file an annual tax return with the
IRS;
(v) The type of eligible credit(s) for
which the eligible taxpayer intends to
make a transfer election;
(vi) Each eligible credit property that
the eligible taxpayer intends to use to
determine a specified credit portion for
which the eligible taxpayer intends to
make a transfer election;
(vii) For each eligible credit prop-
erty listed in paragraph (b)(4)(vi) of this
section, any further information required
by the IRS electronic portal, such as—
(A) The type of eligible credit property;
(B) Physical location (that is, address
and coordinates (longitude and latitude) of
the eligible credit property);
(C) Any supporting documentation
relating to the construction or acquisition
of the eligible credit property (such as
State, Indian Tribal, or local government
permits to operate the eligible credit prop-
erty, certifications, evidence of ownership
that ties to a land deed, lease, or other doc-
umented right to use and access any land
or facility upon which the eligible credit
property is constructed or housed, and
U.S. Coast Guard registration numbers for
offshore wind vessels);
(D) The beginning of construction
date, and the placed in service date of the
eligible credit property; and
(E) Any other information that the eli-
gible taxpayer believes will help the IRS
evaluate the registration request;
(viii) The name of a contact person for
the eligible taxpayer. The contact person
is the person whom the IRS may contact if
there is an issue with the registration. The
contact person must either possess legal
authority to bind the eligible taxpayer, or
must provide a properly executed power of
attorney on Form 2848, Power of Attorney
and Declaration of Representative;
(ix) A penalties of perjury statement,
effective for all information submitted
as a complete application, and signed by
a person with personal knowledge of the
relevant facts that is authorized to bind the
registrant; and
(x) Any other information the IRS
deems necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under this
section that is provided in guidance.
(c) Registration number—(1) In gen-
eral. The IRS will review the registration
information provided and will issue a sep-
arate registration number for each eligi-
ble credit property for which the eligible
taxpayer provided sufficient verifiable
information.
(2) Registration number is only valid
for one taxable year. A registration num-
ber is valid to an eligible taxpayer only
for the taxable year in which the credit is
determined for the eligible credit property
for which the registration is completed,

Bulletin No. 2023–27 1123 July 3, 2023
and for a transferee taxpayer’s taxable
year in which the eligible credit is taken
into account under §1.6418-2(f).
(3) Renewing registration numbers. If
an election to transfer an eligible credit
will be made with respect to an eligible
credit property for a taxable year after a
registration number under this section has
been obtained, the eligible taxpayer must
renew the registration for that subsequent
taxable year in accordance with applicable
guidance, including attesting that all the
facts previously provided are still correct
or updating any facts.
(4) Amendment of previously submit-
ted registration information if a change
occurs before the registration number
is used. As provided in instructions to
the pre-filing registration portal, if spec-
ified changes occur with respect to one
or more applicable credit properties for
which a registration number has been
previously obtained but not yet used, an
eligible taxpayer must amend the reg-
istration (or may need to submit a new
registration) to reflect these new facts.
For example, if the owner of a facility
previously registered for a transfer elec-
tion under §1.6418-2 or §1.6418-3 for
eligible credits determined with respect
to that facility and the facility undergoes
a change of ownership (incident to a cor-
porate reorganization or an asset sale)
such that the new owner has a different
employer identification number (EIN)
than the owner who obtained the origi-
nal registration, the original owner of the
facility must amend the original registra-
tion to disassociate its EIN from the eli-
gible credit property and the new owner
must submit separately an original regis-
tration (or if the new owner previously
registered other credit properties, must
amend its original registration) to associ-
ate the new owner’s EIN with the previ-
ously registered eligible credit property.
(5) Reporting of registration number
by an eligible taxpayer and a transferee
taxpayer—(i) Eligible taxpayer reporting.
As part of making a valid transfer election
under §1.6418-2 or §1.6418-3, an eligi-
ble taxpayer must include the registration
number of the eligible credit property on
the eligible taxpayer’s return (as provided
in §1.6418-2(b) or §1.6418-3(d)) for the
taxable year the specified credit portion
was determined. The IRS will treat an
election as ineffective if the eligible tax-
payer does not include a valid registration
number on the return.
(ii) Transferee taxpayer reporting.
A transferee taxpayer must report the
registration number received (as part
of the transfer election statement as
described in §1.6418-2(b) or otherwise)
from a transferor taxpayer on the Form
3800, General Business Credit, as part
of the return for the taxable year that the
transferee taxpayer takes the transferred
specified credit portion into account. The
specified credit portion will be disallowed
to the transferee taxpayer if the transferee
taxpayer does not include the registration
number on the return.
(d) Applicability date. This section
applies to taxable years ending on or after
June 21, 2023.
(e) Expiration date. The applicability
of this section expires on June 12, 2026.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
Approved: June 5, 2023.
Lily Batchelder,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register June 14,
2023, 11:15 a.m., and published in the issue of the
Federal Register for June 21, 2023, ** FR *****)

July 3, 2023 1124 Bulletin No. 2023–27
Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2023-48
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the inter-
est rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
1
However, an elec-
tion may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Notice 2007-81, 2007-44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consistent
with the methodology specified in Notice
2007-81, the monthly corporate bond
yield curve derived from May 2023 data
is in Table 2023-5 at the end of this notice.
The spot first, second, and third segment
rates for the month of May 2023 are,
respectively, 4.91, 5.15, and 5.34.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant
to § 430(h)(2)(C)(iv) to be within the
applicable minimum and maximum per-
centages of the corresponding 25-year
average segment rates. For this purpose,
any 25-year average segment rate that is
less than 5% is deemed to be 5%. The
25-year average segment rates for plan
years beginning in 2022 and 2023 were
published in Notice 2021-54, 2021-41
I.R.B. 457, and Notice 2022-40, 2022-40
I.R.B. 266, respectively. The applicable
minimum and maximum percentages are
95% and 105% for a plan year beginning
in 2022 or 2023.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate
bond segment rates applicable for June
2023 without adjustment for the 25-year
average segment rate limits are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
June 2023 3.03 4.11 4.27
The adjusted 24-month average seg-
ment rates set forth in the chart below reflect
§ 430(h)(2)(C)(iv) of the Code. The
24-month averages applicable for June
2023, adjusted to be within the applicable
minimum and maximum percentages of
the corresponding 25-year average seg-
ment rates in accordance with § 430(h)(2)
(C)(iv) of the Code, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable MonthFirst SegmentSecond SegmentThird Segment
2022June 20234.755.185.92
2023 June 20234.755.005.74
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B) specifies a mini-
mum amount for the full-funding limita-
tion described in § 431(c)(6)(A), based on
the plan’s current liability. Section 431(c)
(6)(E)(ii)(I) provides that the interest
rate used to calculate current liability for
this purpose must be no more than 5 per-
cent above and no more than 10 percent
below the weighted average of the rates
1
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).

Bulletin No. 2023–27 1125 July 3, 2023
of interest on 30-year Treasury securi-
ties during the four-year period ending
on the last day before the beginning of
the plan year. Notice 88-73, 1988-2 C.B.
383, provides guidelines for determin-
ing the weighted average interest rate.
The rate of interest on 30-year Treasury
securities for May 2023 is 3.86 percent.
The Service determined this rate as the
average of the daily determinations of
yield on the 30-year Treasury bond matur-
ing in February 2053 determined each day
through May 10, 2023 and the yield on the
30-year Treasury bond maturing in May
2053 determined each day for the balance
of the month. For plan years beginning in
June 2023, the weighted average of the
rates of interest on 30-year Treasury secu-
rities and the permissible range of rates
used to calculate current liability are as
follows:
Treasury Weighted Average Rates
For Plan Years Beginning In30-Year Treasury Weighted AveragePermissible Range 90% to 105%
June 20232.672.40 to 2.80
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007-81 provides guide-
lines for determining the minimum
present value segment rates. Pursuant to
that notice, the minimum present value
segment rates determined for May 2023
are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
May 2023 4.91 5.15 5.34
DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of Associate
Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free calls).

July 3, 2023 1126 Bulletin No. 2023–27
Table 2023-5
Monthly Yield Curve for May 2023
Derived from May 2023 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.55.4720.55.3340.55.3560.55.3680.55.36
1.05.2621.05.3341.05.3561.05.3681.05.36
1.55.0821.55.3341.55.3561.55.3681.55.36
2.04.9322.05.3342.05.3562.05.3682.05.36
2.54.8322.55.3342.55.3562.55.3682.55.36
3.04.7623.05.3343.05.3563.05.3683.05.36
3.54.7123.55.3343.55.3563.55.3683.55.36
4.04.6924.05.3344.05.3564.05.3684.05.36
4.54.6924.55.3344.55.3564.55.3684.55.36
5.04.7025.05.3345.05.3565.05.3685.05.36
5.54.7225.55.3345.55.3565.55.3685.55.36
6.04.7526.05.3346.05.3566.05.3686.05.36
6.54.7926.55.3346.55.3566.55.3686.55.36
7.04.8327.05.3347.05.3567.05.3687.05.36
7.54.8827.55.3347.55.3567.55.3687.55.36
8.04.9228.05.3348.05.3568.05.3688.05.36
8.54.9728.55.3448.55.3568.55.3688.55.36
9.05.0129.05.3449.05.3569.05.3689.05.36
9.55.0529.55.3449.55.3569.55.3689.55.36
10.05.0930.05.3450.05.3570.05.3690.05.36
10.55.1230.55.3450.55.3570.55.3690.55.36
11.05.1531.05.3451.05.3571.05.3691.05.36
11.55.1831.55.3451.55.3571.55.3691.55.36
12.05.2132.05.3452.05.3572.05.3692.05.36
12.55.2332.55.3452.55.3572.55.3692.55.36
13.05.2533.05.3453.05.3573.05.3693.05.36
13.55.2633.55.3453.55.3573.55.3693.55.36
14.05.2834.05.3454.05.3574.05.3694.05.36
14.55.2934.55.3454.55.3574.55.3694.55.36
15.05.3035.05.3455.05.3575.05.3695.05.36
15.55.3135.55.3455.55.3575.55.3695.55.36
16.05.3136.05.3456.05.3676.05.3696.05.36
16.55.3236.55.3456.55.3676.55.3696.55.36
17.05.3237.05.3457.05.3677.05.3697.05.36
17.55.3237.55.3557.55.3677.55.3697.55.36
18.05.3338.05.3558.05.3678.05.3698.05.36
18.55.3338.55.3558.55.3678.55.3698.55.36
19.05.3339.05.3559.05.3679.05.3699.05.36
19.55.3339.55.3559.55.3679.55.3699.55.36
20.05.3340.05.3560.05.3680.05.36100.05.36

Bulletin No. 2023–27 1127 July 3, 2023
Part IV
Notice of Proposed
Rulemaking
Section 6417 Elective
Payment of Applicable
Credits
REG-101607-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations concerning the elec-
tion under the Inflation Reduction Act of
2022 to treat the amount of certain tax
credits as a payment of Federal income
tax. The proposed regulations describe
rules for the elective payment of these
credit amounts in a taxable year, includ-
ing definitions and special rules applica-
ble to partnerships and S corporations
and regarding repayment of excessive
payments. In addition, the proposed reg-
ulations describe rules related to an IRS
pre-filing registration process that would
be required. These proposed regulations
affect tax-exempt organizations, State and
local governments, Indian tribal govern-
ments, Alaska Native Corporations, the
Tennessee Valley Authority, rural electric
cooperatives, and, in the case of three of
these credits, certain taxpayers eligible
to elect the elective payment of credit
amounts in a taxable year. This document
also provides notice of a public hearing on
the proposed regulations.
DATES: Written or electronic comments
must be received by August 14, 2023. The
public hearing on these proposed regula-
tions is scheduled to be held on August
21, 2023, at 10 a.m. ET. Requests to speak
and outlines of topics to be discussed
at the public hearing must be received
by August 14, 2023. If no outlines are
received by August 14, 2023, the public
hearing will be cancelled. Requests to
attend the public hearing must be received
by 5 p.m. ET on August 17, 2023. The
public hearing will be made accessible to
people with disabilities. Requests for spe-
cial assistance during the hearing must be
received by August 16, 2023.
ADDRESSES: Stakeholders are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-101607-23) by following
the online instructions for submitting
comments. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn. The Department of
the Treasury (Treasury Department) and
the IRS will publish for public availabil-
ity any comments submitted, whether
electronically or on paper, to the IRS’s
public docket. Send paper submissions
to: CC:PA:LPD:PR (REG-101607-23),
Room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Jeremy Milton at (202) 317-
5665 and James Holmes at (202) 317-
5114 (not toll-free numbers); concerning
submissions of comments or the public
hearing, Vivian Hayes at (202) 317–6901
(not a toll-free number) or by email to
publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background
Section 6417 was added to the Internal
Revenue Code (Code) on August 16,
2022, by section 13801(a) of Public
Law 117-169, 136 Stat. 1818, 2003,
commonly referred to as the Inflation
Reduction Act of 2022 (IRA). Section
6417 allows “applicable entities” (includ-
ing tax-exempt organizations, State and
local governments, Indian tribal govern-
ments, Alaska Native Corporations, the
Tennessee Valley Authority, and rural
electric cooperatives) to make an election
to treat an applicable credit determined
with respect to such entity as making a
payment against the tax imposed by subti-
tle A of the Code (subtitle A), for the tax-
able year with respect to which such credit
was determined, equal to the amount
of such credit. Section 6417 also allows
certain taxpayers to elect to be treated as
applicable entities for limited purposes,
as described in part III of this background
section. Section 6417 also provides spe-
cial rules relating to partnerships and
S corporations and directs the Secretary of
the Treasury or her delegate (Secretary) to
provide rules for making elections under
section 6417 and to require information
or registration necessary for purposes of
preventing duplication, fraud, improper
payments, or excessive payments under
section 6417. Section 13801(g) of the
IRA provides that section 6417 applies to
taxable years beginning after December
31, 2022. This document contains pro-
posed regulations that would amend the
Income Tax Regulations (26 CFR part 1)
and the Procedure and Administration
Regulations (part 301) to implement the
statutory provisions of section 6417.
In the Rules and Regulations section
of this issue of the Federal Register,
the Treasury Department and the IRS
are issuing temporary regulations under
§1.6417-5T that implement the pre-filing
registration process described in proposed
§1.6417-5 of the proposed regulations.
The temporary regulations require appli-
cable entities that want to elect the elec-
tive payment of applicable credit amounts
to register with the IRS through an IRS
electronic portal in advance of the appli-
cable entity filing the return on which the
election under section 6417 is made.
I. Overview of Section 6417
Section 6417(a) provides that, in the
case of an applicable entity that makes an
elective payment election under section
6417 with respect to any applicable credit
determined with respect to the applicable
entity for the taxable year, the applica-
ble entity is treated as making a payment
against the tax imposed by subtitle A, that
is, Federal income taxes, for the taxable
year with respect to which such credit was
determined that is equal to the amount of

July 3, 2023 1128 Bulletin No. 2023–27
such credit (elective payment amount). An
election under section 6417 must be made
at such time and in such manner as pro-
vided by the Secretary.
Section 6417(b) defines the term
“applicable credit” to mean each of the
following 12 credits:
(1) So much of the credit for alternative
fuel vehicle refueling property allowed
under section 30C of the Code that, pur-
suant to section 30C(d)(1), is treated as a
credit listed in section 38(b) of the Code
(section 30C credit);
(2) So much of the renewable electric-
ity production credit determined under
section 45(a) of the Code as is attributable
to qualified facilities that are originally
placed in service after December 31, 2022
(section 45 credit);
(3) So much of the credit for carbon
oxide sequestration determined under sec-
tion 45Q(a) of the Code as is attributable
to carbon capture equipment that is origi-
nally placed in service after December 31,
2022 (section 45Q credit);
(4) The zero-emission nuclear power
production credit determined under sec-
tion 45U(a) of the Code (section 45U
credit);
(5) So much of the credit for produc-
tion of clean hydrogen determined under
section 45V(a) of the Code as is attribut-
able to qualified clean hydrogen produc-
tion facilities that are originally placed in
service after December 31, 2012 (section
45V credit);
(6) In the case of a “tax-exempt entity”
described in section 168(h)(2)(A)(i), (ii),
or (iv) of the Code, the credit for qualified
commercial vehicles determined under
section 45W of the Code by reason of sec-
tion 45W(d)(3)
1
(section 45W credit);
(7) The credit for advanced manufac-
turing production under section 45X(a) of
the Code (section 45X credit);
(8) The clean electricity production
credit determined under section 45Y(a) of
the Code (section 45Y credit);
(9) The clean fuel production credit
determined under section 45Z(a) of the
Code (section 45Z credit);
(10) The energy credit determined
under section 48 of the Code (section 48
credit);
(11) The qualifying advanced energy
project credit determined under section
48C of the Code (section 48C credit); and
(12) The clean electricity investment
credit determined under section 48E of the
Code (section 48E credit).
As described in part II of this
Background section, section 6417(d)
defines an “applicable entity” and pro-
vides generally applicable rules for mak-
ing elective payment elections. Sections
6417(e) through (h) provide special rules
applicable under section 6417 that are
described in part II of this Background
section. As described in parts III and
IV of this Background section, section
6417(c), (d)(1)(B), (C), and (D), and (d)
(3) also contain special rules allowing
a taxpayer, including for this purpose a
partnership or S corporation, that is not
an applicable entity (electing taxpayer)
to elect to be treated as an applicable
entity for the limited purpose of making
an elective payment election under sec-
tion 6417, but only with respect to sec-
tion 45Q credits, section 45V credits,
and section 45X credits. Part V of this
Background section describes Notice
2022-50, 2022-43 I.R.B. 325, which, in
part, requested feedback from the pub-
lic on potential issues with respect to
the elective payment election provisions
under section 6417.
II. Applicable Entities and General
Elective Payment Election Rules
Section 6417(d)(1)(A) defines the term
“applicable entity” to mean:
(1) Any organization exempt from tax
imposed by subtitle A;
(2) Any State or political subdivision
thereof;
(3) The Tennessee Valley Authority;
(4) An Indian tribal government (as
defined in section 30D(g)(9) of the Code);
(5) Any Alaska Native Corporation
(as defined in section 3 of the Alaska
Native Claims Settlement Act (43 U.S.C.
1602(m)); or
(6) Any corporation operating on a
cooperative basis that is engaged in fur-
nishing electric energy to persons in rural
areas.
Section 6417(d)(2) provides that, in the
case of any applicable entity that makes
the election described in section 6417(a),
any applicable credit amount is determined
(1) without regard to section 50(b)(3) and
(4)(A)(i) of the Code (that is, restrictions
on property used by tax-exempt organi-
zations and governmental units), and (2)
by treating any property with respect to
which such credit is determined as used in
a trade or business of the applicable entity.
Section 6417(d)(3)(A)(i) provides
rules regarding the due date for making
any elective payment election. In the case
of any government (such as a State, the
District of Columbia, an Indian Tribal
government, any U.S. territory, or any
agency or instrumentality of the forego-
ing), or political subdivision, described
in section 6417(d)(1) and for which no
Federal income tax return is required
under sections 6011 or 6033(a) of the
Code, any election under section 6417(a)
cannot be made later than the date as is
determined appropriate by the Secretary.
In any other case, any election under sec-
tion 6417(a) cannot be made later than the
due date (including extensions of time)
for the tax return for the taxable year for
which the election is made, but in no event
earlier than 180 days after the date of the
enactment of section 6417 (that is, in no
event earlier than 180 days after August
16, 2022, which is February 13, 2023).
Section 6417(d)(3)(A)(ii) provides that
any election under section 6417(a), once
made, is irrevocable, and applies (except
as otherwise provided in section 6417(d)
(3)) with respect to any credit for the tax-
able year for which the election is made.
Section 6417(d)(3)(B) provides that, in
the case of section 45 credits, any election
under section 6417(a): (1) applies sepa-
rately with respect to each qualified facil-
ity; (2) must be made for the taxable year
in which such qualified facility is origi-
nally placed in service; and (3) applies to
such taxable year and to any subsequent
taxable year that is within the 10-year
credit period described in section 45(a)
(2)(A)(ii) with respect to such qualified
facility.
Section 6417(d)(3)(C) provides that,
in the case of section 45Q credits, any
1
The reference should be to 45W(d)(2). This has been corrected in the proposed regulations.

Bulletin No. 2023–27 1129 July 3, 2023
election under section 6417(a): (1) applies
separately with respect to the carbon
capture equipment originally placed in
service by the applicable entity during
a taxable year; and (2) applies to such
taxable year and to any subsequent tax-
able year that is within the 12-year credit
period described in section 45Q(a)(3)(A)
or (4)(A) with respect to such equipment.
Section 6417(d)(3)(C)(i)(II)(aa), (d)(3)
(C)(ii), and (d)(3)(C)(iii) provides special
rules for a taxpayer making the election to
be treated as an applicable entity for pur-
poses of section 6417 with respect to the
45Q credit (see part III of this Background
section).
Section 6417(d)(3)(D) provides that,
in the case of section 45V credits, any
election under section 6417(a): (1) applies
separately with respect to each quali-
fied clean hydrogen production facility;
(2) must be made for the taxable year in
which such facility is placed in service (or
within the 1-year period subsequent to the
date of enactment of section 6417 in the
case of facilities placed in service before
December 31, 2022); and (3) applies to
the taxable year and all subsequent tax-
able years with respect to such facility.
Section 6417(d)(3)(D)(i)(III)(aa), (d)(3)
(D)(ii), and (d)(3)(D)(iii) provide special
rules for a taxpayer making the election to
be treated as an applicable entity for pur-
poses of section 6417 with respect to the
45V credit (see part III of this Background
section).
Section 6417(d)(3)(E) provides that, in
the case of section 45Y credits, any elec-
tion under section 6417(a): (1) applies
separately with respect to each qualified
facility; (2) must be made for the taxable
year in which such facility is placed in ser-
vice; and (3) applies to such taxable year
and to any subsequent taxable year that is
within the 10-year credit period described
in section 45Y(b)(1)(B) with respect to
such facility.
Section 6417(d)(4) provides rules
regarding when the elective payment is
treated as made. Section 6417(d)(4)(A)
provides that in the case of any govern-
ment or political subdivision described
in section 6417(d)(1), and for which no
return is required under section 6011 or
section 6033(a), the payment described
in section 6417(a) is treated as made on
the later of the date that a return would
be due under section 6033(a) if such gov-
ernment or subdivision were described in
section 6033 or the date on which such
government or subdivision submits a
claim for credit or refund (at such time
and in such manner as the Secretary pro-
vides). Section 6417(d)(4)(B) provides
that, in any other case, the payment
described in section 6417(a) is treated as
made on the later of the due date (deter-
mined without regard to extensions) of
the return of tax for the taxable year or
the date on which such return is filed with
the IRS.
Section 6417(d)(5) provides that, as
a condition of, and prior to, any amount
being treated as a payment that is made
by an applicable entity under section
6417(a), the Secretary may require
such information or registration as the
Secretary deems necessary for pur-
poses of preventing duplication, fraud,
improper payments, or excessive pay-
ments under section 6417.
Section 6417(d)(6) provides rules
relating to excessive payments. In the case
of any amount treated as a payment that is
made by the applicable entity under sec-
tion 6417(a), or the amount of the payment
made pursuant to section 6417(c), that is
determined to constitute an excessive pay-
ment, the tax imposed on such entity by
chapter 1 of the Code (chapter 1), regard-
less of whether such entity would other-
wise be subject to chapter 1 tax, for the
taxable year in which such determination
is made is increased by an amount equal to
the sum of (1) the amount of such exces-
sive payment, plus (2) an amount equal
to 20 percent of such excessive payment.
The increase equal to 20 percent of the
excessive payment does not apply if the
applicable entity can demonstrate that the
excessive payment resulted from reason-
able cause.
An excessive payment is defined as,
with respect to a facility or property for
which an election is made under section
6417 for any taxable year, an amount equal
to the excess of (1) the amount treated as
a payment that is made by the applica-
ble entity under section 6417(a), or the
amount of the payment made pursuant to
section 6417(c), with respect to such facil-
ity or property for such taxable year, over
(2) the amount of the credit that, without
application of section 6417, would be oth-
erwise allowable (as determined pursuant
to section 6417(d)(2) and without regard
to section 38(c)) with respect to such facil-
ity or property for such taxable year.
Section 6417(e) provides a denial of
double benefit rule providing that, in the
case of an applicable entity making an
election under section 6417 with respect to
an applicable credit, such credit is reduced
to zero and, for any other purpose under
the Code, is deemed to have been allowed
to such entity for such taxable year.
Section 6417(f) provides a special rule
relating to any territory
2
of the United
States with a mirror code tax system (as
defined in section 24(k) of the Code).
Under this rule, section 6417 will not be
treated as part of the income tax laws of
the United States for purposes of deter-
mining the income tax law of any such
U.S. territory unless such U.S. territory
elects to have section 6417 be so treated.
Currently, the U.S. Virgin Islands, Guam,
and the Commonwealth of the Northern
Mariana Islands have mirror code tax
systems.
Section 6417(g) provides basis reduc-
tion and recapture rules. It states that,
except as otherwise provided in section
6417(d)(2)(A),
3
rules similar to the rules
of section 50 apply for purposes of section
6417.
Section 6417(h) authorizes the
Secretary to issue regulations or other
guidance as may be necessary to carry
out the purposes of section 6417, includ-
ing guidance to ensure that the amount
of the payment or deemed payment made
under section 6417 is commensurate with
the amount of the credit that would be
otherwise allowable (determined without
regard to section 38(c)).
2
Section 6417(f) uses the term “possession,” but this proposed regulation uses the alternative term “territory.”
3
Section 6417(g) actually states “subsection (c)(2)(A),” but there is no section 6417(c)(2)(A); thus, the proposed regulations correct the reference to state“(d)(2)(A).”

July 3, 2023 1130 Bulletin No. 2023–27
III. Special Rules Relating to Certain
Taxpayers Making An Election Under
Section 6417(d)(1)(B), (C), or (D)
(Electing Taxpayers)
A taxpayer other than an applicable
entity under section 6417(d)(1)(A) may
make an election under section 6417(d)(1)
(B), (C), or (D) at such time and in such
manner as the Secretary provides (but no
election may be made with respect to any
taxable year beginning after December
31, 2032). The election allows the elect-
ing taxpayer to be treated as an applicable
entity for the limited purpose of making
an elective payment election under sec-
tion 6417 with respect to a section 45V
credit, a section 45Q credit, or a section
45X credit, respectively. The special rules
for such an election are described in para-
graphs III.A, III.B, and III.C of this back-
ground section.
A. Electing taxpayers making an election
with respect to section 45V credits
Section 6417(d)(1)(B) allows an
electing taxpayer to make an elective
payment election for any taxable year
in which such taxpayer has placed in
service a qualified clean hydrogen pro-
duction facility (as defined in section
45V(c)(3)), but only with respect to a
section 45V credit determined in such
year with respect to the electing tax-
payer. Pursuant to section 6417(d)(3)
(D)(i)(III), such electing taxpayer is
treated as having made such election for
the taxable year with respect to which
the election is made and each of the
four subsequent taxable years ending
before January 1, 2033. Under section
6417(d)(3)(D)(iii), an electing taxpayer
may elect to revoke the application of
such election, but any such election to
revoke, if made, applies to the applica-
ble year specified in such election (but
not any prior taxable year) and each sub-
sequent taxable year within the 5-year
period and cannot be revoked.
Section 6417(d)(3)(D)(ii) prohibits an
electing taxpayer from making a trans-
fer election under section 6418(a) with
respect to a section 45V credit for any
year for which the electing taxpayer’s
election under section 6417(d)(1)(B) is
in effect.
B. Electing taxpayers making an election
with respect to section 45Q credits
Section 6417(d)(1)(C) allows an elect-
ing taxpayer to make an elective payment
election for any taxable year in which the
electing taxpayer has, after December
31, 2022, placed in service carbon cap-
ture equipment at a qualified facility (as
defined in section 45Q(d)), but only with
respect to a section 45Q credit deter-
mined in such year with respect to such
taxpayer. Pursuant to section 6417(d)
(3)(C)(i)(II)(aa), such electing taxpayer
is treated as having made such election
for the taxable year with respect to which
the election is made and each of the four
subsequent taxable years ending before
January 1, 2033. Under section 6417(d)
(3)(C)(iii), an electing taxpayer may
elect to revoke the application of such
election, but any such election to revoke,
if made, applies to the applicable year
specified in such election (but not any
prior taxable year) and each subsequent
taxable year within the 5-year period and
cannot be revoked.
Section 6417(d)(3)(C)(ii) prohibits an
electing taxpayer from making a trans-
fer election under section 6418(a) with
respect to a section 45Q credit for any
year for which the electing taxpayer’s
election under section 6417(d)(1)(C) is
in effect.
C. Electing taxpayers making an election
with respect to section 45X credits
Section 6417(d)(1)(D) allows an elect-
ing taxpayer to make an elective payment
election for any taxable year in which the
electing taxpayer has, after December 31,
2022, produced eligible components (as
defined in section 45X(c)(1)), but only
with respect to a section 45X credit deter-
mined in such year with respect to such
taxpayer. Pursuant to section 6417(d)
(1)(D)(ii)(I), such electing taxpayer is
treated as having made such election for
the taxable year with respect to which
the election is made and each of the four
subsequent taxable years ending before
January 1, 2033. Under section 6417(d)(1)
(D)(ii)(II), an electing taxpayer may elect
to revoke the application of such election,
but any such election to revoke, if made,
applies to the applicable year specified in
such election (but not any prior taxable
year) and each subsequent taxable year
remaining within the 5-year period and
cannot be revoked.
Section 6417(d)(1)(D)(iii) prohib-
its an electing taxpayer from making a
transfer election under section 6418(a)
with respect to a section 45X credit for
any year for which the electing taxpay-
er’s election under section 6417(d)(1)(D)
is in effect.
IV. Section 6417 Rules for Partnerships
and S corporations
Section 6417(c) provides special rules
for partnerships and S corporations that
hold directly (as determined for Federal
income tax purposes) a facility or prop-
erty for which an applicable credit is
determined. Section 6417(c)(1) provides
that, in the case of any applicable credit
determined with respect to any facility or
property held directly by a partnership or
S corporation, any elective payment elec-
tion must be made by such partnership
or S corporation in the manner provided
by the Secretary. If such a partnership
or S corporation makes an elective pay-
ment election with respect to any appli-
cable credit, (1) a payment is made to
such partnership or S corporation equal
to the applicable credit amount, (2) sec-
tion 6417(e) is applied with respect to the
applicable credit before determining any
partner’s distributive share, or S corpora-
tion shareholder’s pro rata share, of such
applicable credit, (3) any applicable credit
amount with respect to which the election
in section 6417(a) is made is treated as tax
exempt income for purposes of sections
705 and 1366 of the Code, and (4) a part-
ner’s distributive share of such tax exempt
income is based on such partner’s distrib-
utive share of the otherwise applicable
credit for each taxable year (an S corpo-
ration shareholder’s share of tax exempt
income is based on the shareholder’s pro
rata share).
Section 6417(c)(2) provides that, in
the case of any facility or property held
directly by a partnership or S corporation,
no election by any partner or shareholder
is allowed under section 6417(a) with
respect to any applicable credit deter-
mined with respect to such facility or
property.

Bulletin No. 2023–27 1131 July 3, 2023
V. Notice 2022-50
On October 24, 2022, the Treasury
Department and the IRS published Notice
2022-50, 2022-43 I.R.B. 325, to, among
other things, request feedback from the
public on potential issues with respect
to the elective payment election provi-
sions under section 6417 that may require
guidance. Over 200 comment letters were
received in response to Notice 2022-50.
Based in part on the feedback received,
the Treasury Department and the IRS are
issuing these proposed regulations regard-
ing the elective payment election provi-
sions under section 6417. The major areas
with respect to which public stakeholders
provided letters are discussed in the fol-
lowing Explanation of Provisions.
Explanation of Provisions
I. General Rules and Definitions
A. Applicable entity
Section 6417(d)(1) defines “applicable
entity” as (1) any organization exempt
from the tax imposed by subtitle A, (2)
any State or political subdivision thereof,
(3) the Tennessee Valley Authority, (4) an
Indian tribal government (as defined in
section 30D(g)(9)), (5) any Alaska Native
Corporation (as defined in section 3 of the
Alaska Native Claims Settlement Act (43
U.S.C. 1602(m)), or (6) any corporation
operating on a cooperative basis that is
engaged in furnishing electric energy to
persons in rural areas. Proposed §1.6417-
1(c) would clarify these statutory defini-
tions pursuant to the Secretary’s authority
under section 6417(h) to issue regulations
necessary to carry out the purposes of sec-
tion 6417, as discussed below.
1. Any organization exempt from the tax
imposed by subtitle A
Stakeholders asked for clarification on
the scope of the phrase “any organization
exempt from the tax imposed by subtitle
A” for purposes of determining whether
a taxpayer is an applicable entity. Entities
may be exempt from tax or have their
income exempt from tax under various
authorities. For example, an organization
could be exempt from taxation by section
501(a) of the Code or by other provisions
of the Code. An organization could also
have its income excluded from taxation
by section 115.
The Treasury Department and the IRS
propose to define the term “any organi-
zation exempt from the tax imposed by
subtitle A” to include all organizations
exempt from the tax imposed by subtitle A
by section 501(a) of the Code, commonly
referred to as “tax-exempt organizations.”
Several stakeholders requested clarifi-
cation that tax-exempt entities in the U.S.
territories are eligible to make an election
under section 6417. Under these proposed
regulations, such entities would be con-
sidered organizations exempt from the tax
imposed by subtitle A as long as they are
exempt from taxation by section 501(a)
and as long as they meet the requirements
to claim an applicable credit (such as
being an appropriate owner of an invest-
ment credit property under sections 50(b)
(1)(B) and 168(g)(4)(G)).
4
Stakeholders also asked whether an
entity classified as a nonprofit under State
law but that does not have Federal tax-ex-
empt status would be described in sec-
tion 6417(d)(1)(A). Such an entity would
not be described in section 6417(d)(1)
(A) because it is not exempt from the tax
imposed by subtitle A (unless it met the
requirements of another type of applica-
ble entity discussed below, such as a state
instrumentality).
Stakeholders also specifically sought
clarification as to whether governments
of U.S. territories would be treated as
applicable entities, based on their unique
status and the importance of their energy
security. These stakeholders noted that
the renewable energy credits gener-
ally may be claimed for activities in
the U.S. territories provided the under-
lying requirements are met, including
the specific ownership requirements for
investment tax credits.
5
In response, the
proposed regulations would interpret the
term “organization exempt from the tax
imposed by subtitle A” as used in section
6417(d)(1)(A) to include the govern-
ments of the U.S. territories.

Since sec-
tion 115(2) excludes the income accruing
to the government of any territory of the
United States, or any political subdivision
thereof, from gross income, it effectively
exempts these governments from the tax
imposed by subtitle A. In addition, these
governments may properly be viewed as
organizations.
6
Accordingly, proposed
§1.6417-1(c)(1)(ii) would provide that
the government of any U.S. territory, or a
political subdivision thereof, is an appli-
cable entity for purposes of section 6417
or provisions of law referencing section
6417(d)(1)(A).
The Treasury Department and the IRS
request comments on this definition of any
organization exempt from the tax imposed
by subtitle A, including as to whether the
term should encompass the United States,
federal agencies, or other organizations
beyond those listed in these proposed
rules.
2. Any State or political subdivision
thereof
Section 6417(d)(1)(A)(ii) states that
“any State or political subdivision thereof”
is an applicable entity for purposes of sec-
tion 6417.
The Treasury Department and the IRS
note that section 7701(a)(10) provides
that the term “State” must be construed
to include the District of Columbia where
such construction is necessary to carry out
provisions of Title 26, and thus propose
that the definition of State would include
the District of Columbia. The Treasury
Department and the IRS request com-
ments on whether additional clarification
is needed.
4
Section 50(b)(1) provides that no investment tax credit can be determined with respect to property used predominantly outside of the United States, but section 50(b)(1)(B) provides an excep-
tion for property described in section 168(g)(4). In the case of entities, section 168(g)(4)(G) describes property which is owned by a domestic corporation and which is used predominantly
in a U.S. territory by such a corporation, or by a corporation created or organized in, or under the law of, a U.S. territory.
5
See footnote 2.
6
The Code and the regulations under 26 CFR part 1 occasionally refer to governmental entities as organizations. For example, section 509(a)(1) refers to “an organization described in section
170(b)(1)(A),” which includes a governmental unit described in sections 170(b)(1)(A)(v) and 170(c)(1). See corresponding rules in §1.170A-9(a) and (e).

July 3, 2023 1132 Bulletin No. 2023–27
3. Indian tribal governments
Section 6417(d)(1)(A)(iv) states that
an applicable entity includes an Indian
tribal government (as defined in section
30D(g)(9)). To provide Indian tribal gov-
ernments parity with state governments,
proposed §1.6417-1(c)(3) would include
subdivisions of Indian tribal governments
in this definition.
Section 30D(g)(9) provides that “the
term “Indian tribal government” means
the recognized governing body of any
Indian or Alaska Native tribe, band,
nation, pueblo, village, community, com-
ponent band, or component reservation,
individually identified (including par-
enthetically) in the list published most
recently as of the date of enactment of
this subsection pursuant to section 104
of the Federally Recognized Indian Tribe
List Act of 1994 (25 U.S.C. 5131). Thus,
proposed §1.6417-1(k) would incorporate
this definition into the 6417 regulations.
See Rev. Proc. 2008-55, 2008-39 I.R.B.
768 (generally providing that an Indian
tribal entity that appears on the most
recent list published by the Department of
the Interior in the Federal Register pur-
suant to the requirements of the List Act
is designated an Indian tribal government
for purposes of section 7701(a)(40)).
The Treasury Department and the IRS
request comments regarding the defini-
tions in proposed §1.6417-1(c)(3) and (k),
including as to whether any further clarifi-
cation would be warranted. The Treasury
Department and the IRS further request
comments on whether the proposed defi-
nitions encompass the entity structures
that Indian tribal governments employ in
activities that would give rise to elective
payments, including entities with partial
Indian tribal government ownership.
4. Alaska Native Corporations
Section 6417(d)(1)(A)(v) provides that
an applicable entity for purposes of sec-
tion 6417(a) includes “any Alaska Native
Corporation (as defined in section 3 of the
Alaska Native Claims Settlement Act (43
U.S.C. 1602(m)).” A “Native Corporation”
is defined in 43 U.S.C. 1602(m) to mean
“any Regional Corporation, any Village
Corporation, any Urban Corporation,
and any Group Corporation,” which are
organized under the laws of the State of
Alaska. Although 43 U.S.C. 1606(d) pro-
vides that a Regional Corporation is incor-
porated to conduct business for profit,
each of a Village Corporation, Urban
Corporation, and Group Corporation may
be organized as a business for profit or
nonprofit corporation to hold rights and
assets for Native villages, urban commu-
nities of Natives, or members of a Native
group.
A few stakeholders requested that a
Settlement Trust (within the meaning of
43 U.S.C. 1602(t)) that is established by an
Alaska Native Corporation (ANC) for the
benefit of its shareholders also be treated
as an applicable entity. The stakeholders
stated that an ANC is a separate legal
entity that is required to be a C corpora-
tion for Federal income tax purposes, and
as such, it is an entity different from the
Settlement Trust established by the ANC.
However, the beneficiaries of the ANC
Settlement Trust are typically the same
Native individuals as the shareholders
of the ANC. the stakeholders thus asked
that an ANC Settlement Trust be added as
an applicable entity in cases in which the
Settlement Trust is directly affiliated with
an applicable ANC.
Unlike the case of the statutory defini-
tions of “Indian Tribal government,” the
statutory definition of ANC is not ambig-
uous. Accordingly, the proposed regula-
tions would not treat Settlement Trusts as
ANCs. However, Settlement Trusts could
themselves be applicable entities not
based on their relationship with an ANC if
they qualified for exempt status under sec-
tion 501(a) and applied for and received a
determination letter from the IRS recog-
nizing any such tax-exempt status.
Separately, an ANC may be the com-
mon parent of a consolidated group of
corporations (ANC-parented group)
that, in many ways, is treated similarly
to a single taxpayer for Federal income
tax purposes by the consolidated return
regulations (§§1.1502-1, et seq.). For
example, the members of a consolidated
group report their consolidated taxable
income on a single Federal income tax
return that the common parent files with
the IRS as the agent for the group under
§1.1502-77. In this regard, some stake-
holders have inquired whether non-ANC
members of an ANC-parented group
may separately make an elective pay-
ment election with respect to a section
45V credit, a section 45Q credit, or sec-
tion 45X credit determined with respect
to such member. The concern appears to
be that, by reason of their affiliation with
an ANC common parent, the non-ANC
members might be prevented from mak-
ing an election under section 6417(d)(1)
(B), (C), or (D).
The proposed regulations would clar-
ify that a non-ANC member of an ANC-
parented group may qualify as an electing
taxpayer eligible to make elections under
section 6417(d)(1)(B), (C), or (D), based
on its own corporate status. See —As with
any other electing taxpayer, a non-ANC
member of an ANC-parented group would
be required to —section 6417(d)(1)(B),
(C), or (D) —
The Treasury Department and the IRS
request comments regarding the definition
in proposed §1.6417-1(c)(4) and whether
additional guidance is necessary regarding
consolidated groups with ANC common
parents.
5. Tennessee Valley Authority
As per section 6417(d)(1)(A)(iii), the
Tennessee Valley Authority would be an
applicable entity under proposed §1.6417-
1(c)(5).
6. Rural Electrical Co-ops
Section 6417(d)(1)(A)(vi) provides that
“any corporation operating on a coopera-
tive basis which is engaged in furnishing
electric energy to persons in rural areas” is
an applicable entity. These proposed regu-
lations do not elaborate on this definition,
but request comments on whether further
clarification of the definition in proposed
§1.6417-1(c)(6) is necessary.
Stakeholders asked that any payment
under section 6417(a) not be considered
income for purposes of the 85-percent
income test under section 501(c)(12) for
electric cooperatives. Because the sec-
tion 6417(a) election results in a credit
being treated as a payment against the
tax imposed by subtitle A for the taxable
year with respect to which such credit was
determined, any such payment that results
in a refund being issued by the IRS to an
electric cooperative under section 6417(a)

Bulletin No. 2023–27 1133 July 3, 2023
will not affect the application of the
85-percent income test determined with
respect to the electric cooperative.
The Treasury Department and the IRS
request comments on whether additional
guidance is necessary to address any
uncertainty that may exist regarding the
application of section 6417 in the context
of a consolidated group with members
that are cooperatives subject to the rules
of subchapter T of chapter 1.
7. Agencies and instrumentalities
Based on feedback from stakehold-
ers, the Treasury Department and the IRS
believe that, in many instances, States,
Indian tribal governments, U.S. territo-
ries, or political subdivisions thereof are
likely to make investments or engage in
activities that qualify for applicable cred-
its through their agencies and instrumen-
talities. Multiple stakeholders requested
that State and local government agencies
and instrumentalities be included as appli-
cable entities under a variety of theories,
including cross-references to sections
50(b)(4)(A)(i) and 168(h)(2)(A)(i) in
section 6417, the fact that the income of
an instrumentality is generally excluded
from tax by section 115 of the Code, and
the authority provided by section 6417(h)
to issue regulations necessary to carry out
the purposes of section 6417. In particular,
stakeholders stated that the term “Indian
tribal government” should be defined to
include, in part, economic subdivisions of
a tribe (such as a utility, housing author-
ity, energy division or authority, or other
enterprise) regardless of how the entity
is formed (whether by Federal, Tribal or
State law).
It would be administratively burden-
some, both for stakeholders and for the
IRS, to determine what is part of a State,
Indian tribal government, U.S. territory,
or political subdivision, on the one hand,
and what is an agency or instrumentality
thereof on the other hand.
7
For example,
stakeholders expressed uncertainty about
whether certain entities, such as school
districts, public utility districts, and spe-
cial purpose entities established by gov-
ernments (such as joint action agencies,
economic development corporations, and
joint powers authorities) would qual-
ify as political subdivisions or would be
viewed as agencies or instrumentalities.
Stakeholders also noted that the status
of such entities as political subdivisions
may turn on differences in state law, such
as whether a school district has taxing
authority.
In addition, different States may struc-
ture ownership of relevant property dif-
ferently (for example, a school district or
the county of the school district may own
the electric school buses), and it would
be inequitable for entities to be eligible
or ineligible for elective payment on the
basis of such differences in ownership
structures. Furthermore, if agencies and
instrumentalities were not specifically
listed as applicable entities, States and
political subdivisions may decide to create
new entities or reorganize the administra-
tion of their activities to perform applica-
ble credit eligible activities directly, which
would be administratively burdensome
without a commensurate public benefit.
For these reasons, and to promote uniform
treatment throughout the United Sates,
proposed §1.6417-1(c)(7) would pro-
vide that applicable entities include any
agency or instrumentality of any State, the
District of Columbia, Indian tribal gov-
ernment, U.S. territory, or political subdi-
vision thereof.
The Treasury Department and the
IRS request comments on this approach
to defining applicable entities and on
whether further guidance is necessary.
8. Electing taxpayers
Certain taxpayers may make an elec-
tion to be treated as an applicable entity
with respect to applicable credit property
giving rise to the section 45Q credit, sec-
tion 45V credit, or section 45X credit, as
described in part III of this Explanation of
Provisions. Proposed §1.6417-1(g) defines
an “electing taxpayer” as any taxpayer
that is not an applicable entity, but makes
an election in accordance with proposed
§§1.6417-2(b), 1.6417-3, and, if applica-
ble, 1.6417-4, to be treated as an applica-
ble entity for a taxable year with respect to
applicable credits determined with respect
to an applicable credit property described
in proposed §1.6417-1(e)(3), (5), or (7).
Section 7701(a)(14) defines a “taxpayer”
as any person subject to any internal reve-
nue tax, including income taxes, employ-
ment taxes, and excise taxes.
Members of a consolidated group that
is not an ANC-parented group also may
make an election to be treated as an appli-
cable entity with respect to the section
45Q credit, section 45V credit, or section
45X credit. A member of the consoli-
dated group would be required to — The
Treasury Department and the IRS request
comments regarding the application of
section 6417 to consolidated groups with
electing taxpayers (for example, whether
special rules are necessary for consoli-
dated groups under proposed §1.6417-
2(e)(2) (the denial of double benefit rule).
B. Entities formed by an applicable entity
or by an electing taxpayer
1. Disregarded entities
Several stakeholders asked whether
an entity disregarded as separate from its
owner (disregarded entity) is described
in section 6417(d)(1)(A) if its owner
is described in section 6417(d)(1)(A).
Since a disregarded entity is disregarded
for Federal income tax purposes and
its attributes are attributed to the owner
regarded for Federal income tax pur-
poses, the disregarded entity’s activities
would be attributed to the owner and the
owner could claim the credit as long as
the owner is described in section 6417(d)
(1)(A). This would also include property
that an electing taxpayer that is a part-
nership or S corporation holds through a
disregarded entity or multiple disregarded
entities, including tiers of multiple disre-
garded entities owned though chains of
ownership. Thus, proposed §§1.6417-2(a)
(1)(ii) and -2(a)(2)(iv) would provide that,
if an applicable entity or electing taxpayer
is the owner (directly or indirectly) of a
disregarded entity that directly holds an
applicable credit property, the applicable
entity may make an elective payment elec-
tion for applicable credits determined with
7
The definitions of political subdivision under §1.103-1(b) and of instrumentality under Rev. Rul. 57-128, 1957-1 C.B. 311, are frequently cited for Federal tax purposes.

July 3, 2023 1134 Bulletin No. 2023–27
respect to the applicable credit property
held directly by the disregarded entity.
2. Taxable C corporations
Stakeholders also asked whether an
entity described in section 6417(d)(1)
(A) could create an entity that is a tax-
able C corporation to perform the appli-
cable credit activity and still qualify for
the section 6417 election. Because a tax-
able C corporation is an entity separate
from its owner, proposed §1.6417-1(c)(1)
would not include a C corporation that is
not itself an applicable entity described
in proposed §1.6417-1(c)(1), even if its
owner is an applicable entity described in
proposed §1.6417-1(c)(1). However, an
electing taxpayer may include a taxable C
corporation (including a member of a con-
solidated group).
3. Undivided ownership interests
Stakeholders also asked whether enti-
ties such as unincorporated joint ventures
could provide applicable entities access
to earning applicable credits available for
an elective payment election, including
by partnering with other applicable enti-
ties or with for-profit entities. Proposed
§1.6417-2(a)(1)(iii) would provide that,
if an applicable entity is a co-owner of
an applicable credit property through an
ownership arrangement treated as a ten-
ancy-in-common or pursuant to a joint
operating arrangement that has properly
elected out of subchapter K of chapter 1
of the Code (subchapter K) under section
761, then each owner is considered to own
an undivided interest in or share of the
underlying applicable credit property and
thus, any applicable credits are determined
separately with respect to each owner. As
a result, an applicable entity may make an
elective payment election under section
6417(a) in the manner provided in para-
graph (b) with respect to its share of the
applicable credits determined with respect
to its undivided ownership interest in or
share of the underlying applicable credit
property.
4. Partnerships
Many stakeholders questioned
whether a partnership that contains
partners described in section 6417(d)
(1)(A) could make an elective payment
election under section 6417 with respect
to those partners, pointing to the “deter-
mined with respect to such entity” lan-
guage in section 6417(a). Stakeholders
stated that clarity around the treatment
of these partnerships is of particular
importance as many applicable entities
choose to partner with non-applicable
entities in investment and development
of credit generating projects, that appli-
cable entities may not have the expertise
or resources to own such projects out-
right, and that the ability to partner is key
to their meaningful participation in the
energy transition.
The Treasury Department and the IRS
believe that the better interpretation of the
“determined with respect to such entity”
language in section 6417(a), as well as
the rules in sections 6417(c), is to apply
entity-specific rules under section 6417.
Section 6417(c) refers to a credit deter-
mined with respect to any facility or
property “held directly by a partnership
or S corporation,” meaning that the part-
nership or S corporation, not its owners,
is the relevant entity for these purposes.
Additionally, section 6417(c) provides
that the partnership or S corporation,
not the partners or shareholders, makes
the section 6417 election. Furthermore,
because section 6417 elections are made
for a particular applicable credit prop-
erty, allowing a section 6417 election for
a portion of an applicable credit property
would be contrary to section 6417(a) and,
if permitted, would be difficult to admin-
ister, particularly in tiered partnership
structures.
Thus, proposed §1.6417-2(a)(1)(iv)
would provide that partnerships and
S corporations are not applicable entities
described in section 6417(d)(1)(A) and
proposed §1.6417-1(c). This proposed
rule would apply no matter how many of
the partners or shareholders are described
in section 6417(d)(1)(A) and proposed
§1.6417-1(c), including if all partners
or shareholders are described in section
6417(d)(1)(A) and proposed §1.6417-
1(c). However, because section 6418(f)
(2) defines “eligible taxpayer” as any
taxpayer that is not described in section
6417(d)(1)(A) (and thus not in proposed
§1.6417-1(c)), such a partnership would
be an eligible taxpayer described in sec-
tion 6418(f)(2).
In addition, as described in part I.B.3.
of this Explanation of Provision, an appli-
cable entity may engage with other enti-
ties, including with for-profit partners, in
an ownership arrangement that has prop-
erly elected out of subchapter K and make
an elective payment election under section
6417(a) with respect to its share of the
applicable credits determined with respect
to its share of the underlying applicable
credit property. This type of arrangement
provides some flexibility for tax-exempt
and government entities to participate
in section 6417 with other entities. The
Treasury Department and the IRS request
comments on whether any additional rules
are needed. Comments are also requested
regarding whether any entity described in
section 6417(d)(1)(A)(i)-(vi) or proposed
§1.6417-1(c) could include an entity
organized as a partnership for Federal tax
purposes.
As described in part IV of this
Explanation of Provisions, an electing
taxpayer may include a partnership or
S corporation.
C. Applicable credit
Section 6417(b) lists the applicable
credits for which a section 6417(a) elec-
tion is available. Proposed §1.6417-1(d)
lists those credits, with minor changes to
account for erroneous cross-references in
the statute.
Stakeholders asked for clarification
on the scope of the credit for qualified
commercial vehicles. Section 6417(b)
(6) states that the term “applicable
credit” includes the credit for qualified
commercial vehicles determined under
section 45W by reason of subsection
(d)(2)
8
thereof, “in the case of a tax-ex-
empt entity described in clause (i), (ii),
or (iv) of section 168(h)(2)(A).” In order
to qualify for elective pay for the section
45W credit, an entity would need to be
both be an applicable entity, as defined
in proposed §1.6417-1(c), and a tax-ex-
empt entity described in clause (i), (ii),
or (iv) of section 168(h)(2)(A) (in other
words, an organization exempt from
the tax imposed by subtitle A by reason
of section 501(a) of the Code; a State,
the District of Columbia, a political

Bulletin No. 2023–27 1135 July 3, 2023
subdivision thereof, or any agency or
instrumentality of any of the foregoing;
a U.S. territory, a political subdivision
thereof, or any agency or instrumental-
ity of any of the foregoing; or an Indian
tribal government, a subdivision thereof,
or any agency or instrumentality of any
of the foregoing), and would also need
to otherwise qualify for the section 45W
credit.
One stakeholder asked whether the
elective payment election applies to both
the applicable credit and any eligible
bonus credit amounts. The amount of
applicable credit is determined, in part,
under the Code by including any eligible
bonus credit amounts. The entire amount
of any applicable credit is eligible under
the Code for the elective payment elec-
tion, assuming all the relevant require-
ments are met.
Several stakeholders asked whether
the applicable entity could treat the appli-
cable credits arising during a quarter as
a payment against quarterly estimated
tax (assuming such an amount was due).
These proposed regulations do not contain
a special rule because taxpayers can deter-
mine, based on their projected tax liability,
the correct amount of estimated tax to pay
in order to avoid a section 6654 or section
6655 estimated tax penalty at the end of
the year.
Because registration must be made
with respect to each facility or property
giving rise to an applicable credit, pro-
posed §1.6417-1(e) defines “applicable
credit property” for purposes of each of
the applicable credits, and the section
6417 regulations use the term “applicable
credit property” throughout for clarity.
D. Definitions pertaining to the election
Proposed §1.6417-1(i) would provide
that the “elective payment election” is the
election provided in proposed §1.6417-
2(b). Proposed §1.6417-1(h) would pro-
vide that the “elective payment amount”
means, with respect to an applicable entity
or an electing taxpayer that is not a part-
nership or an S corporation, the applicable
credit(s) for which an applicable entity or
electing taxpayer makes an elective pay-
ment election to be treated as making a
payment against the tax imposed by sub-
title A for the taxable year, which would
be equal to the sum of (1) the amount
(if any) of the current year applicable
credit(s) allowed as a general business
credit (GBC) under section 38 for the
taxable year, and (2) the amount (if any)
of unused current year applicable credits
which would otherwise be carried back
or carried forward from the unused credit
year under section 39 and that are treated
as a payment against tax. With respect to
an electing taxpayer that is a partnership
or an S corporation, the term “elective
payment amount” would mean the sum
of the applicable credit(s) for which the
partnership or S corporation makes an
elective payment election and results in a
payment to such partnership or S corpora-
tion equal to the amount of such credit(s)
(unless the partnership or S corporation
owes a Federal tax liability, in which case
the payment may be reduced by such tax
liability).
E. Guidance
Interpretations and procedures pertain-
ing to section 6417 and the section 6417
regulations may be issued through guid-
ance, as appropriate. Proposed §1.6417-
1(j) would define “guidance” for purposes
of these regulations as guidance pub-
lished in the Federal Register or Internal
Revenue Bulletin, as well as administra-
tive guidance such as forms, instructions,
publications, or other guidance on the
IRS.gov website.
F. Annual Tax Return
To avoid any confusion about where
the elective payment election should
be made, proposed §1.6417-1(b) would
define “annual tax return,” for purposes
of the section 6417 regulations, as fol-
lows: (1) for any taxpayer normally
required to file an annual tax return with
the IRS, such annual return (including the
Form 1065, “U.S. Return of Partnership
Income,” for partnerships and the Form
990-T for organizations with unrelated
business income tax or a proxy tax under
section 6033(e)); (2) for any taxpayer
that is not normally required to file an
annual tax return with the IRS (such as
taxpayers located in the U.S. territories),
the return they would be required to file
if they were located in the United States,
or, if no such return is required (such as
for State, District of Columbia, local, or
Indian tribal governmental entities), the
Form 990-T; and (3) for short tax year fil-
ers, the short year tax return. For example,
an individual in a U.S. territory would file
a Form 1040, “U.S. Individual Income
Tax Return,” a corporation in a U.S. ter-
ritory would file a Form 1120, “U.S.
Corporation Income Tax Return,” and
the U.S. territory itself would file Form
990-T, “Exempt Organization Business
Income Tax Return (and proxy tax under
section 6033(e).” Similarly, a tax-exempt
entity would file the Form 990-T even if
not otherwise required to file the Form
990-T.
II. Rules for Making Elective Payment
Elections
A. In general
Proposed §1.6417-2 would provide
general rules for an applicable entity or
electing taxpayer to make an elective
payment election under section 6417 in
accordance with the rules of proposed
§1.6417-2(b) with respect to any applica-
ble credit determined with respect to such
entity.
Proposed §1.6417-2(a)(1) would
provide the rules for applicable entities
making elective payment elections. An
applicable entity that makes an elec-
tive payment election in the manner
described in Part II.B. of this Explanation
of Provisions would be treated as mak-
ing a payment against the Federal
income taxes imposed by subtitle A, for
the taxable year with respect to which
an applicable credit was determined, in
the amount of such credit as determined
under the rules discussed in Part II.C. of
this Explanation of Provisions. Proposed
8
While section 6417(b)(6) refers to section 45W(d)(3), the reference should be to section 45W(d)(2). This has been corrected in the proposed regulations

July 3, 2023 1136 Bulletin No. 2023–27
§1.6417-2(d)(1) would provide that the
payment described in proposed §1.6417-
2(a)(1) is treated as made (1) in the
case of an entity for which no return is
required under sections 6011 or 6033(a),
on the later of the date that a return would
be due under section 6033(a) (determined
without regard to extensions) if such
entity were described in that section, or
the date on which such entity submits a
claim for credit or refund, and (2) in any
other case, on the later of the due date
(determined without regard to exten-
sions) of the return of tax for the taxable
year, or the date on which such return is
filed.
Special rules are provided in proposed
§1.6417-2(a)(1)(ii) through (v) that would
apply for applicable entities if the elec-
tion is made for applicable credit property
held by a disregarded entity; if the appli-
cable entity is a co-owner in an applica-
ble credit property through an ownership
arrangement properly treated as a ten-
ancy-in-common, or pursuant to a joint
operating arrangement that has properly
elected out of subchapter K under sec-
tion 761; and for members of a consoli-
dated group of which an Alaska Native
Corporation is the common parent.
As discussed in Part I.B.4 of this
Explanation of Provisions, partnerships
and S corporations would not be appli-
cable entities described in proposed
§1.6417-1(c)(1), and thus would not be
eligible to make an elective payment elec-
tion unless the partnership or S corpora-
tion is an electing taxpayer.
Proposed §1.6417-2(a)(2) would
provide the rules for electing taxpayers
making an elective payment election. An
electing taxpayer other than a partnership
or an S corporation that has made an elec-
tive payment election in accordance with
proposed §§1.6417-3 and §1.6417-2(b)
would be treated as making a payment
against the Federal income taxes imposed
by subtitle A for the taxable year with
respect to which the applicable credit is
determined in the amount determined
under proposed §1.6417-2(c). Proposed
§1.6417-2(d)(1) would provide that the
payment described in proposed §1.6417-
2(a)(2) is treated as made at the same time
as made by an applicable entity. However,
in the case of an electing taxpayer that is a
partnership or S corporation that has made
an elective payment election in accor-
dance with proposed §§1.6417-3, 1.6417-
4, and 1.6417-2(b), the IRS will make a
payment to such partnership or S corpo-
ration equal to the amount of such credit
determined under proposed §§1.6417-2(b)
and 1.6417-4(d)(3) (unless the partnership
or S corporation owes any Federal income
tax liability, in which case the payment
may be reduced by such tax liability).
Proposed §1.6417-2(a)(2) also pro-
vides special rules for electing taxpayers
that would apply if the election is made for
applicable credit property held by a disre-
garded entity; if the applicable entity is a
co-owner in an applicable credit property
through an ownership arrangement prop-
erly treated as a tenancy-in-common, or
pursuant to a joint operating arrangement
that has properly elected out of subchapter
K under section 761; and for members of
a consolidated group.
Proposed §1.6417-2(a)(3)(i)-(iv)
would address the special rules with
regard to the election for credits under
section 45, 45V, 45Q, or 45Y, as provided
in section 6417(d)(3). However, the spe-
cial rules in section 6417(d)(3) that relate
to electing taxpayers are set forth in pro-
posed §1.6417-3, for clarity.
Consistent with the special rule for
electing taxpayers that may elect to be
treated as an applicable entity for purposes
of section 6417 for up to five years with
respect to a facility placed in service that
produces eligible components (as defined
in section 45X(c)(1)), proposed §1.6417-
2(a)(3)(v) would clarify that a section 45X
election is made, for purposes of section
6417, with respect to a facility (whether
the facility existed on or before, or after,
December 31, 2022) at which a taxpayer
produces, after December 31, 2022, eli-
gible components as defined in section
45X(c)(1) during the taxable year.
B. Manner of making the election
Section 6417(a) provides that the elec-
tive payment election is made “at such
time and in such manner as the Secretary
may provide,” and proposed §1.6417-2(b)
would provide those rules. First, proposed
§1.6417-2(b)(1) provides that an appli-
cable entity or electing taxpayer would
make an elective payment election on the
applicable entity’s or electing taxpayer’s
annual tax return, as defined in §1.6417-
1(b), in the manner prescribed by the IRS
in guidance, along with any required com-
pleted source credit form(s) with respect
to the applicable credit property, a com-
pleted Form 3800, General Business
Credit, (or its successor), and any addi-
tional information, including supporting
calculations, required in instructions to
the relevant forms.
Proposed §1.6417-2(b)(1)(iv) would
provide that an elective payment election
may only be made on an original return
(including any revisions on a superseding
return) filed not later than the due date
(including extensions of time) for the orig-
inal return for the taxable year for which
the applicable credit is determined. No
elective payment election may be made
or revised on an amended return or by fil-
ing an administrative adjustment request
under section 6227 of the Code. There
also would be no relief available under
§§ 301.9100-1 through 301.9100-3 of the
Procedure and Administration Regulations
(26 CFR part 301) for an elective payment
election that is not timely filed.
Second, proposed §1.6417-2(b)(2)
would specify that pre-filing registration
—is a condition of any amount being
treated as a payment that is made by an
applicable entity under section 6417(a).
An elective payment election will not be
effective with respect to applicable credits
determined with respect to an applicable
credit property unless the applicable entity
or electing taxpayer received a valid reg-
istration number for the applicable credit
property and provided the registration
number for each applicable credit prop-
erty on its Form 3800 (or its successor)
attached to the tax return in accordance
with guidance.
Third, proposed §1.6417-2(b)(3)
would provide the due date for the elec-
tion under section 6417(a). In the case of
any entity for which no Federal income
tax return is required under sections 6011
or 6033(a) of the Code (such as a gov-
ernmental entity), the elective payment
election must be made no later than the
due date (including an extension of time)
for the original return that would be due
under section 6033(a) if such applica-
ble entity were described in that sec-
tion. Under section 6072(e), that date is
the 15th day of the fifth month after the

Bulletin No. 2023–27 1137 July 3, 2023
taxable year determined by section 441
of the Code. Subject to issuance of guid-
ance that specifies the manner in which
an entity for which no Federal income
tax return is required under sections 6011
or 6033(a) of the Code could request an
extension of time to file, an automatic
paperless six-month extension from the
original due date is deemed to be allowed.
In the case of any taxpayer that is not
normally required to file an annual tax
return with the IRS (such as those located
in the U.S. territories), the elective pay-
ment election must be made no later
than the due date (including extensions
of time) that would apply if the taxpayer
was located in the United States (such
as the 15th day of the fourth month after
the end of the year for individuals fill-
ing Form 1040 or for corporations filling
Form 1120). For example, an individual
in a U.S. territory would be required to
make the elective payment election on or
before the 15th day of April following the
close of the calendar year, or, if they filed
an extension, on or before the 15th day of
October following the close of the calen-
dar year.
In any other case, the elective payment
election must be made no later than the
due date (including extensions of time) for
the original return for the taxable year for
which the election is made, but in no event
earlier than February 13, 2023.
Fourth, proposed §1.6417-2(b)(4)
would provide that any election under
section 6417(a), once made, is irrevocable
and applies with respect to any applicable
credit for the taxable year for which the
election is made.
Under section 6417, the election
period applies for a period of years with
respect to certain applicable credits.
Specifically, for the section 45 credit or
section 45Y credit, the election applies
to the 10-year period beginning on the
date the facility was originally placed in
service. For the section 45Q credit, the
election applies to the 12-year period
beginning on the date the equipment was
originally placed in service. For the sec-
tion 45V credit, the election applies to
all subsequent taxable years with respect
to the facility.
Electing taxpayers make the election
for one five-year period per applica-
ble credit property, but are allowed one
revocation per applicable credit property,
as provided in section 6417(d)(1)(D) and
(d)(3)(C) and (D), and would be provided
in proposed §1.6417-3 (as described in
part III of this Explanation of Provisions).
Fifth, proposed §1.6417-2(b)(5) would
provide that an elective payment election
applies to the entire amount of applicable
credit(s) determined with respect to each
applicable credit property that was prop-
erly registered for the taxable year, result-
ing in an elective payment amount that is
the entire amount of applicable credit(s)
determined with respect to the applicable
entity or electing taxpayer for a taxable
year.
C. Determination of Applicable Credit
Proposed §1.6417-2(c) would provide
three rules relating to the determination of
any applicable credit.
1. Special rules for tax-exempt
organizations and government entities
In accordance with section 6417(d)
(2), proposed §1.6417-2(c)(1) would pro-
vide that, in the case of any applicable
entity that makes the election described
in section 6417(a), any applicable credit
is determined (1) without regard to the
restrictions regarding use of property by
tax-exempt organizations and government
entities found in sections 50(b)(3) and (4)
(A)(i), and (2) by treating any property
with respect to which such credit is deter-
mined as used in a trade or business of the
applicable entity.
Proposed §1.6417-2(c)(2) elaborates
on the effect of the “trade or business”
rule in section 6417(d)(2) and proposed
§1.6417-2(c)(1)(ii). First, the rule would
allow tax-exempt and government enti-
ties to take advantage of applicable cred-
its even outside of the unrelated business
taxable income context (provided other
requirements are met) by allowing the
entity to treat an item of property as if it
is of a character subject to an allowance
of depreciation (such as under sections
30C and 45W); to produce items “in the
ordinary course of a trade or business of
the taxpayer” (such as in sections 45V
and 45X); and to state that an item of
property is one for which depreciation
(or amortization in lieu of depreciation)
is allowable (such as in sections 48, 48C,
and 48E).
Second, the rule allows the entity to
apply the capitalization and accelerated
depreciation rules (such as sections 167,
168, 263 and 263A) that apply to deter-
mining the basis and the depreciation
allowance for property used in a trade or
business.
Third, the rule makes applicable gen-
eral limitations on the use of credits by
those persons engaged in the conduct of
a trade or business, such as section 49 in
the context of investment tax credits, and
section 469 for all applicable credits. For
section 49 to apply for purposes of sec-
tion 6417, the property must be placed in
service by an applicable entity or electing
taxpayer described in section 465(a)(1)
(that is, an individual or a C corporation
with respect to which the stock owner-
ship requirements of section 542(a)(2)
are met). For section 469 to apply for
purposes of section 6417, the applicable
entity or electing taxpayer would need to
be described in section 469(a)(2) (that is,
an individual, estate or trust, a closely
held C corporation, or a personal service
corporation). Thus, for any applicable
entity or electing taxpayer for which sec-
tion 49 or 469 generally applies, those
sections apply with respect to the deter-
mination of applicable credits under sec-
tion 6417. The Treasury Department and
the IRS request comments on whether
any additional clarification is needed
regarding the application of sections 49
and 469 to applicable entities or electing
taxpayers determining the amount of an
applicable credit.
Lastly, the rule does not create any
presumption that the trade or business is
related (or unrelated) to a tax-exempt enti-
ty’s exempt purpose.
2. Special rule for investment-related
credit property acquired with income,
including income from certain grants
and forgivable loans, that is exempt from
taxation under subtitle A
Multiple stakeholders asked that reg-
ulations clarify whether an applicable
entity that funded the purchase of an
investment credit property with income,
including income from certain grants
and forgivable loans, that is exempt from

July 3, 2023 1138 Bulletin No. 2023–27
taxation under subtitle A (Tax-Exempt
Amounts
9
) can include those amounts in
the basis of the property for purposes of
calculating the amount of the investment
tax credit. Stakeholders also noted that in
some cases the full cost of the investment
credit property can be paid through Tax-
Exempt Amounts.
Generally, the basis of property is the
cost of such property. See section 1012 of
the Code. However, for a taxable entity,
cost basis in property may need to be
reduced if Tax-Exempt Amounts are used
for the purpose of purchasing, constructing,
or otherwise acquiring such property. See
for example, sections 118(a) and 362(c)(2)
of the Code. However, grants and forgiv-
able loans received by taxable entities are
generally taxable, and thus generally do not
result in a reduction in basis. See generally
section 61 of the Code.
For tax-exempt and government enti-
ties, for which grants, forgivable loans,
and other amounts are generally exempt
from taxation under subtitle A, the treat-
ment of such Tax-Exempt Amounts with
respect to basis in property is less clear.
Because these entities may acquire invest-
ment credit properties eligible for the
section 6417(a) election, in whole or in
part, with Tax-Exempt Amounts, if such
amounts were not included in the basis of
the investment credit property (that is, they
resulted in a reduction in the basis of the
investment credit property), the applica-
ble entity may have little or no basis with
respect to which to calculate the credit,
which would frustrate Congressional
intent to provide the section 6417(a) elec-
tion for investment credit properties owned
by such entities. However, as stakeholders
noted, allowing an elective payment for an
applicable tax credit when the investment
credit property was fully purchased with
Tax-Exempt Amounts subject to donor
restrictions for that purpose would result
in an aggregate benefit to the applicable
entity in excess of the cost of the property.
As a result, a few stakeholders suggested
that local, State, and Federal government
grants received as Tax-Exempt Amounts
by applicable entities specifically for
acquisition of investment credit property
should not be included in the basis of such
property for purposes of calculating the
applicable credit for the elective payment
under section 6417.
Proposed §1.6417-2(c)(3) would pro-
vide a special rule for investment credit
property acquired with Tax-Exempt
Amounts and would expand the rule to
other credits that are determined on the
basis of property. The rule states that,
for purposes of 6417, any Tax-Exempt
Amounts used to purchase, construct,
reconstruct, erect, or otherwise acquire
an applicable credit property described
in sections 30C, 45W, 48, 48C, or 48E
(investment-related credit property) are
included in basis for purposes of com-
puting the applicable credit amount
determined with respect to the invest-
ment-related credit property, regardless of
whether basis is required to be reduced (in
whole or in part) by such amounts under
other provisions of the Code.
However, to prevent an excessive ben-
efit, proposed §1.6417-2(c)(3) would pro-
vide that, if an applicable entity receives
Tax Exempt Amounts for the specific pur-
pose of purchasing, constructing, recon-
structing, erecting, or otherwise acquiring
an investment credit property (Restricted
Tax Exempt Amount), and the Restricted
Tax-Exempt Amount plus the applicable
credit otherwise determined with respect
to that investment-related credit property
exceeds the cost of the investment-re-
lated credit property, then the amount of
the applicable credit is reduced so that
the total amount of applicable credit plus
the amount of any Restricted Tax Exempt
Amount equals the cost of investment
credit property.
Proposed §1.6417-2(c)(5) contains
three examples illustrating these rules.
3. Credits must be determined with
respect to the applicable entity or
electing taxpayer
Multiple stakeholders asked that regu-
lations clarify whether applicable entities
may “chain” an election under section
6417(a) for credits obtained from other
sources. For example, stakeholders ques-
tioned whether an applicable entity may
make an elective payment election under
section 6417(a) with respect to purchased
credits under section 6418(a) or credits
allowable to the applicable entity because
of an election under section 45Q(f)(3)(B)
or former section 48(d) (pursuant to sec-
tion 50(d)(5)). Stakeholders also asked
whether an applicable entity may make an
elective payment election in the case of a
third-party ownership arrangement, such
as an energy project owned by a for-profit
developer but developed by a government
entity.
The Treasury Department and the IRS
propose that such chaining will not be
permissible and seek further comment
on the issue. Proposed §1.6417-2(c)(4)
would state that any credits for which an
election is made under section 6417(a)
must have been determined with respect
to the applicable entity or electing tax-
payer, meaning that the applicable entity
or electing taxpayer owns the underlying
eligible credit property or, if ownership
is not required, otherwise conducts the
activities giving rise to the underlying eli-
gible credit.
10
This proposed rule, which
is consistent with the proposed regula-
tions under section 6418, would mean that
no election may be made under section
6417(a) for credits purchased pursuant to
section 6418, transferred pursuant to sec-
tion 45Q(f)(3), acquired by a lessee from
a lessor by means of an election to pass
through the credit to a lessee under former
section 48(d) (pursuant to section 50(d)
(5)), owned by a third party, or otherwise
not determined directly with respect to the
applicable entity or electing taxpayer.
Stakeholders noted several adminis-
trative and practical reasons why mak-
ing an elective payment election with
respect to credits transferred under sec-
tion 6418 would present challenges. For
example, stakeholders noted that busi-
nesses electing to be treated as appli-
cable entities with respect to applicable
credit property giving rise to section
45V, 45Q, or 45X credits must do so in
the taxable year in which such taxpayer
has placed in service such property, and
the election generally lasts through the
following four taxable years, whereas
the duration of the section 6418 trans-
fer election is limited to the tax year.
9
For this purpose, “Tax-Exempt Amounts” do not include the proceeds of loans, which are not included in income as long as they need to be repaid.
10
The section 45X credit requires that the taxpayer produce eligible components. Thus, an applicable entity or electing taxpayer must produce eligible components to claim the credit.

Bulletin No. 2023–27 1139 July 3, 2023
In addition, any credit determined with
respect to an electing taxpayer that is
a partnership or S corporation must be
determined with respect to only applica-
ble credit property held directly by the
partnership or S corporation. Allowing a
partnership or S corporation to make an
elective payment election with respect to
transferred credits would conflict with
this rule. Furthermore, the elective pay-
ment election under section 6417 with
respect to a section 45 credit or section
45Q credit only applies to applicable
credit property that is originally placed
in service after December 31, 2022, and
the elective payment election under sec-
tion 6417 with respect to a section 45V
credit only applies to clean hydrogen
attributable to applicable credit property
that is originally placed in service after
December 31, 2012, whereas there are
no such restrictions under section 6418.
In addition, stakeholders contended that
section 6417(d)(3)(ii)’s requirement that
a section 6417(a) election be “irrevoca-
ble” would seem to prohibit an applica-
ble entity from making a section 6417(a)
election with respect to any transferred
credit for which the 6417(a) election
spans more than one year (such as credits
determined under sections 45, 45Q, 45V,
45Y, and, for electing taxpayers only,
under section 45X), because elections to
transfer all or a portion of eligible cred-
its under section 6418(a) are annual and
the transferee does not own the property
or engage in the activities that originally
gave rise to the eligible credits. Finally,
stakeholders noted that a transferee may
purchase only a portion of a credit deter-
mined with respect to an eligible credit
property pursuant to section 6418(a),
which they argued is inconsistent with
the requirement under section 6417(a)
that the elective payment election be
with respect to the entire applicable
credit determined with respect to appli-
cable credit property for a taxable year.
These administrative and practical
reasons have informed the proposed con-
clusion of the Treasury Department and
the IRS that sections 6417 and 6418 are
best interpreted to not allow an applica-
ble entity under section 6417 to make an
elective payment election for a transferred
credit under section 6418. Furthermore,
the pre-filing registration process
contemplated by section 6417(d)(5) and
by section 6418(g)(1) is not currently
designed to allow an applicable entity
purchasing eligible credits under section
6418 to make an elective payment elec-
tion under section 6417.
Other stakeholders have suggested that
the Code may allow a transferee taxpayer
under section 6418 to make an elective
payment election under section 6417
for a transferred credit because section
6418(a) provides that “the transferee tax-
payer specified in such election (and not
the eligible taxpayer) shall be treated as
the taxpayer for purposes of this title with
respect to such credit.” These stakeholders
argue the transferee taxpayer steps into the
shoes of the eligible taxpayer transferring
the credit, such that a transferee taxpayer
may be viewed as the taxpayer earning the
credit for purposes of section 6417 and
therefore is able to make an elective pay-
ment election with respect to such credit.
They further noted that section 6417 does
not expressly prohibit an applicable entity
from making an elective payment election
with respect to a transferred credit and
that allowing applicable entities to make
an elective payment election with respect
to a transferred credit may further the
policy goals of the IRA by expanding the
financing methods available to renewable
energy projects.
The Treasury Department and the
IRS agree with stakeholders who noted
that there is no restriction on who can
be a transferee under section 6418, other
than that the transferee cannot be related
(within the meaning of section 267(b)
or 707(b)(1) of the Code) to the eligible
taxpayer transferring the credit. Thus,
an applicable entity could be transferred
credits under 6418, at least to offset any
Federal income tax liability. However,
the statute does not address whether an
applicable entity can make an elective
payment election under section 6417
with respect to transferred credits. Based
on the reasons previously discussed in
this part II.C.3. of this Explanation of
Provisions, the Treasury Department and
the IRS believe that a transferred credit is
not properly interpreted as an applicable
credit that is “determined with respect
to” an applicable entity or electing tax-
payer under section 6417(a) because the
credit is not determined with respect to
underlying applicable credit property
owned by the applicable entity or elect-
ing taxpayer, or, if ownership is not
required, activities otherwise conducted
by the applicable entity or electing tax-
payer. Section 6418(a) and the proposed
regulations under section 6418 provide
that a transferred credit is determined
with respect to the eligible taxpayer
transferring the credit. Although the
transferee taxpayer uses the credit, the
proposed regulations under section 6418
provide that the transferee taxpayer is not
considered to have owned an interest in
the underlying eligible credit property
or have otherwise conducted any of the
activities that give rise to the credit.
The Treasury Department and the
IRS seek comments on limited situations
where exceptions to this proposed rule
may be appropriate because it is consis-
tent with the text, design, and intent of
the IRA, while also ensuring that such
exceptions are not subject to fraud or
abuse. Stakeholders could consider appro-
priate limitations such as (1) the type of
applicable entity that may be allowed to
make an elective payment election with
respect to credits transferred under section
6418, such as a government entity; (2) the
involvement of the transferee taxpayer in
the project’s development; (3) the level of
due diligence conducted by the transferee
taxpayer regarding whether the project
qualifies for the applicable credit and any
bonus credits and whether the amount of
transferred credits was properly deter-
mined with respect to the eligible tax-
payer transferring the credit; (4) the fact
that the transferee taxpayer is paying close
to the face value of the credit (and what
minimum percentage of face value should
be required); and (5) there are no other
special financial arrangements between
the parties. Stakeholders should address
legal considerations, as well as practical
and administrative challenges, to any such
exception to the proposed rule.
D. Denial of Double Benefit
Section 6417(a) allows an applica-
ble entity or electing taxpayer other
than a partnership or S corporation to be
treated as making a payment against the
tax imposed by subtitle A for the taxable
year with respect to which such credit was

July 3, 2023 1140 Bulletin No. 2023–27
determined equal to the amount of such
credit. Section 6417(c)(1)(A) provides
that, for an electing taxpayer that is a part-
nership or S corporation, the Secretary
will make a payment to such partnership
or S corporation with respect to a credit
determined with respect to applicable
credit property held directly by the part-
nership or S corporation equal to the
amount of such credit. Sections 6417(e)
and 6417(c)(1)(B) each provide that such
credit is reduced to zero and, for any other
purposes of the Code, is deemed to have
been allowed to such entity for such tax-
able year. Section 6417(h) provides that
the Secretary must issue guidance neces-
sary to carry out the purposes of section
6417, including guidance to ensure that
the amount of the payment (in the case of
an electing taxpayer that is a partnership
or S corporation) or deemed payment (in
the case of all other electing taxpayers and
applicable entities) made under section
6417 is commensurate with the amount of
the credit that would be otherwise allow-
able (determined without regard to section
38(c)).
Proposed §1.6417-2(e)(2) and (3)
would address the methodology for deter-
mining the amount of the elective payment
election, reducing the elective payment
election amount to zero, and treating the
applicable credit as a credit allowed for
the taxable year for all other purposes of
the Code with respect to applicable enti-
ties and electing taxpayers other than
partnerships or S corporations. The meth-
odology with respect to a payment made to
a partnership or S corporation is provided
in proposed §1.6417-4(c), as described in
part IV of this Explanation of Provisions.
An applicable entity or electing tax-
payer (other than an electing taxpayer that
is a partnership or S corporation) mak-
ing an elective payment election applies
section 6417(e) by taking the following
steps. First, the taxpayer would compute
the amount of the Federal income tax lia-
bility (if any) for the taxable year, without
regard to the GBC, that is payable on the
due date of the return (without regard to
extensions), and the amount of the Federal
income tax liability that may be offset by
GBCs pursuant to the limitation based on
amount of tax under section 38. Second,
the taxpayer would compute the allowed
amount of GBC carryforwards carried to
the taxable year plus the amount of current
year GBCs (including current applicable
credits) allowed for the taxable year under
section 38 (that is, in accordance with
all the rules in section 38, including the
ordering rules provided in section 38(d)).
Since the election would be required to be
made on an original return, any business
credit carrybacks would not be considered
when determining the elective payment
amount for the taxable year. Third, the
taxpayer would apply the GBCs allowed
for the taxable year as computed in step 2,
including those attributable to applicable
credits as GBCs, against the tax liability
computed in step 1. Fourth, the taxpayer
would identify the amount of any excess
or unused current year business credit, as
defined under section 39, attributable to
current year applicable credit(s) for which
the applicable entity is making an elective
payment election. The amount of such
unused applicable credits would be treated
as a payment against the tax imposed by
subtitle A for the taxable year with respect
to which such credits are determined
(rather than having them available for
carryback or carryover) (net elective pay-
ment amount). Fifth, the taxpayer would
reduce the applicable credits for which
an elective payment election is made by
the amount (if any) allowed as a GBC
under section 38 for the taxable year, as
provided in step 3, and by the net elective
payment amount (if any) that is treated as
a payment against tax, as provided in step
4, which results in the applicable credits
being reduced to zero.
The proposed regulations would pro-
vide, consistent with section 6417(e), that
the full amount of the applicable credits
for which an elective payment election is
made is deemed to have been allowed for
all other purposes of the Code, including,
but not limited to, the basis reduction and
recapture rules imposed by section 50 and
calculation of any underpayment of esti-
mated tax under sections 6654 and 6655
of the Code. The proposed regulations
would give several examples illustrating
these rules.
The Treasury Department and the IRS
request comments on whether future guid-
ance should expand or clarify the meth-
odology that an applicable entity follows
to compute the amount of its elective
payment. Comments are also requested
on additional Code sections under which
it may be necessary to consider the appli-
cable credit to have been deemed to have
been allowed for the taxable year in which
an elective payment election is made.
III. Elective Payment Election by Electing
Taxpayers
Section 6417(d)(1)(B), (C), and (D)
provides that a taxpayer that is not an
applicable entity described in section
6417(d)(1)(A) and that, with respect to
any taxable year, places in service appli-
cable credit property that qualifies for
the section 45V credit or the section 45Q
credit, or, with respect to any taxable
year in which such taxpayer has, after
December 31, 2022, produced eligible
components (as defined in section 45X(c)
(1)), respectively, may elect to be treated
as an applicable entity for purposes of
section 6417 for such taxable year, but
only with respect to the applicable credit
property and only with respect to the
credit under section 45V(a), 45Q(a), or
45X(a), respectively. Proposed §1.6417-
1(g) would define such a taxpayer as an
“electing taxpayer.”
The special rules for electing taxpayers
are found in section 6417(d)(1) and (d)(3).
Proposed §1.6417-3 would combine these
rules for clarity.
Proposed §1.6417-3(b), (c), and (d)
would provide the specific rules regard-
ing the election under section 6417(d)(1)
(B), (C), or (D). Proposed §1.6417-3(e)
would provide the rules relating to the
election for electing taxpayers. Proposed
§1.6417-4 would provide additional rules
for electing taxpayers that are partnerships
or S corporations.
Proposed §1.6417-3(b) would provide
that an electing taxpayer that has placed
in service a qualified clean hydrogen
production facility as defined in section
45V(c)(3) during the taxable year may
make an elective payment election for
such taxable year (or by August 16, 2023,
in the case of facilities placed in service
before December 31, 2022), but only
with respect to the qualified clean hydro-
gen production facility, only with respect
to the section 45V credit, and only if the
pre-filing registration process that would
be required by proposed §1.6417-5 was
properly completed. An electing taxpayer

Bulletin No. 2023–27 1141 July 3, 2023
that elects to treat qualified property that is
part of a specified clean hydrogen produc-
tion facility as energy property under sec-
tion 48(a)(15) would not be able to make
an elective payment election with respect
to such facility.
Proposed §1.6417-3(c) would provide
that an electing taxpayer that has, after
December 31, 2022, placed in service a
single process train described in §1.45Q-
2(c)(3) at a qualified facility (as defined
in section 45Q(d)) during the taxable year
may make an elective payment election for
such taxable year, but only with respect to
the single process train, only with respect
to the section 45Q credit, and only if the
pre-filing registration process that would
be required by proposed §1.6417-5 was
properly completed.
Proposed §1.6417-2(a)(3)(v) and -3(d)
would provide that an electing taxpayer
that produces, after December 31, 2022,
eligible components (as defined in section
45X(c)(1)) at a facility during the taxable
year may make an elective payment elec-
tion for such taxable year, but only with
respect to the facility at which the eligible
components are produced by the electing
taxpayer in that year, only with respect
to the section 45X credit, and only if the
pre-filing registration process that would
be required by proposed §1.6417-5 was
properly completed.
Proposed §1.6417-3(e) would provide
rules on how the electing taxpayer makes
the elective payment election. First, if an
electing taxpayer makes an elective pay-
ment election under proposed §1.6417-
2(b) with respect to any taxable year in
which the electing taxpayer places in ser-
vice a qualified clean hydrogen produc-
tion facility for which a section 45V credit
is determined, places in service a single
process train at a qualified facility for
which a section 45Q credit is determined,
or produces, after December 31, 2022,
eligible components (as defined in sec-
tion 45X(c)(1)) at a facility, respectively,
the electing taxpayer will be treated as an
applicable entity for purposes of making
an elective payment election for such tax-
able year and during the election period
described in proposed §1.6417-3(e)(3),
but only with respect to the applicable
credit property described in proposed
§1.6417-1(e)(3), (5), or (7), respectively,
that is the subject of the election. The
taxpayer would be required to otherwise
meet all requirements to earn the credit in
the electing year and in each succeeding
year during the election period described
in proposed §1.6417-3(e)(3).
Second, the election would be made
separately for each applicable credit prop-
erty, which is, respectively, a qualified
clean hydrogen production facility placed
in service for which a section 45V credit is
determined, a single process train placed
in service at a qualified facility for which
a section 45Q credit is determined, or a
facility in which eligible components are
produced for which a section 45X credit
is determined. Only one election may be
made with respect to any specific applica-
ble credit property.
Third, the elective payment election
generally would apply for an election
period consisting of the taxable year in
which the election is made and each of
the four subsequent taxable years that
end before January 1, 2033. The election
period would not be able to be less than
a taxable year but may be made for a tax-
able period of less than 12 months within
the meaning of section 443 of the Code.
However, an electing taxpayer may,
during a subsequent year of the election
period, revoke the elective payment elec-
tion with respect to an applicable credit
property described in proposed §1.6417-
1(e)(3), (5), or (7) in accordance with
forms and instructions. Any such revoca-
tion, if made, applies to the taxable year
in which the revocation is made (which
cannot be less than a taxable year but may
be made for a taxable period of less than
12 months within the meaning of section
443 of the Code) and each subsequent tax-
able year within the election period. Any
such revocation may not be subsequently
revoked.
An electing taxpayer would not be
able to make a transfer election under
section 6418(a) with respect to any appli-
cable credit under proposed §1.6417-1(d)
(3), (5), or (7) determined with respect
to applicable credit property described
in proposed §1.6417-1(e)(3), (5), or (7)
during the election period for that appli-
cable credit property. However, if the
election period is no longer in effect with
respect to an applicable credit property,
any credit determined with respect to such
applicable credit property would be able
to be transferred pursuant to a transfer
election under section 6418(a), as long
as the taxpayer meets the requirements of
section 6418 and the 6418 regulations.
IV. Elective Payment Election for
Partnerships and S corporations
A. Overview
Section 6417(c)(1) provides that, in the
case of any applicable credit determined
with respect to any applicable credit
property held directly by a partnership
or S corporation, any election under sec-
tion 6417(a) is made by such partnership
or S corporation. These proposed regu-
lations would clarify that partnerships or
S corporations are not applicable entities
described in section 6417(d)(1)(A); thus,
any partnership or S corporation making
an elective payment election must be an
electing taxpayer, and as such, the only
applicable credits with respect to which
the partnership or S corporation can make
an elective payment election are a section
45V credit, a section 45Q credit, and a
section 45X credit.
If a partnership or S corporation makes
an election under section 6417(a) and pro-
posed §1.6417-2(b), the special rules of
section 6417(c)(1)(A) through (D) apply.
In that regard, proposed §1.6417-4(c)
would provide that (1) the IRS will make a
payment to such partnership or S corpora-
tion equal to the amount of such credit; (2)
before determining any partner’s distribu-
tive share, or shareholder’s pro rata share,
of such credit, such credit is reduced to
zero and is, for any other purposes under
this title, deemed to have been allowed
solely to such entity (and not allocated by
such entity, or otherwise allowed, to any
partner or shareholder) for such taxable
year (for example, if a partnership pays a
Federal tax liability to the IRS in a year
for which an elective payment election
is made and cash is received, it treats the
payment to the IRS as if it paid the lia-
bility with the same amount of underly-
ing credit for which the elective payment
election is made); (3) any amount with
respect to which the election under sec-
tion 6417(a) is made is treated as tax
exempt income for purposes of sections
705 and 1366; and (4) a partner’s distrib-
utive share of such tax exempt income is

July 3, 2023 1142 Bulletin No. 2023–27
equal to such partner’s distributive share
of the otherwise applicable credit for each
taxable year as determined under §1.704-
1(b)(4)(ii). The tax exempt income would
be taken into account by the partnership
or S corporation at the same time as the
underlying credit would have been taken
into account by the partnership or S cor-
poration absent an elective payment elec-
tion. The proposed regulations provide an
example illustrating this rule. Because it
is the applicable credits, and not the tax
exempt income, that arise from the con-
duct of the trade or business, the proposed
regulations would treat the tax exempt
income resulting from an elective payment
election by a partnership or an S corpora-
tion as arising from an investment activity
and not from the conduct of a trade or busi-
ness within the meaning of section 469(c)
(1)(A). As such, the tax exempt income
would not be treated as passive income to
any partners or shareholders who do not
materially participate within the meaning
of section 469(c)(1)(B).
As requested by stakeholders, the
Treasury Department and the IRS clar-
ify here that there are no restrictions
imposed under section 6417 or the section
6417 regulations on how a partnership
or S corporation that receives a payment
from the IRS pursuant to an elective pay-
ment election may use the cash payments
in its operations (including on when it
makes distributions to its partners or
shareholders).
Section 6417(h) requires that the
Secretary issue regulations or other guid-
ance to ensure that the amount of the pay-
ment to a partnership or S corporation
is commensurate with the amount of the
credit that would otherwise be allow-
able (without regard to section 38(c)).
Therefore, proposed §1.6417-4(d)(1)
would provide that, in determining the
applicable credit amount that will result in
a payment to a partnership or S corpora-
tion, the partnership or S corporation must
compute the amount of the applicable
credit allowable (without regard to section
38(c)) as if an elective payment election
were not made. Because a partnership or
S corporation is not subject to section 469
(that is, section 469 applies at the partner
or shareholder level), the amount of an
applicable credit determined with respect
to an applicable credit property held
directly by a partnership or S corporation
is not subject to limitation by section 469.
In addition, because the credits to which
a partnership or S corporation may make
the elective payment election (that is, sec-
tion 45V, 45Q, and 45X) are not invest-
ment tax credits under section 46, sections
49 and 50 do not apply to limit the amount
of the credits.
B. BBA partnerships
Many partnerships are subject to the
centralized partnership audit regime found
in subchapter C of chapter 63 of the Code
as amended by the Bipartisan Budget
Act of 2015 (BBA).
11
In connection with
the implementation of section 6417, the
Treasury Department and the IRS identi-
fied several areas of the BBA regulations
that require updates to administer section
6417 in the case of a partnership subject
to the BBA (BBA Partnership). Section
6221 of the Code provides that any adjust-
ment to a partnership-related item with
respect to a BBA Partnership, and any tax
attributable thereto, is assessed and col-
lected at the partnership-level except to
the extent provided under the BBA. The
BBA outlines centralized audit procedures
which generally must be followed before
the IRS can adjust a partnership-related
item (as defined in §301.6241-1). In order
to implement section 6417, the Treasury
Department and the IRS propose updates
to the regulations under §§301.6241-1 and
301.6241-7.
1. Partnership-related Items
Under §301.6241-1(a)(6)(ii), a part-
nership-related item is any item or
amount that is, with respect to the BBA
Partnership, relevant in determining the
tax liability of any person under chap-
ter 1. Because the partnership-related
item definition is based on relevance
to the chapter 1 liability of any person,
the liability could belong to the BBA
Partnership or its partners. While part-
nerships do not typically pay chapter 1
tax pursuant to section 701 of the Code,
a BBA Partnership is eligible to be an
electing taxpayer under section 6417 and
is thus subject to the excessive payment
rule under section 6417(d)(6), which
could result in a chapter 1 tax liability
to the BBA Partnership. In addition, if a
partnership makes an election under sec-
tion 6417, the partnership must reduce its
applicable credit under section 6417(e),
which would impact the amount of credit
and tax exempt income that the partners
would be allocated, thereby affecting the
partners’ chapter 1 liability. Because the
application of section 6417 may be rele-
vant in determining the chapter 1 liabili-
ties of a BBA Partnership and its partners,
any item or amount relevant to section
6417 that is “with respect to the partner-
ship” would be a partnership-related item
as defined under §301.6241-1(a)(6)(ii).
Section 301.6241-1(a)(6)(iii) provides
than an item or amount is “with respect
to the partnership” if the item or amount
is shown or reflected, or required to be
shown or reflected, on a return of the part-
nership under section 6031 of the Code or
is required to be maintained in the part-
nership’s books and records. Because the
definition of a partnership-related item
is based on the item’s relevance to the
chapter 1 tax liability of any person, this
definition ensures that the definition of a
partnership-related item is not so broad as
to include items that are wholly unrelated
to a BBA Partnership, such as a partner’s
unrelated income. While the limitation in
this definition works well to ensure part-
ner-level items are not inadvertently swept
into the definition of a partnership related
item, this definition may inadvertently
exclude a chapter 1 liability of a BBA
Partnership if, for instance, the liability is
not required to be shown or reflected on
the BBA Partnership’s return. The BBA
Partnership’s own chapter 1 tax liability,
in contrast with a partner’s liability, is
undoubtedly “with respect to the partner-
ship” and a partnership-related item.
Accordingly, these proposed regulations
propose to add a sentence to §301.6241-1(a)
11
See section 1101 of the BBA, Public Law 114-74, 129 Stat. 584, 625-638 (2015), as amended by section 411 of the Protecting Americans from Tax Hikes Act of 2015, Public Law 114-113,
129 Stat. 2242, 3121 (2015), and sections 201 through 207 of the Tax Technical Corrections Act of 2018, Public Law 115-141, 132 Stat. 348, 1171-1183 (2018).

Bulletin No. 2023–27 1143 July 3, 2023
(6)(iii) (regarding items or amounts with
respect to a BBA Partnership) to provide
that any chapter 1 tax that is the liability
of the BBA Partnership is an item with
respect to the BBA Partnership regardless
of whether that chapter 1 tax is required to
be reflected or shown on the partnership
return or required to be maintained in the
BBA Partnership’s books and records.
2. Special enforcement rule for the
elective payment election
As noted in part IV.B.1. of this
Explanation of Provisions, the BBA’s
centralized partnership audit regime
requires the IRS to follow certain proce-
dures before adjusting partnership-related
items of a BBA Partnership. Under section
6241(11), in the case of partnership-re-
lated items that the Secretary determines
involve a special enforcement matter, the
Secretary is authorized to prescribe regu-
lations pursuant to which the BBA audit
procedures do not apply, and such partner-
ship-related items are subject to special
rules (including rules related to assess-
ment and collection) as the Secretary
determines necessary for the effective and
efficient enforcement of the Code. Section
6241(11)(A). Section 6241(11)(B) pro-
vides a list of certain “special enforcement
matters,” including the failure to comply
with information reporting obligations of
tiered partnerships, jeopardy assessments
of tax in exigent circumstances, and mat-
ters involving foreign partners and part-
nerships. Sections 6241(11)(B)(i), (ii),
and (v). Section 6241(11)(B)(vi) also pro-
vides a grant of authority to the Secretary
for “other matters that the Secretary
determines by regulation present special
enforcement considerations.”
Proposed §1.6417-2(b) would pro-
vide that the elective payment election
must be made on an original return and
that the election may not be made on
an amended return or administrative
adjustment request. Under the existing
BBA regulations, a BBA Partnership’s
elective payment election under sec-
tion 6417 is a partnership-related item
because the existence of the election is
relevant in determining chapter 1 tax and
because the election is required to be
made on the BBA Partnership’s return.
Because the elective payment election
is a partnership-related item, the only
way for the IRS to make an adjustment
upon the determination of an ineffective
election would be to follow the audit
procedures of the centralized partnership
audit regime. To prevent duplication,
fraud, improper payments, or excessive
payments in an effective manner, the
IRS must be able to determine whether
a BBA Partnership’s elective payment
election is ineffective in an expeditious
manner. The procedural requirements of
the BBA would require the IRS to treat
BBA Partnerships that have made an
ineffective election payment election
differently from other electing taxpay-
ers that are not subject to the centralized
partnership audit regime but that are oth-
erwise similarly situated. The Treasury
Department and the IRS are proposing
that, due to the unique nature of the sec-
tion 6417 election, which, pursuant to
proposed §1.6417-2(d), would result in a
payment treated as having been made on
the later of the due date of the return or
the date the return was filed, the special
enforcement matters described in section
6241(11) would apply, and the BBA cen-
tralized partnership audit regime should
not apply to adjustments with respect to
partnership-related items that affect the
amount or existence of a payment to the
BBA Partnership, or credit or refund of
a payment to the BBA Partnership under
section 6417. Accordingly, these pro-
posed regulations would add new para-
graph (j) to §301.6241-7 to provide that
an election by a BBA Partnership under
section 6417 can be adjusted outside of
the BBA audit rules. These proposed reg-
ulations also would redesignate existing
paragraph (j) (regarding applicability
dates) to a new paragraph (k) and update
that paragraph (k) to reflect an applica-
bility date for these proposed regulations.
V. Pre-filing Registration Requirements
and Additional Information
Section 6417(d)(5) provides that as
a condition of, and prior to, any amount
being treated as a payment that is made
by the taxpayer under section 6417(a) or
any payment being made pursuant to sec-
tion 6417(c), the Secretary may require
such information or registration as the
Secretary deems necessary or appropriate
for purposes of preventing duplication,
fraud, improper payments, or excessive
payments.
In general, stakeholders requested addi-
tional information about this provision and
requested that the regulations balance the
need to prevent fraud and abuse with the
burden on taxpayers. Stakeholders recom-
mended that the information required to
be provided to the IRS should be provided
in a manner that facilitates automated pro-
cedures to help catch potential fraud, dis-
courages abusive or otherwise illegitimate
claims, and allows efficient and prompt
review (both before payment and through
audits). Stakeholders recommended that
all required documents and information
should be able to be submitted easily via an
online portal. Stakeholders recommended
that information or registration should be
as consistent as possible across sections
48D(d)(1), 6417(d)(5), and 6418(g)(1).
Proposed §1.6417-5 would provide
the mandatory pre-filing registration pro-
cess that, except as provided in guidance,
an applicable entity or electing taxpayer
would be required to complete as a con-
dition of, and prior to (1) any amount
being treated as a payment against the
tax imposed by subtitle A that is made by
an applicable entity or electing taxpayer
(other than a partnership of S corporation)
under proposed §§1.6417-2(a)(1)(i) or
-2(a)(2)(i), or (2) any amount being paid
to a partnership or S corporation pursuant
to proposed §1.6417-2(a)(2)(ii).
Proposed §1.6417-5(a) provides an
overview of this process and would
require an applicable entity or electing tax-
payer to satisfy the pre-filing registration
requirements as a condition of, and prior
to, making an elective payment election.
An applicable entity or electing taxpayer
would be required to use the pre-filing
registration process to register itself as
intending to make the elective payment
election, to list all applicable credits it
intends to claim, and to list each applica-
ble credit property that contributed to the
determination of such credits as part of the
pre-filing submission (or amended sub-
mission). An applicable entity or electing
taxpayer that does not obtain a registration
number and report the registration number
on its annual tax return with respect to an
applicable credit property would be ineli-
gible to make an elective payment election

July 3, 2023 1144 Bulletin No. 2023–27
to treat any credit determined with respect
to that applicable credit property as a pay-
ment of tax. However, completion of the
pre-filing registration requirements and
receipt of a registration number would not,
by itself, mean that the applicable entity
or electing taxpayer would receive a pay-
ment with respect to the applicable credits
determined with respect to the applicable
credit property.
Proposed §1.6417-5(b) would pro-
vide the following pre-filing registration
requirements.
First, an applicable entity or electing
taxpayer must complete the pre-filing reg-
istration process electronically through an
IRS electronic portal in accordance with
the instructions provided therein, unless
otherwise provided in guidance. If the
election is by a member of a consolidated
group, the member must complete the
pre-filing registration process as a condi-
tion of, and prior to, making an elective
payment election. See §1.1502-77 (pro-
viding rules regarding the status of the
common parent as agent for its members).
Second, an applicable entity or elect-
ing taxpayer must satisfy the registration
requirements and receive a registration
number prior to making an elective pay-
ment election on the applicable entity’s
tax return for the taxable year at issue.
Third, an applicable entity or electing
taxpayer is required to obtain a registra-
tion number for each applicable credit
property with respect to which an appli-
cable credit will be determined and for
which the applicable entity or electing
taxpayer intends to make an elective pay-
ment election.
Finally, an applicable entity or elect-
ing taxpayer must provide the specific
information required to be provided as
part of the pre-filing registration process.
The provision of such information, which
includes information about the taxpayer,
about the applicable credits, and about
the applicable credit property, would
allow the IRS to prevent duplication,
fraud, improper payments, or excessive
payments under section 6417. For exam-
ple, verifying information about the tax-
payer would allow the IRS to mitigate
the risk of fraud or improper payments
to entities that are not applicable entities
or electing taxpayers. Information about
the taxpayer’s taxable year would allow
the IRS to ensure that an elective pay-
ment election is timely made on the enti-
ty’s annual tax return. Information about
applicable credit properties, including
their address and coordinates (longitude
and latitude), supporting documenta-
tion, beginning of construction date,
and placed in service date would allow
the IRS to mitigate the risk of duplica-
tion, fraud, and improper payments for
properties that are not applicable credit
properties. Information about whether
an investment tax credit property was
acquired using any Restricted Tax
Exempt Amounts would allow the IRS
to prevent improper payments.
Proposed §1.6417-5(c) would provide
information about the required registra-
tion number. Proposed §1.6417-5(c)(1)
would provide that, after an applicable
entity or electing taxpayer completes the
pre-filing registration process as provided
in proposed §1.6417-5(b) for the applica-
ble credit properties with respect to which
the entity intends to make an elective pay-
ment election in the taxable year, the IRS
will review the information provided and
will issue a separate registration number
for each applicable credit property for
which the applicable entity or electing
taxpayer provided sufficient verifiable
information, as provided in guidance.
Proposed §1.6417-5(c)(2) would pro-
vide that a registration number is valid
only for the taxable year for which it
is obtained. Proposed §1.6417-5(c)(3)
would provide that, if an elective pay-
ment election will be made with respect
to an applicable credit property for which
a registration number under proposed
§1.6417-5 has been previously obtained,
the applicable entity or electing taxpayer
would be required to renew the registra-
tion each year in accordance with appli-
cable guidance, including attesting that
all the facts previously provided are still
correct or updating any facts. Proposed
§1.6417-5(c)(4) would provide that, if
specified changes occur with respect to
one or more applicable credit properties
for which a registration number has been
previously obtained but not yet used, an
applicable entity or electing taxpayer
would be required to amend the registra-
tion (or may need to submit a new reg-
istration) to reflect these new facts. For
example, one stakeholder asked that, if a
taxpayer becomes a party to an internal
reorganization under section 368(a) (such
as a merger or distribution in a nonrec-
ognition transaction) during the election
period, the elective payment election
should carry over to the successor entity.
The proposed regulations would provide
that if a facility previously registered for
an elective payment election undergoes a
change of ownership (incident to a cor-
porate reorganization or an asset sale)
such that the new owner has a different
employer identification number (EIN)
than the owner who obtained the origi-
nal registration, the original owner would
be required to amend the original regis-
tration to disassociate its EIN from the
credit property and the new owner must
submit an original registration (or if the
new owner previously registered other
credit properties, must amend its original
registration) to associate the new owner’s
EIN with the previously registered credit
property.
Lastly, proposed §1.6417-5(c)(5)
would provide that the applicable entity
or electing taxpayer would be required
to include the registration number of the
applicable credit property on their annual
tax return for the taxable year. The IRS
will treat an elective payment election as
ineffective with respect to the portion of a
credit determined with respect to an appli-
cable credit property for which the appli-
cable entity or electing taxpayer does not
include a valid registration number on the
annual tax return.
The corresponding temporary regula-
tions under §1.6417-5T published in the
Rules and Regulations section of this edi-
tion of the Federal Register apply rules to
taxable years ending on or after June 21,
2023, that are identical to those that would
apply under proposed §1.6417-5. The
temporary regulations under §1.6417-5T
expire on June 12, 2026.
VI. Special Rules
Proposed §1.6417-6 would provide
special rules relating to excessive payment
as well as basis reduction and recapture.
A. Excessive payment
Pursuant to 6417(d)(6), proposed
§1.6417-6 would provide that the IRS may

Bulletin No. 2023–27 1145 July 3, 2023
determine that an amount treated as a pay-
ment made by an applicable entity under
proposed §1.6417-2(a)(1)(i) or an elect-
ing taxpayer under proposed §1.6417-
2(a)(2)(i), or the amount of the payment
made pursuant to proposed §1.6417-2(a)
(2)(ii), constitutes an excessive payment.
Proposed §1.6417-6(a) would provide
that in the case of an excessive payment
determined by the IRS, the amount of
chapter 1 tax imposed on the applicable
entity or electing taxpayer for the tax-
able year in which the excessive payment
determination is made will be increased
by an amount equal to the sum of (1) the
amount of such excessive payment, plus
(2) an amount equal to 20 percent of such
excessive payment (additional 20-per-
cent chapter 1 tax). This would be the
case even if the applicable entity or elect-
ing taxpayer is otherwise not subject to
chapter 1 tax. The additional 20-percent
chapter 1 tax amount would not apply if
the applicable entity or electing taxpayer
demonstrates to the satisfaction of the IRS
that the excessive payment resulted from
reasonable cause. If the additional 20-per-
cent chapter 1 tax is applicable, it would
apply in addition to any penalties, addi-
tions to tax, or other amounts applicable
under the Code. The Treasury Department
and the IRS anticipate that existing stan-
dards of reasonable cause will inform the
determination by the IRS of whether rea-
sonable cause has been demonstrated for
this purpose.
The term “excessive payment” is pro-
posed to be defined as an amount equal
to the excess of (1) the amount treated
as a payment under proposed §1.6417-
2(a)(1)(i) or -2(a)(2)(i), or the amount
of the payment made pursuant to pro-
posed §1.6417-2(a)(2)(ii), with respect
to such facility or property for such
taxable year, over (2) the amount of the
credit that, without application of section
6417, would be otherwise allowable (as
described in part II.C and II. D. or IV.
of this Explanation of Provisions and
without regard to section 38(c)) under
the Code with respect to such facility or
property for such taxable year.
Several stakeholders asked that the
term “excessive payment” be determined
without any tax credit utilization rules,
such as those found in sections 38, 49, and
469. Because the statute provides that the
amount of the credit should not exceed
the amount “otherwise allowable” (with-
out application of sections 38(c), without
regard to sections 50(b)(3) and (4)(A)(i),
and by treating any property with respect
to which such credit is determined as
used in a trade or business of the applica-
ble entity), the Treasury Department and
the IRS are proposing that all other rel-
evant code sections, including sections
38 (but not 38(c)), 49, and 469, would
apply to the amount treated as a payment
that is made by the applicable entity or
electing taxpayer as described in part II
of this Explanation of Provisions. Thus,
if an applicable entity or electing tax-
payer is an individual, trust, closely held
corporation, or other taxpayer subject to
the rules of section 469, or if an appli-
cable credit is an investment tax credit
that is determined including the rules of
section 49, then those rules would apply.
However, proposed §1.6417-2(c) would
provide additional rules relating to the
determination of applicable credits, such
as the special rule for investment credit
property acquired by a tax-exempt or
government entity using nontaxable
grants or other nontaxable proceeds, as
described in part II.C. of this Explanation
of Provisions.
In contrast, the amount of the pay-
ment to partnerships and S corporations
described in part IV of this Explanation of
Provisions has different proposed rules. As
discussed in part IV of this Explanation of
Provisions, in determining the applicable
credit amount that will result in a payment
to a partnership or S corporation, the part-
nership or S corporation would be required
to compute the amount of the applicable
credit allowable (without regard to section
38(c)) as if an elective payment election
were not made. However, because a part-
nership or S corporation is not subject to
section 469 (that is, section 469 applies
at the partner or shareholder level), the
amount of the credit determined by a
partnership or S corporation would not
be subject to limitation by section 469.
In addition, because the only applicable
credits for which a partnership or S cor-
poration may make the elective payment
election are the section 45V credit, section
45Q credit, and section 45X credit, which
are production tax credits, sections 49 and
50 (applicable to investment tax credits)
would not apply to limit these applicable
credit amounts.
Stakeholders asked for clarification
on how the excessive payment would be
determined and in which year the adjust-
ment applies. The Treasury Department
and the IRS anticipate that excessive
payments may arise in a variety of sit-
uations, such as an improperly claimed
bonus credit amount, an error in calcu-
lating a credit, inflated basis, failure to
apply the section 38(d) ordering rules, or
a misapplication of the credit utilization
rules, among other things. The statute
provides that the tax is imposed on the
applicable entity in the year the determi-
nation of the excessive payment is made,
despite the fact that this is a later year
than the year in which the credit was
allowable. The Treasury Department and
the IRS request comments on whether
additional guidance on excessive pay-
ments is needed.
B. Basis reduction and recapture
Proposed §1.6417-6(b) would provide
rules similar to the rules of section 50
(without regard to section 50(b)(3) and
(4)(A)(i)) apply for purposes of section
6417. (Section 6417(g) erroneously refers
to section 6417(c)(2)(A), a provision that
does not exist, and it is evident that such
reference was intended to be to section
6417(d)(2)(A). That error is accounted for
in these proposed regulations.)
One stakeholder asked how entities
that don’t normally file tax returns should
report recapture events. The stakeholder
asked that the reporting and payment of
the recapture amount should be consistent
with the rules applicable to taxable entities
(that is, no reporting or payment due until
a tax return would be due for the related
calendar year). Proposed §1.6417-6(b)(2)
would clarify that any reporting of recap-
ture is made on the taxpayer’s annual tax
return in the manner prescribed by the IRS
in future guidance, along with supplemen-
tal forms such as Form 4255, Recapture of
Investment Credit.
Stakeholders asked whether recap-
ture is considered an excessive pay-
ment event. The excessive payment
rules operate separately from the recap-
ture rules. The excessive payment rules
apply where the credit amount reported

July 3, 2023 1146 Bulletin No. 2023–27
on the original credit source form by
the applicable entity or electing tax-
payer was excessive. Recapture of a
tax credit occurs when the original tax
credit reported would have been correct
without the occurrence of a subsequent
recapture event. Thus, recapture events,
including recapture events under sec-
tions 45Q(f)(4) or 50(a), do not result in
an excessive payment.
Stakeholders asked that the proposed
regulations clarify that basis reduction and
recapture applies only to the investment
tax credits. The section 50 rules, including
basis reduction and recapture, only apply
to investment tax credits so no clarifica-
tion on this point is required.
Stakeholders also asked that guidance
be provided in the form of examples that
illustrate the manner in which section 50
will be applied for purposes of basis reduc-
tion and recapture. Proposed §1.6417-6(b)
(3) would provide an example.
Proposed Applicability Dates
Each of proposed §§1.6417-1 through
1.6417-6 is proposed to apply to tax-
able years ending on or after the date the
Treasury decision adopting these regula-
tions as final regulations is published in
the Federal Register. Entities may rely
on these proposed regulations for elective
payments of applicable credit amounts
after December 31, 2022, in taxable years
ending before the date the Treasury deci-
sion adopting these regulations as final
regulations is published in the Federal
Register, provided the entities follow the
proposed regulations in their entirety and in
a consistent manner with respect to all elec-
tions made under section 6417. Sections
301.6241-1 and 301.6241-7 are proposed
to apply to taxable years ending on or after
the date these proposed regulations are
published in the Federal Register.
Special Analyses
I. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (“PRA”) generally
requires that a federal agency obtain the
approval of the Office of Management
and Budget (OMB) before collecting
information from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. 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 dis-
plays a valid control number.
The collections of information in these
proposed regulations contain reporting and
recordkeeping requirements. The record-
keeping requirements mentioned within
these proposed regulations are considered
general tax records under Section 1.6001-
1(e). These records are required for the IRS
to validate that taxpayers have met the regu-
latory requirements and are entitled to make
an elective payment election. For PRA
purposes, general tax records are already
approved by OMB under 1545-0047 for
tax-exempt organizations and government
entities; 1545-0074 for individuals; and
under 1545-0123 for business entities.
These proposed regulations also men-
tion reporting requirements related to
making elections as detailed in §§1.6417-2
and 1.6417-3 and calculating the claim
amounts as detailed in §§1.6417-2 and
1.6417-4. These elections will be made by
taxpayers on Forms 990-T, 1040, 1120-S,
1065, and 1120; and credit calculations
will be made on Form 3800 and sup-
porting forms. These forms are approved
under 1545-0047 for tax-exempt organi-
zations and governmental entities; 1545-
0074 for individuals; and 1545-0123 for
business entities.
These proposed regulations also men-
tion recapture procedures as detailed
in §1.6417-6. These recaptures are per-
formed using Form 4255. This form is
approved under 1545-0047 for tax-exempt
organizations and governmental entities;
1545-0074 for individuals; and 1545-
0123 for business entities. These proposed
regulations are not changing or creating
new collection requirements not already
approved by OMB.
These proposed regulations mention
a requirement to register with the IRS to
be able to elect payments as detailed in
§1.6417-5. For further information con-
cerning the registration, where to submit
comments on the collection of informa-
tion and the accuracy of the estimated
burden, and suggestions for reducing this
burden, please refer to the preamble to
the corresponding temporary regulations
(T.D. 9975) published in the Rules and
Regulations section of this issue of
the Federal Register. These proposed
regulations are not changing or creating
new collection requirements beyond the
requirements that are being reviewed and
approved by OMB under the temporary
regulations.
II. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes certain
requirements with respect to Federal rules
that are subject to the notice and comment
requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C.
551 et seq.) and that are likely to have a
significant economic impact on a sub-
stantial number of small entities. Unless
an agency determines that a proposal is
not likely to have a significant economic
impact on a substantial number of small
entities, section 603 of the RFA requires
the agency to present an initial regula-
tory flexibility analysis (IRFA) of the
proposed rule. The Treasury Department
and the IRS have not determined whether
the proposed rule, when finalized, will
likely have a significant economic impact
on a substantial number of small entities.
This determination requires further study.
However, because there is a possibility of
significant economic impact on a substan-
tial number of small entities, an IRFA is
provided in these proposed regulations.
The Treasury Department and the IRS
invite comments on both the number of
entities affected and the economic impact
on small entities.
Pursuant to section 7805(f), this notice
of proposed rulemaking has been sub-
mitted to the Chief Counsel of Advocacy
of the Small Business Administration
for comment on its impact on small
business.
1. Need for and Objectives of the Rule
The proposed regulations would pro-
vide greater clarity to taxpayers that intend
to take advantage of section 6417’s credit
monetization mechanism. It provides
needed definitions, the time and manner to
make the election, and information about
the pre-filing registration process, among
other items. The Treasury Department and

Bulletin No. 2023–27 1147 July 3, 2023
the IRS intend and expect that giving tax-
payers guidance that allows them to use
section 6417 will beneficially impact var-
ious industries, delivering benefits across
the economy, and reduce economy-wide
greenhouse gas emissions.
In particular, section 6417 allows appli-
cable entities to treat an applicable credit
as a payment against Federal income taxes
and defines applicable entities to include
many entities that may not have any tax
liability. Allowing entities without suf-
ficient federal income tax liability to use
a business tax credit to instead make an
election to receive a refund of any over-
payment of taxes created by the elective
payment election will increase the incen-
tive for taxpayers to invest in clean energy
projects that generate eligible credits
because it will increase the amount of
cash available to those entities, thereby
reducing the amount of financing needed
for clean energy projects.
2. Affected Small Entities
The RFA directs agencies to provide
a description of, and where feasible, an
estimate of, the number of small entities
that may be affected by the proposed
rules, if adopted. The Small Business
Administration’s Office of Advocacy
estimates in its 2023 Frequently Asked
Questions that 99.9 percent of American
businesses meet its definition of a small
business. The applicability of these pro-
posed regulations does not depend on
the size of the business, as defined by
the Small Business Administration. As
described more fully in the preamble to
this proposed regulation and in this IRFA,
section 6417 and these proposed regula-
tions may affect a variety of different enti-
ties across several different industries as
there are 12 different applicable credits for
which an elective payment election may
be made. Further, the elective payment
election for 3 of the applicable credits
may be made both by applicable entities
and by taxpayers other than applicable
entities. Although there is uncertainty as
to the exact number of small businesses
within this group, the current estimated
number of respondents to these proposed
rules is 20,000 taxpayers, as described in
the Paperwork Reduction Act section of
the preamble.
The Treasury Department and the IRS
expect to receive more information on
the impact on small businesses through
comments on this proposed rule and again
when taxpayers start to make the elective
payment election using the guidance and
procedures provided in these proposed
regulations.
3. Impact of the Rules
The proposed regulations provide
rules for how taxpayers can take advan-
tage of the section 6417 credit moneti-
zation regime. Taxpayers that elect to
take advantage of section 6417 will have
administrative costs related to reading
and understanding the rules as well as
recordkeeping and reporting requirements
because of the pre-filing registration and
tax return requirements. The costs will
vary across different-sized entities and
across the type of project(s) in which such
entities are engaged.
The pre-filing registration process
requires a taxpayer to register itself as
intending to make the elective payment
election, to list all applicable credits it
intends to claim, and to list each applica-
ble credit property that contributed to the
determination of such credits. This pro-
cess must be completed to receive a reg-
istration number for each applicable credit
property with respect to which the appli-
cable taxpayer intends to make an elective
payment election. To make the elective
payment election and claim the credit, the
taxpayer must file an annual tax return.
The reporting and recordkeeping require-
ments for that return would be required
for any taxpayer that is claiming a general
business credit, regardless of whether the
taxpayer was making an elective payment
election under section 6417.
Although the Treasury Department
and the IRS do not have sufficient data
to determine precisely the likely extent
of the increased costs of compliance, the
estimated burden of complying with the
recordkeeping and reporting requirements
are described in the Paperwork Reduction
Act section of the preamble.
4. Alternatives Considered
The Treasury Department and the IRS
considered alternatives to the proposed
regulations. For example, in adopting the
pre-filing registration requirements, the
Treasury Department and the IRS con-
sidered whether such information could
be obtained at the filing of the relevant
annual tax return. However, the Treasury
Department and the IRS decided that such
an option would increase the opportunity
for duplication fraud, improper payments,
or excessive payments under section 6417
as well as potentially delaying payments to
qualifying taxpayers. Section 6417(d)(5)
specifically authorizes the IRS to require
such information or registration as the
Secretary deems necessary for purposes
of preventing duplication, fraud, improper
payments, or excessive payments under
section 6417 as a condition of, and prior
to, any amount being treated as a pay-
ment which is made by an applicable
entity under section 6417. As described
in the preamble to these proposed regula-
tions, these proposed rules carry out that
Congressional intent as pre-filing regis-
tration allows for the IRS to verify certain
information in a timely manner and then
process the annual tax return with mini-
mal delays. Having a distinction between
applicable entities or electing entities that
are small businesses versus others making
an elective payment election would cre-
ate a scenario where a subset of taxpay-
ers seeking to make an elective payment
election would not have been verified or
received registration numbers, potentially
delaying payment not only to them but
to other taxpayers seeking to use section
6417.
Additionally, when considering how
taxpayers should claim the credits and
make the elective payment election,
the Treasury Department and the IRS
considered creating an election system
outside of the tax return filing system.
However, it was determined that such a
process would not be an efficient use of
resources, especially given the statutory
due date to make an election, which is the
return filing date for the taxpayers with
a filing obligation (which would include
small business taxpayers). The Treasury
Department and the IRS decided that
the most efficient and reliable method is
to use the existing method for claiming
business tax credits; that is, the filing of
the annual tax return. To create a differ-
ent method for small businesses making

July 3, 2023 1148 Bulletin No. 2023–27
an elective payment election than for a
small business claiming the credit (or a
larger business making an elective pay-
ment election or claiming the credit)
would create an additional burden for
both small businesses and the IRS, with-
out any commensurate benefit.
Comments are requested on the
requirements in the proposed regulations,
including specifically whether there are
less burdensome alternatives that do not
increase the risk of duplication, fraud,
improper payments, or excessive pay-
ments under section 6417.
5. Duplicative, Overlapping, or
Conflicting Federal Rules
The proposed rule would not dupli-
cate, overlap, or conflict with any rele-
vant Federal rules. As discussed above,
the proposed rule would merely provide
procedures and definitions to allow tax-
payers to take advantage of the ability to
make an elective payment election. The
Treasury Department and the IRS invite
input from interested members of the
public about identifying and avoiding
overlapping, duplicative, or conflicting
requirements.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Indian tribal government, in the
aggregate, or by the private sector, of $100
million (updated annually for inflation).
This proposed rule does not include any
Federal mandate that may result in expen-
ditures by State, local, or Indian tribal
governments, or by the private sector in
excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing
any rule that has federalism implica-
tions if the rule either imposes substan-
tial, direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law, unless
the agency meets the consultation and
funding requirements of section 6 of the
Executive Order. This proposed rule does
not have federalism implications and does
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive Order.
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments) prohibits an agency from
publishing any rule that has Tribal impli-
cations if the rule either imposes substan-
tial, direct compliance costs on Indian
tribal governments, and is not required
by statute, or preempts Tribal law, unless
the agency meets the consultation and
funding requirements of section 5 of the
Executive Order. This proposed rule does
not have substantial direct effects on
one or more federally recognized Indian
tribes and does not impose substantial
direct compliance costs on Indian tribal
governments within the meaning of the
Executive Order.
Nevertheless, on November 28, 2022,
and November 29, 2022, the Treasury
Department and the IRS held consulta-
tions with Tribal leaders requesting assis-
tance in addressing questions related to
the elective payment election under sec-
tion 6417. Consultation was also held with
Alaska Native Corporations on December
2, 2022. These consultations informed
the development of these proposed
regulations.
The Treasury Department and the
IRS will hold additional consultations
with Tribal leaders and Alaska Native
Corporations after providing an opportu-
nity for review of the proposed regulations
and early in the process of publishing final
regulations under section 6417.
VII. Regulatory Planning and Review
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore, a reg-
ulatory impact assessment is not required.
Comments and Public Hearing
Before these proposed amendments
to the regulations are adopted as final
regulations, consideration will be given
to comments that are submitted timely
to the IRS as prescribed in this pream-
ble under the ADDRESSES section.
The Treasury Department and the IRS
request comments on all aspects of the
proposed regulations. Any electronic
comments submitted, and any paper
comments submitted, will be made
available at https://www.regulations.gov
or upon request.
Announcement 2023-16, 2023-20
I.R.B. 854 (May 15, 2023), provides that
public hearings will be conducted in per-
son, although the IRS will continue to
provide a telephonic option for individu-
als who wish to attend or testify at a hear-
ing by telephone. Any telephonic hearing
will be made accessible to people with
disabilities.
A public hearing is scheduled to be
held in person on August 21, 2023, begin-
ning at 10:00 a.m. ET, unless no outlines
are received by August 14, 2023. Due
to building security procedures, visitors
must enter at the Constitution Avenue
entrance. In addition, all visitors must
present photo identification to enter the
building. Because of access restrictions,
visitors will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts.
The rules of 26 CFR 601.601(a)
(3) apply to the hearing. Persons who
wish to comment by telephone at the
hearing must submit written or electronic
comments and an outline of the topics
to be discussed as well as the time to be
devoted to each topic by August 14, 2023,
as prescribed in the preamble under the
ADDRESSES section.
A period of ten minutes will be allo-
cated to each person for making com-
ments. After the deadline for receiving
outlines has passed, the IRS will prepare an
agenda containing the schedule of speak-
ers. Copies of the agenda will be made
available at https://www.regulations.gov,
search IRS and REG-101607-23. Copies

Bulletin No. 2023–27 1149 July 3, 2023
of the agenda will also be available by
emailing a request to publichearings@
irs.gov. Please put “REG-101607-23
Agenda Request” in the subject line of
the email.
Individuals who want to testify in
person at the public hearing must send
an email to publichearings@irs.gov to
have your name added to the building
access list. The subject line of the email
must contain the regulation number REG-
101607-23 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY In Person at
Hearing for REG-101607-23.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-101607-23 and the language
TESTIFY Telephonically. For exam-
ple, the subject line may say: Request to
TESTIFY Telephonically at Hearing for
REG-101607-23.
Individuals who want to attend the pub-
lic hearing in person without testifying must
also send an email to publichearings@irs.
gov to have your name added to the build-
ing access list. The subject line of the email
must contain the regulation number REG-
101607-23 and the language ATTEND
In Person. For example, the subject line
may say: Request to ATTEND Hearing In
Person for REG-101607-23. Requests to
attend the public hearing must be received
by 5:00 p.m. EST on August 17, 2023.
Individuals who want to attend the
public hearing by telephone without
testifying must also send an email to
publichearings@irs.gov to receive the
telephone number and access code for
the hearing. The subject line of the email
must contain the regulation number REG-
101607-23 and the language ATTEND
Hearing Telephonically. For example, the
subject line may say: Request to ATTEND
Hearing Telephonically for REG-101607-
23. Requests to attend the public hearing
must be received by 5:00 p.m. EST on
August 17, 2023.
Hearings will be made accessible to
people with disabilities. To request special
assistance during a hearing please contact
the Publications and Regulations Branch
of the Office of Associate Chief Counsel
(Procedure and Administration) by send-
ing an email to publichearings@irs.gov
(preferred) or by telephone at (202) 317-
6901 (not a toll-free number) at least
August 16, 2023.
Statement of Availability of IRS
Documents
Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin and
is available from the Superintendent of
Documents, U.S. Government Publishing
Office, Washington, DC 20402, or by vis-
iting the IRS website at https://www.irs.
gov.
Drafting Information
The principal authors of theses pro-
posed regulations are Jeremy Milton
and James Holmes, Office of the
Associate Chief Counsel (Passthroughs
and Special Industries), IRS. However,
other personnel from the Treasury
Department and the IRS participated in
their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
parts 1 and 301 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. Sections 1.6417-0 through
1.6417-6 are added under the undesignated
heading “Abatements, Credits, and
Refunds” to read as follows:
§1.6417-0 Table of contents
This section lists the table of contents
for §§1.6417-1 through 1.6417-6.
§1.6417-1 Elective Payment of
Applicable Credits.
(a) In general.
(b) Annual tax return
(c) Applicable entity.
(d) Applicable credit.
(e) Applicable credit property.
(f) Disregarded entity.
(g) Electing taxpayer.
(h) Elective payment amount.
(i) Elective payment election.
(j) Guidance.
(k) Indian tribal government.
(l) Partnership.
(m) S corporation.
(n) Section 6417 regulations.
(o) Statutory references.
(p) U.S. territory.
(q) Applicability date.
§1.6417-2 Rules for making elective
payment elections.
(a) Elective payment elections.
(b) Manner of making election.
(c) Determination of applicable credit.
(d) Timing of payment.
(e) Denial of double benefit.
(f) Applicability date.
§1.6417-3 Special rules for electing
taxpayers.
(a) In general.
(b) Election with respect to credit for
production of clean hydrogen.
(c) Election with respect to credit for
carbon oxide sequestration.
(d) Election with respect to the advanced
manufacturing production credit.
(e) Election for electing taxpayers.
(f) Applicability date.
§1.6417-4 Elective payment election
for electing taxpayers that are
partnerships or S corporations.
(a) In general.

July 3, 2023 1150 Bulletin No. 2023–27
(b) Elections.
(c) Effect of election.
(d) Determination of amount of the
credit.
(e) Partnerships subject to subchapter
C of chapter 63.
(f) Applicability Date.
§1.6417-5 Additional information and
registration.
(a) Pre-filing registration and election.
(b) Pre-filing registration requirements.
(c) Registration number.
(d) Applicability date.
(e) Expiration date.
§1.6417-6 Special rules.
(a) Excessive payment.
(b) Basis reduction and recapture.
(c) Mirror code territories.
(d) Partnerships subject to subchapter
C of chapter 63 of the Code
(e) Applicability date.
§1.6417-1 Elective payment election of
applicable credits.
(a) In general. An applicable entity
may make an elective payment election
with respect to any applicable credit
determined with respect to such appli-
cable entity in accordance with section
6417 of the Code and the section 6417
regulations. Paragraphs (b) through
(p) of this section provide definitions.
See §1.6417-2 for rules and procedures
under which all elective payment elec-
tions must be made, rules for deter-
mining the amount and the timing of
payments, and statutory rules denying
double benefits. See §1.6417-3 for
special rules pertaining to electing tax-
payers. See §1.6417-4 for special rules
pertaining to electing taxpayers that
are partnerships or S corporations. See
§1.6417-5 for pre-filing registration
requirements and other information
required to make any elective payment
election effective. See §1.6417-6 for
special rules related to excessive pay-
ments, basis reduction and recapture,
any U.S. territory with a mirror code
tax system, and payments made to part-
nerships subject to subchapter C of
chapter 63 of the Code.
(b) Annual Tax Return. The term
annual tax return means, for purposes of
section 6417 and the section 6417 regula-
tions, the following returns (and for each,
any successor return)—
(1) For any taxpayer normally required
to file an annual tax return with the IRS,
such annual return (including the Form
1065 for partnerships and the Form 990-T
for organizations with unrelated business
income tax or a proxy tax under section
6033(e));
(2) For any taxpayer that is not nor-
mally required to file an annual tax return
with the IRS (such as taxpayers located in
the U.S. territories), the return they would
be required to file if they were located in
the United States, or, if no such return is
required (such as for governmental enti-
ties), the Form 990-T; and
(3) For short tax year filers, the short
year tax return.
(c) Applicable entity. The term applica-
ble entity means—
(1) Any organization exempt from the
tax imposed by subtitle A—
(i) By reason of section 501(a) of the
Code; or
(ii) Because it is the government of any
U.S. territory or a political subdivision
thereof;
(2) Any State, the District of Columbia,
or political subdivision thereof;
(3) An Indian tribal government or a
subdivision thereof;
(4) Any Alaska Native Corporation
(as defined in section 3 of the Alaska
Native Claims Settlement Act, 43 U.S.C.
1602(m));
(5) The Tennessee Valley Authority;
(6) Any corporation operating on a
cooperative basis that is engaged in fur-
nishing electric energy to persons in rural
areas; and
(7) An agency or instrumentality of any
applicable entity described in paragraphs
(1)(ii), (2), or (3).
(d) Applicable credit. The term appli-
cable credit means each of the following:
(1) So much of the credit for alternative
fuel vehicle refueling property determined
under section 30C of the Code that, pur-
suant to section 30C(d)(1), is treated as a
credit listed in section 38(b) of the Code
(section 30C credit);
(2) So much of the renewable electricity
production credit determined under section
45(a) as is attributable to qualified facilities
that are originally placed in service after
December 31, 2022 (section 45 credit);
(3) So much of the credit for carbon
oxide sequestration determined under
section 45Q(a) as is attributable to car-
bon capture equipment that is originally
placed in service after December 31, 2022
(section 45Q credit);
(4) The zero-emission nuclear power
production credit determined under sec-
tion 45U(a) (section 45U credit);
(5) So much of the credit for produc-
tion of clean hydrogen determined under
section 45V(a) as is attributable to qual-
ified clean hydrogen production facilities
that are originally placed in service after
December 31, 2012 (section 45V credit);
(6) In the case of a tax-exempt entity
described in section 168(h)(2)(A)(i), (ii),
or (iv) of the Code, the credit for qualified
commercial vehicles determined under
section 45W by reason of section 45W(d)
(2) (section 45W credit);
(7) The credit for advanced manufac-
turing production determined under sec-
tion 45X(a) (section 45X credit);
(8) The clean electricity production
credit determined under section 45Y(a)
(section 45Y credit);
(9) The clean fuel production credit
determined under section 45Z(a) (section
45Z credit);
(10) The energy credit determined
under section 48 (section 48 credit);
(11) The qualifying advanced energy
project credit determined under section
48C (section 48C credit); and
(12) The clean electricity investment
credit determined under section 48E (sec-
tion 48E credit).
(e) Applicable credit property. The
term applicable credit property means
each of the following units of property
with respect to which the amount of an
applicable credit is determined:
(1) In the case of a section 30C credit, a
qualified alternative fuel vehicle refueling
property described in section 30C(c).
(2) In the case of a section 45 credit, a
qualified facility described in section 45(d).
(3) In the case of a section 45Q credit, a
single process train described in §1.45Q-
2(c)(3).
(4) In the case of a section 45U credit, a
qualified nuclear power facility described
in section 45U(b)(1).

Bulletin No. 2023–27 1151 July 3, 2023
(5) In the case of a section 45V credit, a
qualified clean hydrogen production facil-
ity described in section 45V(c)(3).
(6) In the case of a section 45W credit,
a qualified commercial clean vehicle
described in section 45W(c).
(7) In the case of a section 45X credit,
a facility that produces eligible compo-
nents, as described in guidance under sec-
tions 48C and 45X.
(8) In the case of a section 45Y credit,
a qualified facility described in section
45Y(b)(1).
(9) In the case of a section 45Z credit,
a qualified facility described in section
45Z(d)(4).
(10) Section 48 credit property—(i) In
general. In the case of a section 48 credit
and except as provided in paragraph (d)
(10)(ii) of this section, an energy property
described in section 48.
(ii) Pre-filing registration and elec-
tions. At the option of an applicable entity
or electing taxpayer, and to the extent
consistently applied for purposes of the
pre-filing registration requirements of
§1.6417-5 and the elective payment elec-
tion requirements of §§1.6417-2 through
1.6417-4, an energy project as described
in section 48(a)(9)(A)(ii) and defined in
guidance.
(11) In the case of a section 48C credit,
an eligible property described in section
48C(c)(2).
(12) In the case of a section 48E credit,
a qualified facility described in section
48E(b)(3) or, in the case of a section 48E
credit relating to a qualified investment
with respect to energy storage technology,
an energy storage technology described in
section 48E(c)(2).
(f) Disregarded entity. The term dis-
regarded entity means an entity that is
disregarded as an entity separate from its
owner for Federal income tax purposes.
(g) Electing taxpayer. The term electing
taxpayer means any taxpayer that is not an
applicable entity described in paragraph
(b) of this section but makes an election in
accordance with §§1.6417-2(b), 1.6417-3,
and, if applicable, 1.6417-4, to be treated as
an applicable entity for a taxable year with
respect to applicable credits determined
with respect to an applicable credit property
described in §1.6417-1(e)(3), (5), or (7).
(h) Elective payment amount—(1)
In general. The term elective payment
amount means, with respect to an appli-
cable entity or an electing taxpayer that is
not a partnership or an S corporation, the
applicable credit(s) for which an applica-
ble entity or electing taxpayer makes an
elective payment election to be treated as
making a payment against the tax imposed
by subtitle A for the taxable year, which is
equal to the sum of—
(i) The amount (if any) of the current
year applicable credit(s) allowed as a gen-
eral business credit under section 38 for
the taxable year, as provided in §1.6417-
2(e)(2)(iii), and
(ii) The amount (if any) of unused cur-
rent year applicable credits which would
otherwise be carried back or carried for-
ward from the unused credit year under
section 39 and that are treated as a pay-
ment against tax, as provided in §1.6417-
2(e)(2)(iv).
(2) Elective payment amount with
respect to partnerships and S corporations.
With respect to an electing taxpayer that is
a partnership or an S corporation, the term
elective payment amount means the sum of
the applicable credit(s) for which the part-
nership or S corporation makes an elec-
tive payment election and that results in a
payment to such partnership or S corpora-
tion equal to the amount of such credit(s)
(unless the partnership owes a Federal tax
liability, in which case the payment may be
reduced by such tax liability).
(i) Elective payment election. The term
elective payment election means an elec-
tion made in accordance with §1.6417-
2(b) for applicable credit(s) determined
with respect to an applicable entity or
electing taxpayer.
(j) Guidance. The term guidance
means guidance published in the Federal
Register or Internal Revenue Bulletin, as
well as administrative guidance such as
forms, instructions, publications, or other
guidance on the IRS.gov website. See
§§601.601 and 601.602 of this chapter.
(k) Indian tribal government. The term
Indian tribal government means the rec-
ognized governing body of any Indian or
Alaska Native tribe, band, nation, pueblo,
village, community, component band,
or component reservation, individually
identified (including parenthetically) in
the most recent list published by the
Department of the Interior in the Federal
Register pursuant to section 104 of the
Federally Recognized Indian Tribe List
Act of 1994 (25 U.S.C. 5131).
(l) Partnership. The term partnership
has the meaning provided in section 761
of the Code.
(m) S corporation. The term S corpo-
ration has the meaning provided in section
1361(a)(1) of the Code.
(n) Section 6417 regulations. The
term section 6417 regulations means
§§1.6417-1 through 1.6417-6.
(o) Statutory references—(1) Chapter
1. The term chapter 1 means chapter 1 of
the Code.
(2) Code. The term Code means the
Internal Revenue Code.
(3) Subchapter K. The term subchapter
K means subchapter K of chapter 1.
(4) Subtitle A. The term subtitle A
means subtitle A of the Code.
(p) U.S. territory. The term U.S. terri-
tory means the Commonwealth of Puerto
Rico, Guam, the U.S. Virgin Islands,
American Samoa, and the Commonwealth
of the Northern Mariana Islands.
(q) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6417-2 Rules for making elective
payment elections.
(a) Elective payment elections—(1)
Elections by applicable entities—(i) In
general. An applicable entity that makes
an elective payment election in the man-
ner provided in paragraph (b) of this sec-
tion will be treated as making a payment
against the Federal income taxes imposed
by subtitle A for the taxable year with
respect to which an applicable credit is
determined in the amount determined
under paragraph (c) of this section.
(ii) Disregarded entities. If an applica-
ble entity is the owner (directly or indi-
rectly) of a disregarded entity that directly
holds an applicable credit property, the
applicable entity may make an elective
payment election in the manner provided
in paragraph (b) of this section for appli-
cable credits determined with respect to
the applicable credit property held directly
by the disregarded entity.
(iii) Undivided ownership interests.
If an applicable entity is a co-owner in
an applicable credit property through
an arrangement properly treated as a

July 3, 2023 1152 Bulletin No. 2023–27
tenancy-in-common for Federal income
tax purposes, or through an organization
that has made a valid election under sec-
tion 761(a) of the Code to be excluded
from the application of subchapter K,
then the applicable entity’s undivided
ownership share of the applicable credit
property will be treated as a separate
applicable credit property owned by such
applicable entity, and the applicable entity
may make an elective payment election
in the manner provided in paragraph (b)
of this section for the applicable credits
determined with respect such applicable
credit property.
(iv) Partnerships and S corporations
not applicable entities. Partnerships and
S corporations are not applicable entities
described in §1.6417-1(c), and thus are not
eligible to make any election under para-
graph (b) of this section, unless the partner-
ship or S corporation is an electing taxpayer.
This is the case no matter how many of the
partners of a partnership are described in
§1.6417-1(c)(1), including if all of a part-
nership’s partners are so described.
(v) Members of a consolidated group of
which an Alaska Native Corporation is the
common parent—a consolidated group (as
defined in §1.1502-1) the common parent
of which is an Alaska Native Corporation,
any member that is an electing taxpayer
may —
(2) Electing taxpayers—(i) Electing
taxpayers that are not partnerships or
S corporations. An electing taxpayer
other than a partnership or an S corpora-
tion that has made an elective payment
election in accordance with §1.6417-3
and paragraph (b) of this section will be
treated as making a payment against the
Federal income taxes imposed by subti-
tle A for the taxable year with respect to
which the applicable credit is determined
in the amount determined under para-
graph (c) of this section.
(ii) Electing taxpayers that are part-
nerships or S corporations. In the case
of an electing taxpayer that is a partner-
ship or S corporation that has made an
elective payment election in accordance
with §§1.6417-3 and 1.6417-4 and para-
graph (b) of this section, the Internal
Revenue Service will make a payment to
such partnership or S corporation equal
to the amount of such credit determined
under paragraph (c) of this section and
§1.6417-4(d) (unless the partnership owes
any Federal income tax liability, in which
case the payment may be reduced by such
tax liability).
(iii) Partners and S corporation share-
holders prohibited from making any
elective payment election. Under section
6417(c)(1) of the Code, any elective pay-
ment election with respect to applicable
credit property held directly by a partner-
ship or S corporation must be made by the
partnership or S corporation. As provided
under section 6417(c)(2) of the Code, no
partner in a partnership, or shareholder
of an S corporation, may make an elec-
tive payment election with respect to any
applicable credit determined with respect
to such applicable credit property.
(iv) Disregarded entities. If an electing
taxpayer is the owner (directly or indi-
rectly) of a disregarded entity that directly
holds any applicable credit property, the
electing taxpayer may make an elective
payment election in the manner provided
in paragraph (b) of this section for appli-
cable credits determined with respect to
the applicable credit property held directly
by the disregarded entity.
(v) Undivided ownership interests.
If an electing taxpayer is a co-owner in
an applicable credit property through an
arrangement properly treated as a tenan-
cy-in-common for Federal income tax
purposes, or through an organization that
has made a valid election under section
761(a) of the Code to be excluded from
the application of subchapter K, then the
electing taxpayer’s undivided owner-
ship interest in or share of the applicable
credit property will be treated as a sepa-
rate applicable credit property owned by
such electing taxpayer, and the electing
taxpayer may make an elective payment
election in the manner provided in para-
graph (b) of this section for the applicable
credits determined with respect to such
applicable credit property.
(vi) Members of a consolidated
group—
(3) Special rules for certain cred-
its—(i) Renewable electricity production
credit. Any election under this paragraph
(a) with respect to a section 45 credit—
(A) Applies separately with respect to
each qualified facility;
(B) Must be made in the manner pro-
vided in paragraph (b) of this section for
the taxable year in which such qualified
facility is originally placed in service;
and
(C) Applies to such taxable year and to
any subsequent taxable year that is within
the period described in section 45(a)(2)(A)
(ii) with respect to such qualified facility.
(ii) Credit for carbon oxide sequestra-
tion. Except as provided in §1.6417-3(c),
which provides a special rule for electing
taxpayers, any election under this para-
graph (a) with respect to a section 45Q
credit—
(A) Applies separately with respect to
the carbon capture equipment originally
placed in service by the applicable entity
during a taxable year;
(B) Must be made in the manner pro-
vided in paragraph (b) of this section for
the taxable year in which such qualified
facility is originally placed in service; and
(C) Applies to such taxable year and to
any subsequent taxable year that is within
the period described in section 45Q(3)(A)
or (4)(A) with respect to such equipment.
(iii) Credit for production of clean
hydrogen. Except as provided in §1.6417-
3(b), which provides a special rule for
electing taxpayers, any election under this
paragraph (a) with respect to a section
45V credit—
(A) Applies separately with respect to
each qualified clean hydrogen production
facility;
(B) Must be made in the manner pro-
vided in paragraph (b) of this section for
the taxable year in which such facility is
placed in service (or within the 1-year
period after August 16, 2022, for facilities
placed in service before December 31,
2022); and
(C) Applies to such taxable year and all
subsequent taxable years with respect to
such facility.
(iv) Clean electricity production credit.
Any elective payment election with
respect to a section 45Y credit—
(A) Applies separately with respect to
each qualified facility;
(B) Must be made in the manner pro-
vided in paragraph (b) of this section for
the taxable year in which such facility is
placed in service; and
(C) Applies to such taxable year and
to any subsequent taxable year which
is within the period described in section
45Y(b)(1)(B) with respect to such facility.

Bulletin No. 2023–27 1153 July 3, 2023
(v) Advanced manufacturing produc-
tion credit. Any elective payment elec-
tion with respect to a section 45X credit
applies separately with respect to each
facility (whether the facility existed on
or before, or after, December 31, 2022)
at which a taxpayer produces, after
December 31, 2022, eligible components
(as defined in section 45X(c)(1)) during
the taxable year.
(b) Manner of making election—(1)
In general—(i) Election is made on the
annual tax return. An elective payment
election is made on the annual tax return,
as defined in §1.6417-1(b), in the man-
ner prescribed by the IRS in guidance,
along with any required completed source
credit form(s) with respect to the appli-
cable credit property, a completed Form
3800, General Business Credit, (or its
successor), and any additional informa-
tion, including supporting calculations,
required in instructions.
(ii) Election must be made on original
return. An election must be made on an
original return (including any revisions on
a superseding return) filed not later than
the due date (including extensions of time)
for the original return for the taxable year
for which the applicable credit is deter-
mined. No elective payment election may
be made or revised on an amended return
or by filing an administrative adjust-
ment request under section 6227 of the
Code. There is no relief available under
§§301.9100-1 through 301.9100-3 of this
chapter for an elective payment election
that is not timely filed.
(2) Pre-filing registration required.
Pre-filing registration in accordance with
§1.6417-5 is a condition for making an
elective payment election. An elective
payment election will not be effective
with respect to credits determined with
respect to an applicable credit property
unless the applicable entity or electing
taxpayer received a valid registration
number for the applicable credit prop-
erty in accordance with §1.6417-5(c)
and provided the registration number
for each applicable credit property on
its Form 3800 (or its successor) attached
to the tax return, in accordance with
guidance.
(3) Due date for making the election.
To be effective, an elective payment elec-
tion must be made no later than:
(i) In the case of any taxpayer for which
no Federal income tax return is required
under sections 6011 or 6033(a) of the
Code, the due date (including an extension
of time) for the original return that would
be due under section 6033(a) if such appli-
cable entity were described in that section.
Under section 6072(e), that date is the
15th day of the fifth month after the tax-
able year determined by section 441 of the
Code. Subject to issuance of guidance that
specifies the manner in which an entity
for which no Federal income tax return is
required under sections 6011 or 6033(a)
of the Code could request an extension of
time to file, an automatic paperless six-
month extension from the original due
date is deemed to be allowed.
(ii) In the case of any taxpayer that is
not normally required to file an annual
tax return with the IRS (such as taxpay-
ers located in the U.S. territories), the due
date (including extensions of time) that
would apply if the taxpayer was located in
the United States.
(iii) In any other case, the due date
(including extensions of time) for the
original return for the taxable year for
which the election is made, but in no event
earlier than February 13, 2023.
(4) Election is not revocable—(i) In
general. Except as provided in subpara-
graphs (ii) and (iii) of this paragraph, any
elective payment election, once made, is
irrevocable and applies with respect to
any applicable credit for the taxable year
for which the election is made.
(ii) Election lasts for a period of years
for certain credits. For elective pay-
ment elections with respect to section 45
credits described in §1.6417-1(d)(2) or
section 45Y credits described in §1.6417-
1(d)(8), the election applies to each tax-
able year in the 10-year period provided
in section 45(a)(2)(A)(ii) or 45Y(b)(1)
(B), respectively, beginning on the date
the facility was originally placed in ser-
vice. For elective payment elections with
respect to section 45Q credits described
in §1.6417-1(d)(3), the election applies
to each taxable year in the 12-year period
provided in section 45Q(a)(3)(A) or (4)
(A) beginning on the date the carbon
capture equipment was originally placed
in service. For elective payment elec-
tions with respect to section 45V cred-
its described in §1.6417-1(d)(5), the
election applies to the taxable year in
which the qualified clean hydrogen pro-
duction facility was originally placed in
service and all subsequent taxable years.
(iii) Electing taxpayers. For electing
taxpayers who make an elective payment
election, the election applies for one five-
year period per applicable credit property,
but such election may be revoked once per
applicable credit property, as provided in
§1.6417-3.
(5) Scope of election. An elective pay-
ment election applies to the entire amount
of applicable credit(s) determined with
respect to each applicable credit property
that was properly registered for the tax-
able year, resulting in an elective payment
amount that is the entire amount of appli-
cable credit(s) determined with respect to
the applicable entity or electing taxpayer
for a taxable year.
(c) Determination of applicable
credit—(1) In general. In the case of any
applicable entity making an elective pay-
ment election, any applicable credit is
determined—
(i) Without regard to section 50(b)(3)
and (4)(A)(i) of the Code, and
(ii) By treating any property with
respect to which such credit is determined
as used in a trade or business of the appli-
cable entity.
(2) Effect of trade or business rule. The
trade or business rule in paragraph (c)(1)
(ii) of this section—
(i) Allows the applicable entity to treat
an item of property as if it is of a charac-
ter subject to an allowance of depreciation
(such as under sections 30C and 45W); to
produce items in the ordinary course of
a trade or business of the taxpayer (such
as in sections 45V and 45X); and to state
that an item of property is one for which
depreciation (or amortization in lieu of
depreciation) is allowable (such as in sec-
tions 48, 48C, and 48E);
(ii) Allows the applicable entity to
apply the capitalization and accelerated
depreciation rules (such as sections 167,
168, 263, and 263A of the Code) that
apply to determining the basis and the
depreciation allowance for property used
in a trade or business;
(iii) Makes applicable general credit
limitations by those persons engaged in
the conduct of a trade or business and
to which such limitations apply, such as

July 3, 2023 1154 Bulletin No. 2023–27
section 49 in the context of investment tax
credits and section 469 for all applicable
credits; and
(iv) Does not create any presumption
that the trade or business is related (or
unrelated) to a tax-exempt entity’s exempt
purpose.
(3) Special rule for investment-related
credit property acquired with income,
including income from certain grants
and forgivable loans, that is exempt from
taxation. For purposes of section 6417,
income, including income from certain
grants and forgivable loans, that is exempt
from taxation under subtitle A and used
to purchase, construct, reconstruct, erect,
or otherwise acquire an applicable credit
property described in sections 30C, 45W,
48, 48C, or 48E (investment-related credit
property) are included in basis for purposes
of computing the applicable credit amount
determined with respect to the applica-
ble credit property, regardless of whether
basis is required to be reduced (in whole
or in part) by such amounts under general
tax principles. However, if an applicable
entity receives a grant, forgivable loan,
or other income exempt from taxation
under subtitle A for the specific purpose of
purchasing, constructing, reconstructing,
erecting, or otherwise acquiring an invest-
ment-related credit property (Restricted
Tax Exempt Amount), and the Restricted
Tax Exempt Amount plus the applicable
credit otherwise determined with respect
to that investment-related credit property
exceeds the cost of the investment-re-
lated credit property, then the amount of
the applicable credit is reduced so that
the total amount of applicable credit plus
the amount of any Restricted Tax Exempt
Amount equals the cost of investment-re-
lated credit property.
(4) Credits must be determined with
respect to the applicable entity or electing
taxpayer. Any credits for which an elec-
tive payment election is made must have
been determined with respect to the appli-
cable entity or electing taxpayer. An appli-
cable credit is determined with respect to
an applicable entity or electing taxpayer in
cases where the applicable entity or elect-
ing taxpayer owns the underlying eligi-
ble credit property or, if ownership is not
required, otherwise conducts the activities
giving rise to the underlying eligible credit.
Thus, no election may be made under this
section for any credits purchased pursu-
ant to section 6418, transferred pursuant
to section 45Q(f)(3), acquired by a lessee
from a lessor by means of an election to
pass through the credit to a lessee under
former section 48(d) (pursuant to section
50(d)(5)), owned by a third party, or oth-
erwise not determined with respect to the
applicable entity or electing taxpayer.
(5) Examples. The following examples
illustrate the rules of this paragraph (c).
(i) Example 1. School district A receives a tax
exempt grant in the amount of $400,000 from the
Environmental Protection Agency to purchase elec-
tric school bus B. A purchases B for $400,000. A’s
basis in B is $400,000. B qualifies for the maximum
section 45W credit, $40,000. However, because the
amount of the restricted tax exempt grant plus the
amount of the section 45W credit exceeds the cost of
B, A’s section 45W credit is reduced by the amount
necessary so that the total amount of the section 45W
credit plus the restricted tax exempt amount equals
the cost of B. A’s section 45W credit is therefore
reduced by $40,000 to zero.
(ii) Example 2. Assume the same facts as in
paragraph (c)(5)(i) of this section (Example 1),
except that the grant is in the amount of $300,000.
A purchases B using the grant and $100,000 of A’s
unrestricted funds. A’s basis in B is $400,000 and A’s
section 45W credit is $40,000. Since the amount of
the restricted tax exempt grant plus the amount of the
section 45W credit ($340,000) is less than the cost
of B, A’s 45W credit under section 6417(b)(6) is not
reduced.
(iii) Example 3. Public charity B receives a
$60,000 grant from a private foundation to build
energy property, P, a qualified investment credit
property that costs $80,000. B uses $20,000 of its
own funds plus the $60,000 grant to build P. B’s
basis in P is $80,000. Based upon acquisition cost, B
can earn a section 48 investment credit (with bonus
credit amounts) of $40,000 (50% of basis). However,
because the amount of the restricted tax exempt
grant ($60,000) plus the section 48 credit ($40,000)
exceeds P’s cost by $20,000, B’s section 48 appli-
cable credit is reduced by $20,000 so that the total
amount of the section 48 investment credit plus the
restricted tax exempt grant equals the cost of P.
(iv) Example 4. Taxpayer Q is engaged in the
business of capturing carbon oxide. Q properly elects
to be treated as an applicable entity with respect to
the section 45Q credit determined with respect to
single process trains A, B, and C for 2024. In the
same year, Q also purchases section 45Q credits
under section 6418 from an unrelated taxpayer and
has section 45Q credits transferred to itself pursu-
ant to section 45Q(f)(3). Q can make an elective
payment election only with respect to section 45Q
applicable credits determined with respect to A, B,
and C. Q cannot make an elective payment election
with respect to any credits transferred to Q pursuant
to sections 6418 and 45Q(f)(3).
(d) Timing of payment. Except as pro-
vided in §1.6417-4(d) (relating to pay-
ments to partnerships and S corporations),
the elective payment amount will be
treated as made—
(1) In the case of any taxpayer for
which no return is required under sections
6011 or 6033(a), on the later of—
(i) The date that a return would be due
under section 6033(a) (determined with-
out regard to extensions) if the taxpayer
were described in that section, or
(ii) The date on which such taxpayer
submits a claim for credit or refund in
accordance with paragraph (b) of this
section.
(2) In any other case, on the later of—
(i) The due date (determined without
regard to extensions) of the return for the
taxable year, or
(ii) The date on which such return is
filed.
(e) Denial of double benefit—(1) In
general. Under section 6417(e), in the
case of an applicable entity or electing
taxpayer making an elective payment
election with respect to an applicable
credit, such credit is reduced to zero and
is, for any other purposes of the Code,
deemed to have been allowed as a credit
to such entity or taxpayer for such tax-
able year. Paragraphs (e)(2) and (e)(3)
of this section explain the application of
the section 6417(e) denial of double ben-
efit rule to an applicable entity or elect-
ing taxpayer (other than a partnership or
S corporation). The application of section
6417(e) for an electing taxpayer that is a
partnership or S corporation is provided
in §1.6417-4(c)(1)(ii).
(2) Application of the Denial of Double
Benefit Rule. An applicable entity or
electing taxpayer (other than an electing
taxpayer that is a partnership or S corpo-
ration) making an elective payment elec-
tion applies section 6417(e) by taking the
following steps:
(i) Compute the amount of the Federal
income tax liability (if any) for the tax-
able year, without regard to the GBC, that
is payable on the due date of the return
(without regard to extensions), and the
amount of the Federal income tax liabil-
ity that may be offset by GBCs pursuant
to the limitation based on amount of tax
under section 38.
(ii) Compute the allowed amount of
GBC carryforwards carried to the taxable
year plus the amount of current year GBCs
(including current applicable credits)

Bulletin No. 2023–27 1155 July 3, 2023
allowed for the taxable year under section
38 (including, for clarity purposes, the
ordering rules in section 38(d)). Because
the election is made on an original return
for the taxable year for which the appli-
cable credit is determined, any business
credit carrybacks are not considered when
determining the elective payment amount
for the taxable year.
(iii) Apply the GBCs allowed for the
taxable year as computed under paragraph
(e)(2)(ii) of this section, including those
attributable to applicable credits as GBCs,
against the tax liability computed in para-
graph (e)(2)(i) of this section.
(iv) Identify the amount of any excess
or unused current year GBC, as defined
under section 39, attributable to current
year applicable credit(s) for which the
applicable entity is making an elective
payment election. Treat the amount of
such unused applicable credits as a pay-
ment against the tax imposed by subtitle A
for the taxable year with respect to which
such credits are determined (rather than
having them available for carryback or
carryover) (net elective payment amount).
(v) Reduce the applicable credits for
which an elective payment election is
made by the amount (if any) allowed as a
GBC under section 38 for the taxable year,
as provided in paragraph (e)(2)(iii) of this
section, and by the net elective payment
amount (if any) that is treated as a payment
against tax, as provided in paragraph (e)
(2)(iv) of this section, which results in the
applicable credits being reduced to zero.
(3) Use of applicable credit for other
purposes. The full amount of the applica-
ble credits for which an elective payment
election is made is deemed to have been
allowed for all other purposes of the Code,
including, but not limited to, the basis
reduction and recapture rules imposed by
section 50 and calculation of any under-
payment of estimated tax under sections
6654 and 6655 of the Code.
(4) Examples. The following examples
illustrate the rules of this paragraph (e).
(i) Example 1. U is a tax-exempt university
described in section 501(c)(3) whose fiscal year
runs from July 1 to June 30. U places in service
P, energy property eligible for a section 48 credit,
in June 2024. P is an asset used in connection with
its unrelated business. U completes the pre-fil-
ing registration in accordance with §1.6417-5 as
an applicable entity that has placed P into service
and intends to make an elective payment election
with respect to section 48 credits determined with
respect to P. U timely files its 2024 Form 990-T
on November 15, 2024. On its return, U prop-
erly determines that it has $500,000 of Unrelated
Business Income Tax (UBIT) under section 512. On
its Form 3800 attached to its return, U calculates
its limitation of GBC under section 38(c) (simpli-
fied) is $375,000 (paragraph (e)(2)(i) of this sec-
tion). U attaches Form 3468 to claim a section 48
credit of $100,000 with respect to P (its GBC for
the taxable year) (paragraph (e)(2)(ii) of this sec-
tion). Under paragraph (e)(2)(iii) of this section,
the section 48 credit reduces U’s UBIT liability
to $400,000. U pays its $400,000 tax liability on
November 15, 2024. Because there is no unused
current year applicable credit, paragraph (e)(2)(iv)
of this section does not apply. Under paragraph (e)
(2)(v) of this section, the $100,000 of section 48
credit is reduced by the $100,000 of applicable
credits claimed as GBCs for the taxable year, which
results in the applicable credits being reduced to
zero. However, the $100,000 of current year section
48 credit is deemed to have been allowed to U for
2024 for all other purposes of the Code (paragraph
(e)(3) of this section).
(ii) Example 2. Assume the same facts as in para-
graph (e)(4)(i) of this section (Example 1), except
that U has $80,000 of Unrelated Business Income
Tax (UBIT) under section 512, and calculates its
limitation of GBC under section 38(c) (simplified)
is $60,000 (paragraph (e)(2)(i) of this section). U
uses $60,000 of its $100,000 of section 48 credit
against its tax liability (paragraph (e)(2)(iii) of this
section). U’s net elective payment amount is $40,000
(paragraph (e)(2)(iv) of this section). U reduces its
applicable credit by the $60,000 claimed against
tax in paragraph (e)(2)(iii) of this section and by the
$40,000 net elective payment amount determined in
paragraph (e)(2)(iv) of this section, resulting in the
applicable credit being reduced to zero (paragraph
(e)(2)(v) of this section). When the IRS processes
U’s 2024 Form 990-T, the net elective payment
amount results in a $40,000 refund to U. However,
for other purposes of the Code, the $100,000 section
48 credit is deemed to have been allowed to U for
2024 (paragraph (e)(3) of this section).
(iii) Example 3. V is a city located in the United
States that never has Federal income tax liability, so
paragraph (e)(2)(i) of this section does not apply.
V timely completes pre-filing registration in accor-
dance with §1.6417-5 as an applicable entity that
will be eligible to make an elective payment elec-
tion, with regard to its annual accounting period end-
ing in 2024, for the credit determined under section
30C(a) from properties A, B, and C; the credit deter-
mined under section 45(a) for facility D; the credit
determined under section 45U(a) for facility E; the
credit determined under section 45W(a) with respect
to vehicles F, G, and H; and the credit determined
under section 48(a) with respect to property I and J.
V timely files its 2024 Form 990-T. V properly com-
pletes and attaches the relevant source credit forms
and Form 3800 with registration numbers and all
required information in the instructions, properly
making the elective payment election for all of the
credits, and properly determining that the amount of
applicable credits determined with respect to A, B,
C, D, E, F, G, H, I, and J is $500,000 (its GBC for the
taxable year) (paragraph (e)(2)(ii) of this section).
Paragraph (e)(2)(iii) of this section does not apply.
Under paragraph (e)(2)(iv) of this section, the entire
$500,000 is a net elective payment amount. When
the IRS processes V’s 2024 Form 990-T, the net elec-
tive payment amount results in a $500,000 refund to
V. V’s elective payment amount is reduced by the net
elective payment amount, so all applicable credits
for 2024 are reduced to zero. However, for other pur-
poses of the Code, the $500,000 of applicable credits
are deemed to have been allowed to V for its annual
accounting period ending in 2024 (paragraph (e)(3)
of this section).
(iv) Example 4. W is a business taxpayer engaged
in the manufacturing of components, including eli-
gible components as defined in section 45X(c)(1)
at facility F. W completes pre-filing registration in
accordance with §1.6417-5 stating that it intends to
elect to be treated as an applicable entity with respect
to eligible components produced at F in 2024. In
2024, W timely files its 2024 return electing to be
treated as an applicable entity, calculating its federal
income tax before GBCs of $125,000 and that its
limitation of GBC under section 38(c) (simplified)
is $100,000 (paragraph (e)(2)(i) of this section). W
attaches Form 7207 to claim a current section 45X
credit of $50,000 with respect to eligible components
produced at F (its applicable credits). W also attaches
Form 5884 to claim a current work opportunity tax
credit (WOTC) of $50,000 (WOTC is not an appli-
cable credit). W also completes and attaches Form
3800 which shows the amount of each current credit,
including current section 45X credit with registra-
tion number, and business credit carryforwards of
$25,000 (its GBC for the taxable year) (paragraph
(e)(2)(ii) of this section). Using the ordering rules
in sections 38(d), W is allowed $25,000 of the car-
ryforwards, $50,000 of WOTC plus only $25,000
of section 45X credit against net income tax, as
defined under section 38(c)(1)(B), leaving $25,000
of tax liability (paragraph (e)(2)(iii) of this section).
The $25,000 of unused section 45X credit is the net
elective payment amount that results in a $25,000
payment against tax by W (paragraph (e)(2)(iv) of
this section). On its return, W shows net tax liability
of $25,000 ($125,000 - $100,000 allowed GBC) and
the net elective payment of $25,000 which W applied
to net tax liability, resulting in zero tax owed on the
return. Under paragraph (e)(2)(v) of this section, W’s
applicable credit is reduced by the $25,000 of section
45X credit claimed as a GBC for the taxable year, as
provided in paragraph (e)(2)(iii) of this section, as
well as by the $25,000 net elective payment amount
determined in paragraph (e)(2)(iv) of this section,
resulting in the $50,000 of applicable credit being
reduced to zero. However, for all other purposes of
the Code, the $50,000 of 45X applicable credits are
deemed to have been allowed to W for 2024 (para-
graph (e)(3) of this section).
(v) Example 5. Assume the same facts as in para-
graph (e)(4)(iv) of this section (Example 4), except
W filed the return on a timely filed extension after
the due date of the return (without extensions). Even
though W did not owe tax after applying the net elec-
tive payment amount against its net tax liability, W
may be subject to the section 6655 penalty for failure
to pay estimated income tax. The net elective pay-
ment is not an estimated tax installment, rather, it is
treated as a payment made at the filing of the return.

July 3, 2023 1156 Bulletin No. 2023–27
(f) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6417-3 Special rules for electing
taxpayers.
(a) In general. This section relates to
the election available to electing taxpay-
ers. An electing taxpayer that makes an
elective payment election in accordance
with this section is treated as an appli-
cable entity for the duration of the elec-
tion period, but only with respect to the
applicable credit property described in
proposed §1.6417-1(e)(3), (5), or (7),
respectively, that is the subject of the elec-
tion. See paragraphs (b), (c), and (d) of
this section for the specific rules regarding
taxpayers making an election under sec-
tion 6417(d)(1)(B), (C), or (D), respec-
tively. See paragraph (e) for rules relating
to the making the election. See §1.6417-4
for special rules related to electing taxpay-
ers that are partnerships or S corporations.
(b) Elections with respect to the credit
for production of clean hydrogen. An
electing taxpayer that has placed in ser-
vice applicable credit property described
in §1.6417-1(e)(5) (in other words, a qual-
ified clean hydrogen production facility as
defined in section 45V(c)(3)) during the
taxable year may make an elective pay-
ment election for such taxable year (or by
August 16, 2023, in the case of facilities
placed in service before December 31,
2022), but only with respect to the qual-
ified clean hydrogen production facility,
only with respect to the applicable credit
described in §1.6417-1(d)(5) (in other
words, the section 45V credit), and only
if the pre-filing registration required by
§1.6417-5 was properly completed. An
electing taxpayer that elects to treat qual-
ified property that is part of a specified
clean hydrogen production facility as
energy property under section 48(a)(15)
may not make an elective payment elec-
tion with respect to such facility.
(c) Election with respect to the credit
for carbon oxide sequestration. An elect-
ing taxpayer that has, after December 31,
2022, placed in service applicable credit
property described in §1.6417-1(e)(3)
(in other words, a single process train
described in §1.45Q-2(c)(3) at a quali-
fied facility (as defined in section 45Q(d))
during the taxable year may make an elec-
tive payment election for such taxable
year, but only with respect to the single
process train, only with respect to the
applicable credit described in §1.6417-
1(d)(3) (in other words, the section 45Q
credit), and only if the pre-filing registra-
tion required by §1.6417-5 was properly
completed.
(d) Election with respect to the
advanced manufacturing production
credit. An electing taxpayer that produces,
after December 31, 2022, eligible compo-
nents (as defined in section 45X(c)(1)) at
an applicable credit property described in
§1.6417-1(e)(7) during the taxable year
(whether the facility existed on or before,
or after, December 31, 2022) may make
an elective payment election for such
taxable year, but only with respect to the
facility at which the eligible components
are produced by the electing taxpayer in
that year, only with respect to the applica-
ble credit described in §1.6417-1(d)(7) (in
other words, the section 45X credit), and
only if the pre-filing registration required
by §1.6417-5 was properly completed.
(e) Election for electing taxpayers—
(1) In general. If an electing taxpayer
makes an elective payment election under
1.6417-2(b) with respect to any taxable
year in which the electing taxpayer places
in service a qualified clean hydrogen pro-
duction facility for which a section 45V
credit is determined, places in service a
single process train at a qualified facility
for which a section 45Q credit is deter-
mined, or produces, after December 31,
2022, eligible components (as defined in
section 45X(c)(1)) at a facility, respec-
tively, the electing taxpayer will be treated
as an applicable entity for purposes of
making an elective payment election for
such taxable year and during the election
period described in paragraph (e)(3) of
this section, but only with respect to the
applicable credit property described in
§1.6417-1(e)(3), (5), or (7), as applica-
ble, that is the subject of the election. The
taxpayer must otherwise meet all require-
ments to earn the credit in the electing
year and in each succeeding year during
the election period described in paragraph
(e)(3) of this section.
(2) Election is per applicable credit
property. An elective payment election
under §1.6417-2(b) is made separately for
each applicable credit property, which is,
respectively, a qualified clean hydrogen
production facility placed in service for
which a section 45V credit is determined,
a single process train placed in service
at a qualified facility for which a section
45Q credit is determined, or a facility at
which eligible components are produced
for which a section 45X credit is deter-
mined. Only one election may be made
with respect to any specific applicable
credit property.
(3) Election period—(i) In general.
Except as provided in paragraph (e)(3)
(ii) of this section, if an electing taxpayer
makes an elective payment election under
§1.6417-2(b) with respect to applicable
credit property described in §1.6417-1(e)
(3), (5), or (7) for which an applicable
credit is determined under §1.6417-1(d)
(3), (5), or (7), the election period during
which such election applies includes
the taxable year in which the election is
made and each of the four subsequent
taxable years that end before January 1,
2033. The election period cannot be less
than a taxable year but may be made for
a taxable period of less than 12 months
within the meaning of section 443 of the
Code.
(ii) Revocation of election. An electing
taxpayer may, during a subsequent year
of the election period described in para-
graph (e)(3)(i) of this section, revoke the
elective payment election with respect to
an applicable credit property described in
§1.6417-1(e)(3), (5), or (7), in accordance
with forms and instructions. See §601.602
of this chapter. Any such revocation, if
made, applies to the taxable year in which
the revocation is made (which cannot be
less than a taxable year but may be made
for a taxable period of less than 12 months
as described in section 443 of the Code)
and each subsequent taxable year within
the election period. Any such revocation
may not be subsequently revoked.
(4) No transfer election under section
6418(a) permitted while an elective pay-
ment election is in effect. No transfer elec-
tion under section 6418(a) may be made
by an electing taxpayer with respect to
any applicable credit under §1.6417-1(d)
(3), (5), or (7) determined with respect
to applicable credit property described
in §1.6417-1(e)(3), (5), or (7) during the
election period for that applicable credit

Bulletin No. 2023–27 1157 July 3, 2023
property. However, if the election period
is no longer in effect with respect to an
applicable credit property, any credit
determined with respect to such applica-
ble credit property can be transferred pur-
suant to a transfer election under section
6418(a), as long as the taxpayer meets the
requirements of section 6418 and the 6418
regulations.
(f) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6417-4 Elective payment election
for electing taxpayers that are
partnerships or S corporations.
(a) In general. In the case of any appli-
cable credit determined with respect to
any applicable credit property described
in §1.6417-1(e)(3), (5), or (7) that is held
directly (or treated as held directly because
it is held by a disregarded entity) by an
electing taxpayer that is a partnership or
S corporation, any elective payment elec-
tion under §1.6417-2(b) must be made by
the partnership or S corporation.
(b) Elections. If an electing taxpayer that
is a partnership or S corporation makes an
elective payment election under §1.6417-
2(b) with respect to any taxable year in
which the electing taxpayer places in ser-
vice applicable credit property described
in §1.6417-1(e)(3) or (5), or produces,
after December 31, 2022, eligible compo-
nents (as defined in section 45X(c)(1)) at
an applicable credit property described in
§1.6417-1(e)(7), the electing taxpayer will
be treated as an applicable entity for pur-
poses of making an elective payment elec-
tion for such taxable year and during the
election period described in §1.6417-3(e)
(3), but only with respect to the applicable
credit property described in §1.6417-1(e)
(3), (5), or (7), respectively, that is the sub-
ject of the election. In addition, the taxpayer
must otherwise meet all requirements to
earn the credit in the electing year and in
each succeeding year during the election
period described in §1.6417-3(e)(3).
(c) Effect of election—(1) In general.
If a partnership or S corporation electing
taxpayer makes an elective payment elec-
tion, with respect to the section 45V, 45Q,
or 45X credit—
(i) The Internal Revenue Service will
make a payment to such partnership or
S corporation equal to the amount of
such credit, determined in accordance
with paragraph (d) of this section (unless
the partnership or S corporation owes
a Federal tax liability, in which case the
payment may be reduced by such tax
liability);
(ii) Before determining any partner’s
distributive share, or S corporation share-
holder’s pro rata share, of such credit, such
credit is reduced to zero and is, for any
other purposes under the Code, deemed
to have been allowed solely to such entity
(and not allocated or otherwise allowed to
its partners or shareholders) for such tax-
able year;
(iii) Any amount with respect to which
such election is made is treated as tax
exempt income for purposes of sections
705 and 1366 of the Code;
(iv) A partner’s distributive share of
such tax exempt income is equal to such
partner’s distributive share of the other-
wise applicable credit for each taxable
year, as determined under §1.704-1(b)(4)
(ii);
(v) An S corporation shareholder’s pro
rata share (as determined under section
1377(a) of the Code) of such tax exempt
income for each taxable year (as deter-
mined under sections 444 and 1378(b)
of the Code) is equal to the S corporation
shareholder’s pro rata share (as deter-
mined under section 1377(a)) of the oth-
erwise applicable credit for each taxable
year; and
(vi) Such tax exempt income resulting
from such election is treated as received
or accrued, including for purposes of sec-
tions 705 and 1366 of the Code, as of the
date the applicable credit is determined
with respect to the partnership or S cor-
poration. (such as, for investment credit
property, the date the property is placed in
service).
(2) Electing partnerships in tiered
structures. If a partnership (upper-tier
partnership) is a direct or indirect partner
of a partnership that makes an elective
payment election (electing partnership)
and directly or indirectly receives an allo-
cation of tax exempt income resulting
from the elective payment election made
by the electing partnership, the upper-tier
partnership must determine its partners’
distributive shares of such tax exempt
income in proportion to the partners’
distributive shares of the otherwise appli-
cable credit as provided in paragraph (c)
(1)(iv) of this section.
(3) Character of tax exempt income.
Tax exempt income resulting from an
elective payment election by an S corpo-
ration or a partnership is treated as aris-
ing from an investment activity and not
from the conduct of a trade or business
within the meaning of section 469(c)(1)
(A). As such, the tax exempt income is not
treated as passive income to any partners
or shareholders who do not materially
participate within the meaning of section
469(c)(1)(B).
(d) Determination of amount of the
credit—(1) In general. In determining the
amount of an applicable credit that will
result in a payment under paragraph (c)
(1)(i) of this section, the partnership or
S corporation must compute the amount
of the applicable credit allowable as if an
elective payment election were not made.
Because a partnership or S corporation
is not subject to sections 38(b) and (c)
and 469 (that is, those sections apply at
the partner or S corporation shareholder
level), the amount of applicable credit
determined by a partnership or S corpora-
tion is not subject to limitation by those
sections. In addition, because the only
applicable credits with respect to which a
partnership or S corporation may make an
elective payment election are not invest-
ment credits under section 46, sections 49
and 50 do not apply to limit the amount of
the applicable credits.
(2) Example. The rules of this paragraph (d) are
illustrated in the following example. A and B each
contributed cash to P, a calendar-year partnership,
for the purpose of manufacturing clean hydrogen
at V, a qualified clean hydrogen facility that meets
the definition of section 45V(c)(3). The partnership
agreement provides that A and B share equally in
all items of income, gain, loss, deduction and credit
of P. P completes the pre-filing registration process
with respect to the section 45V credit at V for 2023
in accordance §1.6417-5. P places V in service in
2023. P timely files its 2023 Form 1065 and prop-
erly makes the elective payment election in accor-
dance with §§1.6417-2(b),1.6417-3, and 1.6417-4.
On its Form 1065, P properly determined that the
amount of the section 45V credit with respect to the
clean hydrogen produced at V for 2023 is $100,000.
The IRS processes P’s return and makes a $100,000
payment to P. Before determining A’s and B’s dis-
tributive shares, P reduces the credit to zero. While
the $100,000 section 45V credit is deemed to have
been allowed to P for 2023 for any other purpose
under this title, the credit is not allocated or oth-
erwise allowed to its partners. The $100,000 is

July 3, 2023 1158 Bulletin No. 2023–27
treated as tax exempt income for purposes of sec-
tion 705, and is treated as arising from an invest-
ment activity and not from the conduct of a trade
or business within the meaning of section 469(c)
(1)(A). P allocates the tax exempt income from the
elective payment election proportionately among
the partners based on each partner’s distributive
share of the otherwise eligible section 45V credit
as determined under §1.704-1(b)(4)(ii). Under that
section, if partnership receipts or expenditures give
rise to a credit, the partner’s interest in the partner-
ship with respect to such credit is in the same pro-
portion as such partners’ distributive shares of such
receipt, loss, or deduction. Section 45V credits arise
based on the amount of clean hydrogen produced
at a facility. Under the partnership agreement, A
and B share all items equally. Thus, A and B will
each be allocated $50,000 of tax exempt income for
2023. P will continue to be treated as an applicable
entity with respect to V for taxable years 2024-2027
unless P revokes its election in accordance with
§1.6417-3(e)(3)(ii). At the end of 2023, A and B
increase their respective tax bases in their partner-
ship interest and capital accounts by $50,000 each
(that is, their share of the $100,000 of tax exempt
income).
(e) Partnerships subject to subchapter
C of chapter 63. For the application of
subchapter C of chapter 63 of the Code
to section 6417, see §301.6241-7 of this
chapter.
(f) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6417-5 Additional information and
registration.
(a) Pre-filing registration and elec-
tion. An applicable entity or electing
taxpayer is required to satisfy the pre-fil-
ing registration requirements in para-
graph (b) of this section as a condition
of, and prior to, making an elective pay-
ment election. An applicable entity or
electing taxpayer must use the pre-filing
registration process to register itself as
intending to make the elective payment
election, to list all applicable credits it
intends to claim, and to list each appli-
cable credit property that contributed to
the determination of such credits as part
of the pre-filing submission (or amended
submission). An applicable entity or
electing taxpayer that does not obtain
a registration number under paragraph
(c)(1) of this section or report the regis-
tration number on its annual tax return,
as defined in §1.6417-1(b), pursuant to
paragraph (c)(5) of this section with
respect to an otherwise applicable credit
property, is ineligible to receive any
elective payment amount with respect
to the amount of any credit determined
with respect to that applicable credit
property. However, completion of the
pre-filing registration requirements and
receipt of a registration number does
not, by itself, mean the applicable entity
or electing taxpayer is eligible to receive
a payment with respect to the applicable
credits determined with respect to the
applicable credit property.
(b) Pre-filing registration require-
ments—(1) Manner of pre-filing regis-
tration. Unless otherwise provided in
guidance, an applicable entity or elect-
ing taxpayer must complete the pre-fil-
ing registration process electronically
through the IRS electronic portal and
in accordance with the instructions pro-
vided therein.
(2) Pre-filing registration and election
for members of a consolidated group.
A member of a consolidated group is
required to complete pre-filing registra-
tion as a condition of, and prior to, making
an elective payment election. —
(3) Timing of pre-filing registration. An
applicable entity or electing taxpayer must
satisfy the pre-filing registration require-
ments of this paragraph (b) and receive a
registration number under paragraph (c)
of this section prior to making an elective
payment election under §1.6417-2(b) on
the applicable entity’s or electing taxpay-
er’s annual tax return for the taxable year
at issue.
(4) Each applicable credit property
must have its own registration number.
An applicable entity or electing taxpayer
must obtain a registration number for each
applicable credit property with respect to
which it intends to make an elective pay-
ment election.
(5) Information required to complete
the pre-filing registration process. Unless
modified in future guidance, an appli-
cable entity or electing taxpayer must
provide the following information to the
IRS to complete the pre-filing registration
process:
(i) The applicable entity’s or electing
taxpayer’s general information, including
its name, address, taxpayer identification
number, and type of legal entity.
(ii) Any additional information
required by the IRS electronic portal,
such as information regarding the tax-
payer’s exempt status under section
501(a) of the Code; that the applica-
ble entity is a political subdivision of a
State, the District of Columbia, an Indian
Tribal government, or a U.S. territory; or
that the applicable entity is an agency or
instrumentality of a State, the District of
Columbia, an Indian Tribal government,
or a U.S. territory.
(iii) The taxpayer’s taxable year, as
determined under section 441 of the Code.
(iv) The type of annual tax return(s)
normally filed by the applicable entity or
electing taxpayer, or that the applicable
entity or electing taxpayer does not nor-
mally file an annual tax return with the
IRS.
(v) The type of applicable credit(s) for
which the applicable entity or electing
taxpayer intends to make an elective pay-
ment election.
(vi) For each applicable credit, each
applicable credit property that the appli-
cable entity or electing taxpayer intends
to use to determine the credit for which
the applicable entity or electing taxpayer
intends to make an elective payment
election.
(vii) For each applicable credit prop-
erty listed in paragraph (b)(4)(vi) of this
section, any further information required
by the IRS electronic portal, such as—
(A) The type of applicable credit
property;
(B) Physical location (that is, address
and coordinates (longitude and latitude) of
the applicable credit property);
(C) Any supporting documentation
relating to the construction or acquisition
of the applicable credit property (such as
State, District of Columbia, Indian Tribal,
U.S. territorial, or local government per-
mits to operate the applicable credit prop-
erty; certifications; evidence of ownership
that ties to a land deed, lease, or other
documented right to use and access any
land or facility upon which the applicable
credit property is constructed or housed;
U.S. Coast Guard registration numbers
for offshore wind vessels; and the vehicle
identification number of an eligible clean
vehicle with respect to which a section
45W credit is determined);

Bulletin No. 2023–27 1159 July 3, 2023
(D) The beginning of construction date
and the placed in service date of the appli-
cable credit property.
(E) If an investment-related credit
property (as defined §1.6417-2(c)(3)),
the source of funds the taxpayer used to
acquire the property; and
(F) Any other information that the
applicable entity or electing taxpayer
believes will help the IRS evaluate the
registration request.
(viii) The name of a contact person for
the applicable entity or electing taxpayer.
The contact person is the person whom
the IRS may contact if there is an issue
with the registration. The contact person
must either (1) possess legal authority to
bind the applicable entity or electing tax-
payer or (2) must provide a properly exe-
cuted power of attorney on Form 2848,
Power of Attorney and Declaration of
Representative.
(ix) A penalties of perjury statement,
effective for all information submitted as a
complete application, and signed by a per-
son with personal knowledge of the relevant
facts that is authorized to bind the registrant.
(x) Any other information the IRS
deems necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under this
section that is provided in guidance.
(c) Registration number—(1) In gen-
eral. The IRS will review the information
provided and will issue a separate regis-
tration number for each applicable credit
property for which the applicable entity or
electing taxpayer provided sufficient veri-
fiable information.
(2) Registration number is only valid
for one taxable year. A registration
number is valid only with respect to the
applicable entity or electing taxpayer that
obtained the registration number under
this section and only for the taxable year
for which it is obtained.
(3) Renewing registration numbers.
If an elective payment election will be
made with respect to an applicable credit
property for a taxable year after a reg-
istration number under this section has
been obtained, the applicable entity or
electing taxpayer must renew the regis-
tration for that subsequent taxable year
in accordance with applicable guidance,
including attesting that all the facts
previously provided are still correct or
updating any facts.
(4) Amendment of previously submit-
ted registration information if a change
occurs before the registration number is
used. As provided in instructions to the
pre-filing registration portal, if specified
changes occur with respect to one or more
applicable credit properties for which a
registration number has been previously
obtained but not yet used, an applicable
entity or electing taxpayer must amend the
registration (or may need to submit a new
registration) to reflect these new facts. For
example, if the owner of a facility previ-
ously registered for an elective payment
election for applicable credits determined
with respect to that facility and the facility
undergoes a change of ownership (inci-
dent to a corporate reorganization or an
asset sale) such that the new owner has a
different employer identification number
(EIN) than the owner who obtained the
original registration, the original owner of
the facility must amend the original reg-
istration to disassociate its EIN from the
applicable credit property and the new
owner must submit separately an original
registration (or if the new owner previ-
ously registered other credit properties,
must amend its original registration) to
associate the new owner’s EIN with the
previously registered applicable credit
property.
(5) Registration number is required to
be reported on the return for the taxable
year of the elective payment election. The
applicable entity or electing taxpayer must
include the registration number of the
applicable credit property on its annual tax
return as provided in §1.6417-2(b) for the
taxable year. The IRS will treat an elective
payment election as ineffective with respect
to an applicable credit determined with
respect to an applicable credit property for
which the applicable entity or electing tax-
payer does not include a valid registration
number on the annual tax return.
(d) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6417-6 Special rules.
(a) Excessive payment—(1) In general.
In the case of any elective payment amount
which the IRS determines constitutes an
excessive payment, the tax imposed on
such entity by chapter 1, regardless of
whether such entity or taxpayer would
otherwise be subject to chapter 1 tax, for
the taxable year in which such determi-
nation is made will be increased by an
amount equal to the sum of—
(i) The amount of such excessive pay-
ment, plus
(ii) An amount equal to 20 percent of
such excessive payment.
(2) Reasonable cause. The amount
described in paragraph (a)(1)(ii) of this
section will not apply to an applicable
entity or electing taxpayer if the appli-
cable entity or electing taxpayer demon-
strates to the satisfaction of the IRS that
the excessive payment resulted from rea-
sonable cause.
(3) Excessive payment defined. For pur-
poses of this section, the term excessive
payment means, with respect to an appli-
cable credit property for which an elective
payment election is made under §1.6417-
2(b) for any taxable year, an amount equal
to the excess of—
(i) The amount treated as a payment
under §1.6417-2(a)(1)(i) or (a)(2)(i), or
the amount of the payment made pursu-
ant to §1.6417-2(a)(2)(ii), with respect to
such applicable credit property for such
taxable year, over
(ii) The amount of the credit which,
without application of this section, would
be otherwise allowable under the Code
(as determined pursuant to §1.6417-2(c)
and (e) or §1.6417-4(d)(1) and (3), and
without regard to the limitation based on
tax in section 38(c)) with respect to such
applicable credit property for such tax-
able year.
(4) Example. This example illustrates the prin-
ciples of this paragraph (a). B, an instrumentality
of state M, places in service in 2023 facility F,
which is eligible for the energy credit determined
under section 48. B properly completes the pre-fil-
ing registration as an applicable entity that will
earn the energy credit from F in accordance with
§1.6417-5, and receives a registration number for
F. B timely files its 2023 Form 990-T, properly pro-
viding the registration number for F and otherwise
complying with §1.6417-2(b). On its Form 990-T,
B calculates that the amount of energy credit deter-
mined with respect to F is $100,000 and that the net
elective payment amount is $100,000. B receives
a refund in the amount of $100,000. In 2025, the
IRS determines that the amount of energy credit

July 3, 2023 1160 Bulletin No. 2023–27
properly allowable to B in 2023 with respect to F
(as determined pursuant to §1.6417-2(c) and (e)
and without regard to the limitation based on tax
in section 38(c)) was $60,000. B is unable to show
reasonable cause for the difference. The excessive
payment amount is $40,000 ($100,000 treated as
a payment - $60,000 allowable amount). In 2025,
the tax imposed under chapter 1 on B is increased
in the amount of $48,000 ($40,000 + (20% *
$40,000).)
(b) Basis reduction and recapture—
(1) In general. Rules similar to the rules
of section 50 (without regard to section
50(b)(3) and (4)(A)(i)) apply for purposes
of this section.
(2) Reporting recapture. Any report-
ing of recapture is made on the annual
tax return of the applicable entity or elect-
ing taxpayer in the manner prescribed
by the IRS in any guidance, along with
supplemental forms such as Form 4255,
Recapture of Investment Credit.
(3) Example. This example illustrates the prin-
ciples of this paragraph (b). In December 2023,
G, a government entity, places in service P, which
is energy property eligible for the energy credit
determined under section 48 (section 48 credit).
G properly completes the pre-filing registration in
accordance with §1.6417-5 as an applicable entity
to make an election under section 6417 for 2023. G
timely files its 2023 Form 990-T in 2024, properly
making the elective payment election in accordance
with §1.6417-2 for a section 48 energy credit deter-
mined with respect to P. On its Form 990-T, G prop-
erly determines that the amount of section 48 credit
determined with respect P is $100,000 and that its
net elective payment amount is $100,000. The IRS
sends G a $100,000 refund. Pursuant to section
50(c), G reduces its basis in P by $50,000. In July
2025, P ceases to be investment credit property with
respect to G. Because this occurs before the close of
the recapture period set forth in section 50, section
50(a)(1)(A) provides that the tax under chapter 1
for 2025 is increased by the recapture percentage of
the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would
have resulted solely from reducing to zero any credit
determined under subpart E of part IV of subchapter
A of chapter 1 with respect to such property. Because
P ceased to be investment credit property within 2
full years after P was placed in service, section 50(a)
(1)(B) provides that the recapture percentage is 80%.
G must properly report the recapture event in 2025,
paying an $80,000 tax. Because G is a government
entity, G reports the recapture event on a Form 990-T
or any Form provided in further guidance, along with
supplemental forms such as Form 4255, Recapture
of Investment Credit. G’s basis in P is increased by
$40,000.
(c) Mirror code territories. Pursuant to
section 6417(f) of the Code, section 6417
and the section 6417 regulations are not
treated as part of the income tax laws of
the United States for purposes of deter-
mining the income tax law of any U.S.
territory with a mirror code tax system
(as defined in section 24(k) of the Code),
unless such U.S. territory elects to have
section 6417 and the section 6417 regu-
lations be so treated. The applicable ter-
ritory tax authority for a U.S. territory
determines whether such an election has
been made.
(d) Partnerships subject to subchap-
ter C of chapter 63 of the Code. See
§301.6241-7(j) of this chapter for rules
applicable to payments made to partner-
ships subject to subchapter C of chapter
63 of the Code for a partnership taxable
year.
(e) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 3. The authority citation for part
301 is amended by adding entries in
numerical order for §§301.6241-1 and
301.6241-7 to read in part as follows:
Authority: 26 U.S.C. 7805.
* * * * *
Section 301.6241-1 also issued under
sections 48D(d), 6241, and 6417.
* * * * *
Section 301.6241-7 also issued under
sections 48D(d), 6241, and 6417.
* * * * *
Par. 4. Section 301.6241-1 is amended
by:
1. Adding a sentence after the second
sentence of paragraph (a)(6)(iii); and
2. Adding a sentence to the end to the
end of paragraph (b)(1).
The additions and revisions read as
follows:
§301.6241-1 Definitions
(a) * * *
(6) * * *
(iii) * * * Notwithstanding the previ-
ous two sentences, any tax, penalty, addi-
tion to tax, or additional amount imposed
on the partnership under chapter 1 is an
item or amount with respect to the part-
nership.* * *
(b) * * *
(1) * * *The third sentence of para-
graph (a)(6)(iii) applies to partnership
taxable years ending on or after June 21,
2023. * * *
* * * * *
Par. 5. Section 6241-7 is amended by:
1. Redesignating paragraph (j) as para-
graph (k);
2. Adding new paragraph (j);
3. Revising the first sentence of newly
redesignated paragraph (k)(1); and
4. Adding paragraph (k)(3).
The additions and revisions read as
follows:
§301.6241-7 Treatment of special
enforcement matters
* * * * *
(j) Elections resulting in payments to a
partnership. The IRS may adjust any elec-
tion that results or could result in a pay-
ment to the partnership in lieu of a Federal
tax credit or deduction without regard to
subchapter C of chapter 63. The IRS may
also make determinations, without regard
to subchapter C of chapter 63, about the
payment itself as well as any partner-
ship-related item relevant to adjusting the
election or the payment.
* * * * *
(k) Applicability date—(1) In gen-
eral. Except as provided in paragraph (k)
(2) (relating to paragraph (b) of this sec-
tion) and paragraph (k)(3) of this section
(relating to paragraph (j) of this section),
this section applies to partnership taxable
years ending on or after November 20,
2020.* * *
* * * * *
(3) Elections resulting in payments to a
partnership. Paragraph (j) of this section
applies to taxable years ending on or after
June 21, 2023.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register June 14,
2023, 11:15 a.m., and published in the issue of the
Federal Register for June 21, 2023, ** FR *****)

Bulletin No. 2023–27 1161 July 3, 2023
Notice of Proposed
Rulemaking
Section 6418 Transfer of
Certain Credits
REG-101610-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations concerning the elec-
tion under the Inflation Reduction Act of
2022 to transfer certain Federal income
tax credits. The proposed regulations
describe the proposed rules for the elec-
tion to transfer eligible credits in a taxable
year, including definitions and special
rules applicable to partnerships and S cor-
porations and regarding excessive credit
transfer or recapture events. In addition,
the proposed regulations describe rules
related to an IRS pre-filing registration
process that would be required. These pro-
posed regulations affect eligible taxpayers
that elect to transfer eligible credits in a
taxable year and the transferee taxpayers
to which eligible credits are transferred.
DATES: Written or electronic comments
must be received by August 14, 2023. The
public hearing on these proposed regula-
tions is scheduled to be held on August
23, 2023, at 10 a.m. ET. Requests to speak
and outlines of topics to be discussed
at the public hearing must be received
by August 14, 2023. If no outlines are
received by August 14, 2023, the public
hearing will be cancelled. Requests to
attend the public hearing must be received
by 5 p.m. ET on August 21, 2023. The
public hearing will be made accessible to
people with disabilities. Requests for spe-
cial assistance during the hearing must be
received by August 18, 2023.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-101610-23) by following
the online instructions for submitting
comments. Once submitted to the Federal
eRulemaking Portal, comments cannot
be edited or withdrawn. The Department
of Treasury (Treasury Department) and
the IRS will publish for public availabil-
ity any comments submitted, whether
electronically or on paper, to the IRS’s
public docket. Send paper submissions
to: CC:PA:LPD:PR (REG-101610-23),
Room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning these proposed
regulations, Jeremy Milton at (202) 317-
5665 and James Holmes at (202) 317-
5114 (not a toll-free number); concerning
submissions of comments and requests
for a public hearing, Vivian Hayes at
(202) 317-6901 (not a toll-free number)
or by email to publichearings@irs.gov
(preferred).
SUPPLEMENTARY INFORMATION:
Background
Section 6418 was added to the Internal
Revenue Code (Code) on August 16,
2022, by section 13801(b) of Public Law
117-169, 136 Stat. 1818, 2009, commonly
referred to as the Inflation Reduction Act of
2022 (IRA). Section 6418 allows “eligible
taxpayers” to elect to transfer certain cred-
its to unrelated taxpayers rather than using
the credits against their Federal income
tax liabilities. Section 6418 also provides
special rules relating to partnerships and
S corporations and directs the Secretary of
the Treasury or her delegate (Secretary) to
provide rules for making elections under
section 6418 and to require information or
registration necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under section
6418. Section 13801(g) of the IRA pro-
vides that section 6418 applies to taxable
years beginning after December 31, 2022.
This document contains proposed regu-
lations that would amend the Income Tax
Regulations (26 CFR part 1) to implement
the statutory provisions of section 6418.
In the Rules and Regulations section
of this issue of the Federal Register,
the Treasury Department and the IRS
are issuing temporary regulations under
§1.6418-4T that implement the pre-fil-
ing registration process described in
§1.6418-4 of the proposed regulations.
The temporary regulations require eligible
taxpayers that want to elect to transfer eli-
gible credits under section 6418 to regis-
ter with the IRS through an IRS electronic
portal in advance of the eligible taxpayer
filing the return on which the election
under section 6418 is made.
I. Overview of section 6418
Section 6418(a) provides that, in the
case of an eligible taxpayer that elects to
transfer to an unrelated transferee tax-
payer all (or any portion specified in the
election) of an eligible credit determined
with respect to the eligible taxpayer for
any taxable year, the transferee taxpayer
specified in such election (and not the eligi-
ble taxpayer) is treated as the taxpayer for
purposes of the Code with respect to such
credit (or such portion thereof). Under sec-
tion 6418(b), any amount of consideration
paid by the transferee taxpayer to the eligi-
ble taxpayer for the transfer of such credit
(or such portion thereof) is (1) required to
be paid in cash, (2) not included in the eli-
gible taxpayer’s gross income, and (3) not
allowed as a deduction to the transferee
taxpayer under any provision of the Code.
Section 6418(f)(2) defines the term
“eligible taxpayer” to mean any taxpayer
that is not described in section 6417(d)(1)
(A).
Section 6418(f)(1)(A) defines the term
“eligible credit” to mean each of the fol-
lowing 11 credits:
(1) So much of the credit for alternative
fuel vehicle refueling property allowed
under section 30C of the Code that, pur-
suant to section 30C(d)(1), is treated as a
credit listed in section 38(b) of the Code
(section 30C credit);
(2) The renewable electricity produc-
tion credit determined under section 45(a)
of the Code (section 45 credit);
(3) The credit for carbon oxide seques-
tration determined under section 45Q(a)
of the Code (section 45Q credit);
(4) The zero-emission nuclear power
production credit determined under sec-
tion 45U(a) of the Code (section 45U
credit);

July 3, 2023 1162 Bulletin No. 2023–27
(5) The clean hydrogen production
credit determined under section 45V(a) of
the Code (section 45V credit);
(6) The advanced manufacturing pro-
duction credit determined under section
45X(a) of the Code (section 45X credit);
(7) The clean electricity production
credit determined under section 45Y(a) of
the Code (section 45Y credit);
(8) The clean fuel production credit
determined under section 45Z(a) of the
Code (section 45Z credit);
(9) The energy credit determined under
section 48 of the Code (section 48 credit);
(10) The qualifying advanced energy
project credit determined under section
48C of the Code (section 48C credit); and
(11) The clean electricity investment
credit determined under section 48E of the
Code (section 48E credit).
Under section 6418(f)(1)(B), an elec-
tion to transfer a section 45 credit, section
45Q credit, section 45V credit, or section
45Y credit is made separately with respect
to each facility and for each taxable year
during the credit period of the respective
credit. Pursuant to section 6418(f)(1)(C)
an eligible credit does not include any
business credit carryforward or business
credit carryback. Section 6418(g)(4) pro-
vides that an eligible taxpayer may not
make an election to transfer credits for
progress expenditures.
Pursuant to section 6418(e)(1), an eli-
gible taxpayer must make an election to
transfer any portion of an eligible credit
on its original tax return for the taxable
year for which the credit is determined
by the due date of such return (including
extensions of time) but such an election
cannot be made earlier than 180 days
after the date of the enactment of sec-
tion 6418 by section 13801(b) of the IRA
(that is, in no event earlier than 180 days
after August 16, 2022, which is February
13, 2023). An eligible taxpayer may not
revoke an election to transfer any portion
of a credit. Pursuant to section 6418(d), a
transferee taxpayer takes the transferred
eligible credit into account in its first tax
year ending with, or after, the eligible tax-
payer’s tax year with respect to which the
transferred eligible credit was determined.
Section 6418(e)(2) provides that a trans-
feree taxpayer may not make any addi-
tional transfers of a transferred eligible
credit under section 6418.
II. Section 6418 rules for partnerships
and S corporations
Pursuant to section 6418(c), in the
case of a partnership or an S corporation
that directly holds a facility or property
for which an eligible credit is determined:
the election to transfer an eligible credit
is made at the entity level and no election
by any partner or shareholder is allowed
with respect to such facility or property;
any amount received as consideration for
a transferred eligible credit is treated as
tax exempt income for purposes of sec-
tions 705 and 1366 of the Code; and a
partner’s distributive share of the tax
exempt income is based on the partner’s
distributive share of the transferred eligi-
ble credit.
III. Special rules
Section 6418(g) provides special rules
regarding the elective transfer of certain
credits. Section 6418(g)(1) provides that,
as a condition of, and prior to, any trans-
fer of any portion of an eligible credit
pursuant to section 6418(a), the Secretary
may require such information (includ-
ing, in such form or manner as is deter-
mined appropriate by the Secretary, such
information returns) or registration as the
Secretary deems necessary for purposes
of preventing duplication, fraud, improper
payments, or excessive payments under
section 6418.
Pursuant to section 6418(g)(2), if
the Secretary determines that there is an
excessive credit transfer to a transferee
taxpayer, then the tax imposed on the
transferee taxpayer by chapter 1 of the
Code (chapter 1) (regardless of whether
such entity would otherwise be subject
to tax under chapter 1) is increased in the
year of such determination by the amount
of the excessive credit transfer plus 20
percent of such excessive credit transfer.
The additional amount of 20 percent of the
excessive credit transfer does not apply if
the transferee taxpayer demonstrates to
the satisfaction of the Secretary that the
excessive credit transfer resulted from
reasonable cause. An excessive credit
transfer is defined in section 6418(g)(2)
(C) as, with respect to a facility or prop-
erty for which an election is made under
section 6418(a) for any taxable year,
an amount equal to the excess of (i) the
amount of the eligible credit claimed by
the transferee taxpayer with respect to
such facility or property for such taxable
year; over (ii) the amount of the eligible
credit that, without application of section
6418, would be otherwise allowable under
the Code with respect to such facility or
property for such taxable year.
Pursuant to section 6418(g)(3), if a
section 48 credit, section 48C credit, or
section 48E credit is transferred, the basis
reduction rules of section 50(c) apply to
the applicable investment credit property
as if the transferred eligible credit was
allowed to the eligible taxpayer. Further,
if applicable investment credit property
is disposed of, or otherwise ceases to be
investment credit property with respect
to the eligible taxpayer, before the close
of the recapture period as described in
section 50(a)(1), then certain notification
requirements apply. The eligible taxpayer
must notify the transferee taxpayer of a
recapture event in such form and manner
as the Secretary may provide. In addition,
the transferee taxpayer must notify the
eligible taxpayer of the recapture amount,
if any, in such form and manner as the
Secretary may provide.
Section 6418(h) directs the Secretary to
issue regulations or other guidance as may
be necessary to carry out the purposes of
section 6418, including guidance provid-
ing rules for determining a partner’s dis-
tributive share of the tax exempt income
described in section 6418(c)(1).
IV. Notice 2022-50
On October 24, 2022, the Treasury
Department and the IRS published Notice
2022-50, 2022-43 I.R.B. 325, to, among
other things, request feedback from the
public at large on potential issues with
respect to the transfer election provisions
under section 6418 that may require guid-
ance. Over 200 comment letters were
received in response to Notice 2022-50.
Based in part on the feedback received, the
Treasury Department and the IRS are issu-
ing these proposed regulations regarding
the transfer election provisions under sec-
tion 6418. The major areas with respect to
which public stakeholders provided letters
are discussed in the following Explanation
of Provisions.

Bulletin No. 2023–27 1163 July 3, 2023
Explanation of Provisions
I. Transfers of Eligible Credits
Proposed §1.6418-1(a) would provide
generally that an eligible taxpayer may
make a transfer election under proposed
§1.6418-2 to transfer any specified por-
tion of an eligible credit determined with
respect to any eligible credit property of
such eligible taxpayer for any taxable year
to a transferee taxpayer in accordance with
section 6418 of the Code and §§1.6418-1
through 1.6418-5 (“the section 6418 reg-
ulations”). The remainder of proposed
§1.6418-1 would then provide definitions
for terms used throughout the section
6418 regulations, including definitions
of eligible taxpayer, eligible credit, eligi-
ble credit property, paid in cash, specified
credit portion, transferred specified credit
portion, transfer election, transferee tax-
payer, transferee partnership, transferee
S corporation, transferor partnership, and
transferor S corporation.
Proposed §1.6418-1(b) would define
the term “eligible taxpayer” to mean any
taxpayer (as defined in section 7701(a)
(14) of the Code), other than one described
in section 6417(d)(1)(A) and proposed
§1.6417-1(b). The term “taxpayer” in
section 7701(a)(14) means “any person
subject to any internal revenue tax” and
generally, includes entities that have a
United States employment tax or excise
tax obligation even if they do not have a
United States income tax obligation.
Proposed §1.6418-1(c) would define
the term “eligible credit” consistent with
section 6418(f)(1)(A), and include all 11 of
the credits listed in such section. Further,
the definition would include a rule that an
eligible credit does not include any busi-
ness credit carryforward or business credit
carryback determined under section 39 of
the Code, which is consistent with section
6418(f)(1)(C). The regulations also would
clarify that the entire amount of any eli-
gible credit is separately determined with
respect to each single eligible credit prop-
erty of the eligible taxpayer and includes
any bonus credit amounts (described in
proposed §1.6418-2(c)(3)) determined
with respect to that single eligible credit
property.
Consistent with the proposed rules
described later in this Explanation of
Provisions related to the manner of
making the transfer election, proposed
§1.6418-1(d) would generally define the
term “eligible credit property” as the
unit of property of an eligible taxpayer
with respect to which the amount of an
eligible credit is determined. While the
proposed regulations reference the stat-
utory rules for each eligible credit to
determine the appropriate unit of mea-
surement for section 6418 registrations
and election, the following additional
information is relevant for each of the 11
eligible credits:
(1) For the section 30C credit, a tax-
payer would be required to register and
make an election on a property-by-prop-
erty basis. For this purpose, a property
means a “qualified alternative fuel vehicle
refueling property” as defined in section
30C(c).
1
(2) For the section 45 credit, a taxpayer
would be required to register and make an
election on a facility-by-facility basis. For
this purpose, a facility means a “qualified
facility” as defined in section 45(d).
(3) For the section 45Q credit, a tax-
payer would be required to register and
make an election on the basis of a unit of
carbon capture equipment. The regulations
under §1.45Q-2(c)(3) state that all compo-
nents that make up an independently func-
tioning process train capable of capturing,
processing, and preparing carbon oxide
for transport (single process train) will be
treated as a single “unit of carbon capture
equipment.”
(4) For the section 45U credit, a tax-
payer would be required to register and
make an election on a facility-by-facility
basis. For this purpose, a facility means
a “qualified nuclear power facility” as
defined in section 45U(b)(1).
(5) For the section 45V credit, a tax-
payer would be required to register and
make an election on a facility-by-facility
basis. For this purpose, a facility means
a “qualified clean hydrogen production
facility” as defined in section 45V(c)(3).
(6) For the section 45X credit, a tax-
payer would be required to register and
make an election on a facility-by-facility
basis. For this purpose, a facility means
one that produces eligible components, as
described in guidance under sections 48C
and 45X.
(7) For the section 45Y credit, a tax-
payer would be required to register and
make an election on a facility-by-facility
basis. For this purpose, a facility means a
“qualified facility” as defined in section
45Y(b)(1).
(8) For the section 45Z credit, a tax-
payer would be required to register and
make an election on a facility-by-facility
basis. For this purpose, a facility means a
“qualified facility” as defined in section
45Z(d)(4).
(9) For the section 48 credit, a taxpayer
would be required to register and make an
election on a property-by-property basis.
For this purpose, a property means an
energy property, which generally includes
all components of property that are func-
tionally interdependent (unless such
equipment is an addition or modification
to an energy property). See Notice 2018-
59, 2018-28 I.R.B. 196. Components of
property are functionally interdependent
if the placing in service of each compo-
nent is dependent upon the placing in ser-
vice of each of the other components in
order to generate electricity. Functionally-
interdependent components of property
that can be operated and metered together
and can begin producing electricity sep-
arately from other components of prop-
erty within a larger energy project will
be considered an energy property. See Id.
(Section 7.01 of Notice 2018-59 describes
energy property generally and also cites
Rev. Rul. 94-31, 1994-1 C.B. 16.) Energy
property is comprised of all components of
property necessary to generate electricity
up to the point of transmission or distribu-
tion. However, an eligible taxpayer would
have the option, to the extent consistently
applied for purposes of the pre-filing
registration requirements of proposed
§1.6418-4 and the election requirements
of proposed §§1.6418-2 through 1.6418-
3, to make the section 6418 registrations
1
These proposed regulations under section 6418 do not impact the ability of tax-exempt entities to transfer a section 30C credit to the seller of the qualified alternative fuel vehicle refueling
property under section 30C(e)(2).

July 3, 2023 1164 Bulletin No. 2023–27
and election for an energy project, as
defined in forthcoming guidance. See sec-
tion 48(a)(9)(A)(ii).
(10) For the section 48C credit, a tax-
payer would be required to register and
make an election on a property-by-prop-
erty basis. For this purpose, a property
means an “eligible property” as defined in
section 48C(c)(2).
(11) For the section 48E credit, a tax-
payer would be required to register and
make an election on a facility-by-facility
basis if the credit relates to a qualified
investment with respect to a qualified
facility. For this purpose, a facility means
a “qualified facility” as defined in section
48E(b)(3). However, a taxpayer would be
required to register and make an election
with respect to the section 48E credit on
a property-by-property basis if the credit
relates to a qualified investment with
respect to energy storage technology. For
this purpose, a property means a unit of
“energy storage technology” as defined in
section 48E(c)(2).
Proposed §1.6418-1(j) would define
the term “transfer election” as an election
under section 6418(a) of the Code to trans-
fer to a transferee taxpayer a specified por-
tion of an eligible credit determined with
respect to an eligible credit property in
accordance with the section 6418 regula-
tions. This term would be consistent with
the references in section 6418(a) to a tax-
payer “elect[ing] to transfer” and transfer-
ring “all (or any specified portion in the
election)” of an eligible credit.
Also consistent with the language in
section 6418(a) requiring the portion
of the credit transferred to be specified,
proposed §1.6418-1(h) would define a
“specified credit portion” to mean a pro-
portionate share (including all) of an entire
eligible credit determined with respect to
an eligible credit property of the eligible
taxpayer that is specified in a transfer
election. A specified credit portion of an
eligible credit would be required to reflect
a proportionate share of each bonus credit
amount that is taken into account in cal-
culating the entire amount of the eligible
credit determined with respect to a single
eligible credit property. In defining this
term, the Treasury Department and the
IRS considered questions from stakehold-
ers asking whether it is possible to transfer
bonus credit amounts related to an eligible
credit separately from the “base” eligible
credit determined with respect to the rel-
evant eligible credit property. As section
6418 does not contemplate such a transfer,
the proposed regulations would not permit
this type of transfer. Thus, an eligible tax-
payer would not be permitted to divide an
eligible credit from a single eligible credit
property into the portion from the quali-
fied activity or investment credit property
and one or more bonus amounts of the eli-
gible credit. Instead, an eligible taxpayer
would be permitted to transfer the entire
eligible credit (or portion of the entire eli-
gible credit, which would include a pro-
portionate amount of any component part
of the entire eligible credit) determined
with respect to a single eligible credit
property.
Proposed §1.6418-1(p) would define
the term “transferred specified credit por-
tion” to mean the specified credit portion
that is transferred from an eligible tax-
payer to a transferee taxpayer pursuant to
a transfer election.
Section 6418(b)(1) and proposed
§1.6418-2(a)(4)(ii) (disallowing trans-
fer elections for non-cash consideration)
and proposed §1.6418-2(e)(1) (treatment
of payments made in connection with a
transfer election) would require that any
amounts paid by a transferee taxpayer in
connection with the transfer of a specified
credit portion be paid in cash. Proposed
§1.6418-1(f) would define “paid in cash”
as a payment made in United States dol-
lars. The definition of “paid in cash” con-
templates limiting the manner in which
United States dollars may be transferred
in connection with a transfer election to
payments by cash, check, cashier’s check,
money order, wire transfer, ACH trans-
fer, or other bank transfer of immediately
available funds. The proposed regulations
also would provide a safe harbor timing
rule to allow for certainty as to the treat-
ment of such payments of United States
dollars made during a prescribed time
period. The proposed regulations would
provide that a payment does not vio-
late the paid in cash requirement if the
cash payment is made within the period
beginning on the first day of the eligible
taxpayer’s taxable year during which a
specified credit portion is determined and
ending on the due date for completing a
transfer election statement (as provided in
proposed §1.6418-2(b)(5)(iii)). The pro-
posed regulations also address an issue
raised by stakeholders regarding advanced
commitments and would provide that a
contractual commitment to purchase eligi-
ble credits in advance of the date a spec-
ified credit portion is transferred satisfies
the paid in cash requirement, so long as all
cash payments are made during the time
period described in proposed §1.6418-1(f)
(1)(ii).
Proposed §1.6418-1(m) would define
the term “transferee taxpayer” by incor-
porating the requirement in section
6418(a) that an eligible taxpayer only
transfer eligible credits to a taxpayer that
is not related (within the meaning of sec-
tion 267(b) or 707(b)(1)) to the eligible
taxpayer. Thus, the proposed regulations
would define a transferee taxpayer as
any taxpayer that is not related (within
the meaning of section 267(b) or 707(b)
(1) of the Code) to the eligible taxpayer
making the transfer election to which
the eligible taxpayer transfers a speci-
fied credit portion of an eligible credit.
Further, consistent with the proposed defi-
nitions of transferee taxpayer and eligible
taxpayer, proposed §1.6418-1(k), (l), (n),
and (o) would define the terms “transferee
partnership,” “transferee S corporation,”
“transferor partnership,” and “transferor
S corporation,” respectively.
II. Rules for Making Transfer Elections
The rules in proposed §1.6418-2
would describe the general requirements
for making a transfer election, including
clarifying when a transfer election can
be made in certain ownership situations,
situations where no transfer election may
be made, the manner and due date for the
election, limitations related to a transfer
election, the determination of an eligible
credit, the treatment of payments related
to a transfer of eligible credits, and the
treatment of a transferred specified credit
portion by a transferee taxpayer.
A. Transfer elections in general
Proposed §1.6418-2(a) would provide
rules generally applicable to a transfer
election. Consistent with the language in
section 6418(a), the proposed rules would
provide that if a valid transfer election is

Bulletin No. 2023–27 1165 July 3, 2023
made by an eligible taxpayer for any tax-
able year, the transferee taxpayer speci-
fied in such election (and not the eligible
taxpayer) is treated as the taxpayer for
purposes of the Code with respect to the
specified credit portion.
Proposed §1.6418-2(a)(2) would clar-
ify the rule related to multiple transfer
elections. Stakeholders requested clari-
fication on whether an eligible taxpayer
can make multiple elections to transfer
an eligible credit to multiple transferees.
Proposed §1.6418-2(a)(2) would provide
that an eligible taxpayer may make mul-
tiple transfer elections to transfer one or
more specified credit portion(s) to multi-
ple transferee taxpayers, provided that the
aggregate amount of specified credit por-
tions transferred with respect to a single
eligible credit property does not exceed
the amount of the eligible credit deter-
mined with respect to the eligible credit
property. In other words, section 6418
does not, and therefore these proposed
regulations would not, limit the number of
transfer elections or number of transferee
taxpayers for which an eligible taxpayer
can make a transfer election, unless the
transfer of a specified credit portion would
exceed the available eligible credit to be
transferred.
Proposed §1.6418-2(a)(3) would
address when eligible taxpayers are per-
mitted to make a transfer election in cer-
tain ownership situations. The situations
addressed are based on requests from
stakeholders for clarification. Rules are
proposed for disregarded entities, undi-
vided ownership interests, members of a
consolidated group, and partnerships and
S corporations. For a disregarded entity
wholly owned (directly or indirectly) by
an eligible taxpayer, the eligible taxpayer
makes a transfer election. For undivided
ownership interests, if eligible credit
property is directly owned through an
arrangement properly treated as a tenan-
cy-in-common for Federal income tax
purposes, or through an organization that
has made a valid election under section
761(a) of the Code, each co-owner’s or
member’s undivided ownership share
of the eligible credit property will be
treated for purposes of section 6418 as a
separate eligible credit property owned
by such co-owner or member, and each
makes a separate transfer election. For
members of a consolidated group, a mem-
ber is required to make a transfer election.
Finally, for a partnership or S corporation,
with respect to any eligible credit property
held directly by such partnership or S cor-
poration, the partnership or S corporation
makes a transfer election, not the partners
or shareholders.
Proposed §1.6418-2(a)(4) would
describe three circumstances where no
transfer election can be made.
First, consistent with section 6418(g)
(4), the proposed regulations preclude any
election with respect to any amount of an
eligible credit determined based on prog-
ress expenditures that is allowed pursuant
to rules similar to the rules of section 46(c)
(4) and (d) (as in effect on the day before
the date of the enactment of the Revenue
Reconciliation Act of 1990).
Second, the proposed rules would pre-
clude a transfer election when an eligible
taxpayer receives any amount not paid in
cash (as defined in §1.6418-1(f)) as con-
sideration in connection with the trans-
fer of a specified credit portion. Section
6418(b)(1) requires that “any” consider-
ation paid in connection with a transfer
be paid in cash. Thus, if any consideration
is other than cash, the transfer election is
disallowed.
Third, no election is allowed when
eligible credits are not determined with
respect to an eligible taxpayer. As further
explained later in this preamble, an eligi-
ble credit is determined with respect to an
eligible taxpayer in cases where the eli-
gible taxpayer owns the underlying eligi-
ble credit property or, if ownership is not
required, otherwise conducts the activi-
ties giving rise to the underlying eligible
credit. As examples, the proposed regu-
lations describe two situations where a
credit is allowable to an eligible taxpayer,
but the eligible taxpayer is not permitted
to transfer the credit under section 6418.
First, the proposed regulations provide
that a section 45Q credit allowable to a
person that disposes of qualified carbon
oxide, utilizes qualified carbon oxide, or
uses qualified carbon oxide as a tertiary
injectant due to an election made under
section 45Q(f)(3)(B) is not transferable
under section 6418. Second, the proposed
regulations provide that a section 48 credit
allowable to a lessee of property under
section 50(d)(5) and an election under
§1.48-4 is not transferable under section
6418. In both cases, the taxpayer is only
allowed to claim the credit as a result of an
election by another taxpayer, and does not
own the eligible credit property to which
the credit was determined. These situa-
tions can be contrasted with a sale-lease-
back transaction under section 50(d)(4)
where a purchaser/lessor of investment
credit property owns the underlying prop-
erty to which an eligible credit is deter-
mined. In that case, provided all of the
rules are met, because the eligible credit is
determined with respect to eligible credit
property owned and treated as originally
placed in service by the purchaser/lessor,
the purchaser/lessor can elect to transfer
eligible credits determined with respect to
the property under section 6418.
B. Manner and due date of making a
transfer election
Section 6418(a) allows an eligible
taxpayer to transfer an eligible credit (or
portion thereof) determined with respect
to such taxpayer to a transferee taxpayer.
Generally, section 6418 does not expressly
provide for the relevant unit of measure-
ment for an election to transfer eligible
credits. Proposed §1.6418-2(b) would
provide generally that an eligible taxpayer
is required to make a transfer election to
transfer a specified credit portion on the
basis of a single eligible credit property.
For example, an eligible taxpayer that
determines eligible credits with respect
to two eligible credit properties would
need to make a separate transfer election
with respect to any specified credit por-
tion determined with respect to each eligi-
ble credit property. This approach would
provide eligible taxpayers with flexibility
in determining the credit to transfer and
aligns with how an excessive credit trans-
fer is defined in section 6418(g)(2)(C).
In requiring the election to be made
on the basis of a single eligible credit
property, the Treasury Department and
the IRS request comments on two issues.
First, whether more specific guidance
with respect to any eligible credit prop-
erty is needed to allow eligible taxpayers
to make the election as required. If such
guidance is needed, suggestions for fur-
ther defining the relevant eligible credit
property are requested. Second, whether

July 3, 2023 1166 Bulletin No. 2023–27
to adopt a grouping rule that allows tax-
payers to make an election with respect to
certain groups of eligible credit properties.
If such a rule is recommended, discussion
of the eligible credits that a rule should
apply to, the appropriate circumstances
for grouping, as well as specific rules for
determining a group with respect to an eli-
gible credit is requested.
Consistent with section 6418(f)(1)(B)
(i), proposed §1.6418-2(b)(2) would pro-
vide specific rules in the case of any sec-
tion 45 credit, section 45Q credit, section
45V credit, or section 45Y credit that is an
eligible credit. The proposed rules would
provide that a transfer election is made
with respect to each eligible credit prop-
erty for which an eligible credit is deter-
mined. Consistent with section 6418(f)
(1)(B)(ii), the proposed rules also would
provide that a transfer election would
be required to be made for each taxable
year an eligible taxpayer elects to trans-
fer a specified credit portion with respect
to such eligible credit property during
the 10-year period beginning on the date
such eligible credit property was origi-
nally placed in service (or, in the case of
a section 45Q credit, for each taxable year
during the 12-year period beginning on
the date the eligible credit property was
originally placed in service).
Proposed §1.6418-2(b)(3) would pro-
vide the manner of making a valid transfer
election. Stakeholders asked for clarity
regarding the manner of making a valid
election and provided suggestions for
how an election should be effectuated
and potential information to be included.
Proposed §1.6418-2(b)(3) outlines the
requirements for making a transfer elec-
tion for eligible taxpayers other than part-
nerships or S corporations (those rules
are in proposed §1.6418-3(d)). While
described in more detail in the proposed
regulations, to make a valid transfer elec-
tion, an eligible taxpayer as part of filing
a return (or a return for a short year within
the meaning of section 443 of the Code
(short year return)), generally would be
required to include the following—(A) a
properly completed relevant source credit
form for the eligible credit; (B) a properly
completed Form 3800, General Business
Credit (or its successor), including report-
ing the registration number received
during the required pre-filing registration
(as described in proposed §1.6418-4); (C)
a schedule attached to the Form 3800 (or
its successor) showing the amount of eli-
gible credit transferred for each eligible
credit property; (D) a transfer election
statement as described later in this pream-
ble; and (E) any other information related
to the election specified in guidance (as
defined in proposed §1.6418-1(e)).
A transfer election statement is
described in proposed §1.6418-2(b)(5)
and would be generally defined as a writ-
ten document that describes the transfer
of a specified credit portion between an
eligible taxpayer and transferee taxpayer.
Election statements are used in similar
situations to a transfer election under sec-
tion 6418 (for example, an election under
section 50(d)(5) and §1.48-4, section 45G,
or section 45J all require a written docu-
ment between the parties). A transfer elec-
tion statement that is completed by both
the eligible taxpayer and the transferee
taxpayer would be necessary to allow the
transferee taxpayer the opportunity to file
a return without needing to wait for the
eligible taxpayer to file. A transfer elec-
tion statement, which is described in more
detail in the proposed regulations, would
be required to generally include (1) infor-
mation related to the transferee taxpayer
and the eligible taxpayer; (2) a statement
that provides the necessary information
and amounts to allow the transferee tax-
payer to take into account the specified
credit portion with respect to the eligible
credit property; (3) a statement that the
parties are not related (within the meaning
of section 267(b) or 707(b)(1)); (4) a rep-
resentation from the eligible taxpayer that
it has complied with all relevant require-
ments to make a transfer election; (5) a
statement from the eligible taxpayer and
the transferee taxpayer acknowledging
the notification of recapture requirements
under section 6418(g)(3) and the section
6418 regulations (if applicable); and (6) a
statement or representation from the eligi-
ble taxpayer that the eligible taxpayer has
provided the required minimum documen-
tation to the transferee taxpayer. Required
minimum documentation is specified in
proposed §1.6418-2(b)(3)(iv). Required
minimum documentation would be the
minimum documentation that the eligible
taxpayer is required to provide to a trans-
feree taxpayer, and is more fully described
in the proposed regulations, but is gener-
ally documentation to validate the exis-
tence of the eligible credit property, any
bonus credits amounts, and the evidence
of credit qualification. This requirement is
consistent with a stakeholder suggestion
that such information should be required
to be provided by the eligible taxpayer.
Proposed §1.6418-2(b)(5)(v) would spec-
ify that a transferee taxpayer, consistent
with §1.6001-1(e), would be required to
retain the requirement minimum docu-
mentation provided by the eligible tax-
payer so long as the contents thereof may
become material in the administration of
any internal revenue law.
Proposed §1.6418-2(b)(5)(iii) would
provide a rule on the timing of the trans-
fer election statement. The proposed rule
generally allows a transfer election state-
ment to be completed any time after the
eligible taxpayer and transferee taxpayer
have sufficient information to prepare a
transfer election statement. However, a
transfer election statement cannot be com-
pleted for any taxable year after the earlier
of (A) the filing of the eligible taxpayer’s
return for the taxable year for which the
specified credit portion is determined with
respect to the eligible taxpayer, or (B)
the filing of the return of the transferee
taxpayer for the year in which the speci-
fied credit portion is taken into account.
This proposed rule is intended to provide
flexibility but places an outer limit on the
timing of the transfer election statement
because both the eligible taxpayer and the
transferee taxpayer would be required to
include a transfer election statement as
part of filing a return, and therefore, the
transfer election statement would need to
be completed before a return is filed by
either party.
Consistent with section 6418(e)(1),
proposed §1.6418-2(b)(4) would provide
that an election to transfer any specified
credit portion would need to be made not
later than the due date (including exten-
sions) for the tax return for the taxable
year for which the eligible credit is deter-
mined. The proposed regulations would
also clarify that an election would need
to be filed on an original return and may
not be made or revised on an amended
return or by filing a request for an admin-
istrative adjustment under section 6227
of the Code. An original return includes

Bulletin No. 2023–27 1167 July 3, 2023
a superseding return filed on or before
the due date (including extensions). The
proposed regulations would also provide
that there is no relief available under
§§ 301.9100-1 through 301.9100-3 for a
late transfer election.
C. Limitations on the election
Proposed §1.6418-2(c) would include
rules that describe certain limitations
with respect to making an election under
section 6418. First, consistent with sec-
tion 6418(e)(1), the proposed regulations
would provide that once made, an election
to transfer an eligible credit is irrevocable.
Second, consistent with section 6418(e)
(2), the proposed regulations would pro-
hibit a transferee taxpayer of any speci-
fied credit portion from making a second
transfer under section 6418 with respect to
any amount of such transferred credit.
Stakeholders asked whether a
passthrough transferee taxpayer that
allocates purchased eligible credits to its
direct or indirect owners violates the no
second transfer rule in section 6418(e)(2).
An allocation of a transferred specified
credit portion to a direct or indirect owner
of a passthrough entity would not be con-
sidered a transfer under section 6418. As a
result, an allocation of a transferred spec-
ified credit portion to a direct or indirect
owner of a passthrough transferee tax-
payer does not violate the no second trans-
fer rule in section 6418(e)(2). However,
certain rules would apply to allocations of
a transferred specified credit portion from
passthrough entities as further described
in proposed §1.6418-3.
Stakeholders also inquired whether
eligible credits can be transferred through
dealer arrangements. Any arrangement
where the Federal income tax ownership
of a specified credit portion transfers first,
from an eligible taxpayer to a dealer or
intermediary and then, ultimately, to a
transferee taxpayer is in violation of the no
second transfer rule in section 6418(e)(2).
In contrast, an arrangement using a broker
to match eligible taxpayers and transferee
taxpayers should not violate the no second
transfer rule, assuming the arrangement at
no point transfers the Federal income tax
ownership of a specified credit portion to
the broker or any taxpayer other than the
transferee taxpayer.
D. Determining the eligible credit
Proposed §1.6418-2(d) would pro-
vide rules to clarify how to determine
the amount of an eligible credit that is
transferable. Any rules that relate to the
determination of an eligible credit, such
as rules in sections 49 and 50(b), would
apply to the eligible taxpayer and there-
fore can limit the amount of transferable
eligible credits determined with respect
to a single eligible credit property owned
by the eligible taxpayer. Section 6418(a)
states that an eligible taxpayer can elect to
transfer all (or any portion specified in the
election) of an eligible credit determined
with respect to such eligible taxpayer.
The inclusion of the word “determined”
is instructive, and the proposed regula-
tions would draw a distinction between
rules that impact the amount of credit
determined or the credit base (and thus,
the amount of eligible credit that can be
transferred) versus rules that impact a
taxpayer’s ability to claim a particular eli-
gible credit against its tax liability. Rules
that impact the ability of a taxpayer to
claim a particular eligible credit against
its tax liability do not limit the amount of
an eligible credit that an eligible taxpayer
can transfer. Providing a limitation based
on an eligible taxpayer’s ability to claim
an eligible credit would undercut one of
the purposes of section 6418, which is to
provide an alternative monetization mech-
anism to eligible taxpayers that would be
unable to utilize credits in the current tax-
able year.
As previously stated, section 49 gen-
erally impacts the amount of a credit
determined with respect to an investment
credit property that an eligible taxpayer
can transfer. The proposed regulations
would provide rules for the application of
section 49 to a partnership or S corpora-
tion that is an eligible taxpayer and elects
under section 6418 to transfer an eligible
credit (a transferor partnership or trans-
feror S corporation). The proposed regu-
lations would provide that any amount of
eligible credit determined with respect to
investment credit property held directly
by a transferor partnership or transferor S
corporation (or held directly by an entity
disregarded as separate from such trans-
feror partnership or transferor S corpo-
ration) is determined by the transferor
partnership or transferor S corporation
by taking into account the section 49
at-risk rules at the partner or shareholder
level as of the close of the taxable year in
which the investment credit property is
placed in service. Thus, if the credit base
of the investment credit property is lim-
ited to a partner or shareholder by sec-
tion 49, then the amount of the eligible
credit determined by the transferor part-
nership or transferor S corporation is also
limited. The proposed regulations would
provide that a transferor partnership
or transferor S corporation that trans-
fers any specified credit portion with
respect to an investment credit property
must request from each of its partners or
shareholders, respectively, that is sub-
ject to section 49, the amount of such
partner’s or shareholder’s nonqualified
nonrecourse financing with respect to the
investment credit property as of the close
of the taxable year in which the prop-
erty is placed in service. Additionally,
the transferor partnership or transferor
S corporation would attach to its tax
return for the taxable year in which the
property is placed in service, the amount
of each partner’s or shareholder’s sec-
tion 49 limitation with respect to any
specified credit portion transferred with
respect to the investment credit property.
The Treasury Department and the IRS
request comments as to whether (1) any
information or reporting requirements
are needed for transferor partnerships or
transferor S corporations to apply these
rules when determining the amount of
an eligible credit that can be transferred
or (2) any additional clarifications are
needed regarding how the at-risk rules
apply to the determination of an eligible
credit by an eligible taxpayer.
E. Treatment of payments made in
connection with transfer
Proposed §1.6418-2(e) would include
rules to clarify the treatment of payments
made by a transferee taxpayer to an eligi-
ble taxpayer in connection with the trans-
fer of an eligible credit. The proposed
regulations relate to the rules provided in
section 6418(b)(1) through (3) and include
a rule clarifying when a payment is con-
sidered to be made in connection with a
transfer election.

July 3, 2023 1168 Bulletin No. 2023–27
Proposed §1.6418-2(e)(1) would pro-
vide that an amount paid by a transferee
taxpayer to an eligible taxpayer is con-
sideration for a transfer of a specified
credit portion only if it is paid in cash (as
defined in §1.6418-1(f)), directly relates
to the specified credit portion, and is not
described in §1.6418-5(a)(3) (describing
payments related to an excessive credit
transfer). These proposed rules would pro-
vide objective criteria for eligible taxpayers
and transferee taxpayers that seek certainty
as to the timing of payments and acceptable
forms of payment. General tax rules apply
to any payments made or received outside
of the requirements described in proposed
§1.6418-2(e)(1). Additionally, the require-
ments of proposed §1.6418-2(e)(1) would
not be satisfied where a specified credit
portion is not ultimately transferred to a
transferee taxpayer.
Pursuant to section 6418(b), the pro-
posed regulations also include rules that
would clarify that amounts paid in connec-
tion with a transfer election by a transferee
taxpayer are not includible in the gross
income of an eligible taxpayer and are not
deductible by the transferee taxpayer.
In addition to these rules, the proposed
regulations would include an anti-abuse
provision. The intent of the anti-abuse
provision is to disallow the election and
transfer of an eligible credit under sec-
tion 6418, or otherwise recharacterize a
transaction’s income tax consequences,
in circumstances where the parties to the
transaction have engaged in the transac-
tion or a series of transactions with the
principal purpose of avoiding tax lia-
bility beyond the intent of section 6418.
This could include transactions that are
intended to decrease the eligible taxpay-
er’s gross income or increase a transferee
taxpayer’s deductions. For example, a
transaction where an eligible taxpayer
undercharges or overcharges for services
to a customer who is also purchasing cred-
its from the eligible taxpayer as a trans-
feree taxpayer may violate the anti-abuse
rule. The proposed regulations include
two examples to illustrate application of
the anti-abuse rule.
The proposed regulations do not
address (1) the Federal income tax treat-
ment of transaction costs, either for the eli-
gible taxpayer or the transferee taxpayer,
and (2) whether a transferee taxpayer is
permitted to deduct a loss if the amount
paid to an eligible taxpayer exceeds the
amount of the eligible credit that the trans-
feree taxpayer can ultimately claim. The
Treasury Department and the IRS are cur-
rently developing rules on these general
issues and seek comments as part of that
process. Any comments should also con-
sider the specific matters described in the
following paragraphs.
Generally, gain or loss is recognized on
the sale or other disposition of property.
See section 1001 of the Code. If a seller
incurs costs to facilitate the sale of prop-
erty, such costs are generally required to
be capitalized and reduce the amount real-
ized from the sale. See §1.263(a)-1(e). If a
buyer incurs costs to facilitate the acquisi-
tion of property (for example, legal fees to
draft the purchase agreement), such costs
are generally required to be capitalized and
included in the basis of property acquired.
See, for example, §§1.263(a)-2(f)(1) and
1.263(a)-4(b)(1)(v).
It is a longstanding principle that courts
should construe Federal tax laws in har-
mony with the legislative intent and seek
to carry out the legislative purpose. Foster
v. U.S., 303 U.S. 118 (1938). Furthermore,
it is a well-established principle of statu-
tory interpretation that a tax law should not
be interpreted to allow the practical equiv-
alent of a double benefit absent a clear
declaration of intent by Congress (no dou-
ble benefit principle). See generally U.S. v.
Skelly Oil Co. 394 U.S. 678, 684 (1969);
cf. Hillsboro Nat. Bank v. Commissioner,
460 U.S. 370 (1983). A double tax benefit
could arise in situations of a double deduc-
tion, a deduction and a credit, a credit or a
deduction from amounts that are excluded
from gross income, or credits from expen-
ditures made to generate other credits.
Cf. Hintz v. Commissioner, 712 F2d 281
(7th Cir. 1983); section 265, Expenses and
Interest Relating to Tax-Exempt Income;
S/V Drilling Partners v. Commissioner—
Section 6418 provides specific rules
that explicitly or implicitly supersede cer-
tain general Federal income tax rules in
whole or in part. Accordingly, the Treasury
Department and the IRS must consider not
only the application of specific provisions
of section 6418 but also other applicable
provisions of the Code when develop-
ing rules on the general issues described
previously.
With respect to an eligible taxpayer,
section 6418(b)(2) provides that any con-
sideration received from a transferee tax-
payer for the transfer of an eligible credit
(or portion thereof) is not includible in
gross income of the eligible taxpayer.
Section 6418(c)(1)(A) provides that in the
case of any eligible credit determined with
respect to any facility or property held
directly by a partnership or S corporation,
any amount received as consideration for
the transfer of such credit is treated as tax
exempt income for purposes of sections
705 and 1366. In developing the rules
applicable to transaction costs of an eligi-
ble taxpayer, it will be necessary to deter-
mine, among other things, whether (1) the
no double benefit principle applies and, if
so, how it should apply, and (2) the capi-
talization rules of section 263 and the reg-
ulations thereunder apply and, if so, how
they interact with the rules under section
6418(b)(2) and (c)(1)(A).
With respect to a transferee taxpayer,
as described herein, the proposed regula-
tions would provide that there is no gross
income to a transferee taxpayer when
claiming an eligible credit if the amount
paid for the eligible credit is less than the
amount of the eligible credit transferred
and claimed (transferee gross income
exclusion rule). Similar to the develop-
ment of rules for transaction costs of an
eligible taxpayer, in developing the rules
applicable to transaction costs of a trans-
feree taxpayer, it will be necessary to
determine, among other things, whether
(1) the no double benefit principle applies
and, if so, how it should apply, and (2) the
capitalization rules of section 263 and the
regulations thereunder apply and, if so,
how they interact with the transferee gross
income exclusion rule in the proposed
regulations.
Also, with respect to a transferee tax-
payer, section 6418(b)(3) provides that
any consideration paid to the eligible tax-
payer for an eligible credit is not deduct-
ible under any provision of the Code.
However, it is not clear whether the “not
deductible” language in section 6418(b)
(3) should be read to preclude capitaliza-
tion of the consideration paid to the eligi-
ble taxpayer (for example, under section
263). Therefore, it will be necessary for
the Treasury Department and the IRS to
determine whether the capitalization rules

Bulletin No. 2023–27 1169 July 3, 2023
of section 263 and the regulations there-
under apply to a transferee taxpayer and,
if so, how they should apply. It will also be
necessary to interpret the scope of section
6418(b)(3) and resolve whether it pre-
cludes a deduction for any amount of con-
sideration paid that is otherwise deductible
as a loss under section 165 (for example,
where the amount of consideration paid
exceeds the amount of the credit the trans-
feree taxpayer can ultimately claim).
F. Transferee taxpayer’s treatment of an
eligible credit
Proposed §1.6418-2(f) would provide
rules describing the transferee taxpayer’s
treatment of a transferred specified credit
portion. Stakeholders sought clarification
of whether a transferee taxpayer has a
choice of which year to take an eligible
credit into account. Section 6418(d) pro-
vides that in the case of any eligible credit
transferred to a transferee taxpayer pursu-
ant to a transfer election, the eligible credit
is taken into account in the first taxable year
of the transferee taxpayer ending with, or
after, the taxable year of the eligible tax-
payer with respect to which the credit was
determined. This language prescribes the
specific year the transferee taxpayer takes
the transferred eligible credit into account.
Therefore, no clarification is needed. To
the extent the taxable years of an eligible
taxpayer and a transferee taxpayer end
on the same date, the transferee taxpayer
will take the specified credit portion into
account in that taxable year. To the extent
the taxable years of an eligible taxpayer
and a transferee taxpayer end on different
dates, the transferee taxpayer will take the
specified credit portion into account in the
transferee taxpayer’s first taxable year that
ends after the taxable year of the eligible
taxpayer. Consistent with this rule, the
transferee taxpayer may claim a specified
credit portion on an amended return or, if
applicable, a request for administrative
adjustment. A transferee taxpayer may
also take into account a specified credit
portion that it has purchased, or intends to
purchase, when calculating its estimated
tax payments, though the transferee tax-
payer remains liable for any additions to
tax in accordance with sections 6654 and
6655 to the extent the transferee taxpayer
has an underpayment of estimated tax.
Stakeholders also asked whether there
are any income tax consequences to a
transferee taxpayer if the amount paid for
an eligible credit is less than the amount of
the eligible credit transferred and claimed.
As described earlier, the proposed regula-
tions would clarify this issue by providing
that there is no gross income to a trans-
feree taxpayer when claiming an eligible
credit if the amount paid for the eligible
credit is less than the amount of the eligi-
ble credit transferred and claimed. Under
section 6418(a), a transferee taxpayer is
treated as the eligible taxpayer for other
purposes of the Code with respect to a
transferred eligible credit. An eligible tax-
payer would not have gross income as a
result of claiming an eligible credit. As
such, a transferee taxpayer also should not
have gross income as a result of claiming
a transferred eligible credit.
The proposed regulations would also
describe the effect of the language in
section 6418(a), which provides that the
transferee taxpayer specified in an elec-
tion (and not the eligible taxpayer) is
treated as the taxpayer for purposes of
the Code with respect to such credit (or
such portion thereof). Consistent with an
eligible credit being determined based
on ownership of the underlying eligible
credit property by an eligible taxpayer,
or, if ownership is not required, based on
conducting the activities giving rise to the
eligible credit, the proposed regulations
would provide that a transferee taxpayer
does not also apply rules that relate to the
determination of an eligible credit, such as
rules in section 49 or 50(b) as described
in proposed §1.6418-2(d)(1). However, a
transferee taxpayer would apply rules that
relate to the amount of a transferred eli-
gible credit that is allowed to be claimed
in the taxable year based on a transferee’s
particular circumstances, such as the rules
in section 38 or 469.
Consistent with applying credit utili-
zation rules to transferee taxpayers, the
proposed regulations would provide a rule
that a transferred specified credit portion
is treated as earned in connection with the
conduct of a trade or business, and, if appli-
cable, such transferred specified credit
portion is subject to the passive activity
limitation rules in section 469. However, a
transferee taxpayer (or a direct or indirect
owner of a transferee taxpayer that claims
a transferred specified credit portion) that
is subject to section 469 is not, as a result
of a transfer election, considered to have
owned an interest in the eligible taxpay-
er’s business at the time the work was
done (as required for material participa-
tion in §1.469-5(f)(1)) and cannot change
the characterization of the transferee tax-
payer’s participation with respect to gen-
eration of the transferred specified credit
portion by using any of the grouping rules
in §1.469-4(c). This proposed rule would
be consistent with the result that the trans-
feree taxpayer does not apply rules that
relate to the determination of an eligible
credit because the transferee does not own
the underlying eligible credit property to
which the credit is determined or conduct
the activity directly. Further, allowing a
transferee taxpayer to try to change the
characterization of an eligible credit based
on grouping with its own activities under
§1.469-4(c) would conflict with the con-
clusion that the eligible credit has already
been determined. In contrast, an eligible
credit generated through the conduct of a
trade or business does not lose such attri-
bute through a transfer under section 6418
for purposes of determining whether a
transferee taxpayer is allowed the credit.
Likewise, a section 38 business credit
does not become an individual (non-busi-
ness) credit if transferred to an individual.
If such attributes did not transfer under
section 6418, eligible credits earned and
used by eligible taxpayers would be sub-
ject to different limitations than trans-
ferred eligible credits used by transferee
taxpayers. The impact of this rule for a
transferee taxpayer that is subject to sec-
tion 469 is that such transferee taxpayer
will be considered to earn eligible credits
through the conduct of a trade or business
related to the eligible credit but will not
materially participate in such business for
purposes of section 469. Thus, a transferee
taxpayer subject to section 469 would be
required to treat the credits making up the
specified credit portion as passive activity
credits (as defined in section 469(d)(2))
to the extent the specified credit portion
exceeds passive tax liability. The Treasury
Department and the IRS request com-
ments on whether there are circumstances
in which it would be appropriate to not
apply the passive activity rules under
section 469 to a transferee taxpayer or to

July 3, 2023 1170 Bulletin No. 2023–27
attribute the participation of an eligible
taxpayer to a transferee taxpayer.
Lastly, proposed §1.6418-2(f)(4)
would provide rules for how a transferee
taxpayer can take into account a trans-
ferred specified credit portion. Section
6418(d) provides the taxable year that a
transferee taxpayer takes a transferred
eligible credit into account but does not
provide further procedures applicable to
a transferee taxpayer. In determining the
proposed procedures, consideration was
given to the requirements for any taxpayer
when taking into account a general busi-
ness credit, with additional information
required that is necessary for tracking
the transfer of specified credit portions.
The proposed rules would provide that
in order for a transferee taxpayer to take
into account a specified credit portion,
the transferee taxpayer would be required
to include certain information as part of
filing a return (or short year return). The
proposed regulations would require (A) a
properly completed Form 3800, General
Business Credit (or its successor), taking
into account a transferred eligible credit as
a current general business credit, includ-
ing all registration number(s) related to
the transferred eligible credit; (B) the
transfer election statement described ear-
lier in this preamble attached to the return;
and (C) any other information related to
the transfer election specified in guidance.
III. Partnerships and S corporations
A. Overview
The proposed regulations would pro-
vide general rules related to transfers
of eligible credits by transferor partner-
ships and transferor S corporations and
purchases of eligible credits by trans-
feree partnerships and transferee S cor-
porations. As a preliminary matter, the
proposed regulations would clarify that
a partnership or an S corporation may
qualify as an eligible taxpayer or a trans-
feree taxpayer, assuming all other relevant
requirements in section 6418 are met. The
proposed regulations would also clar-
ify that the language in section 6418(c)
requiring an eligible credit property to be
“held directly” by a transferor partnership
or transferor S corporation allows for such
eligible credit property to be owned by an
entity disregarded as separate from the
transferor partnership or transferor S cor-
poration for Federal income tax purposes.
In addition, the proposed regulations
would clarify that any tax exempt income
resulting from the receipt of consideration
for the transfer of a specified credit por-
tion by a transferor partnership or trans-
feror S corporation is treated as arising
from an investment activity and not from
the conduct of a trade or business within
the meaning of section 469(c)(1)(A). As
a result, such tax exempt income is not
treated as passive income to any partners
or shareholders who do not materially
participate within the meaning of sec-
tion 469(c)(1)(B). Because a transfer of a
specified credit portion does not involve
the transfer of any assets used in a trade
or business, it is more appropriate to treat
any tax exempt income resulting from
the transfer as arising from an investment
activity.
B. Special recapture rules for transferor
partnerships and S corporations
Stakeholders requested clarification on
whether indirect disposition events result
in recapture of transferred investment tax
credits to a transferee taxpayer under sec-
tion 6418(g)(3)(B). Section 1.47-4(a)(2)
provides that if an S corporation share-
holder’s interest in an S corporation is
reduced as a result of certain events during
the recapture period by a certain percent-
age of the shareholder’s interest for the
taxable year of the S corporation in which
the investment credit property is placed
in service, recapture can occur to such S
corporation shareholder. Likewise, §1.47-
6(a)(2) provides that if a partner’s interest
in the general profits of a partnership is
reduced as a result of certain events during
the recapture period by a certain percent-
age of the partner’s interest in general
profits for the taxable year of the partner-
ship in which the investment credit prop-
erty is placed in service, recapture can
occur to such partner. As explained later in
part V of this Explanation of Provisions,
the proposed regulations would provide
generally that if an applicable investment
credit property is disposed of, or other-
wise ceases to be investment credit prop-
erty with respect to the eligible taxpayer, a
transferee taxpayer bears the recapture tax
associated with any transferred eligible
investment tax credit transferred to such
transferee taxpayer.
The recapture events described in
§§1.47-4(a)(2) and 1.47-6(a)(2) are appli-
cable with respect to the specific share-
holder or partner to which the recapture
event occurs and not with respect to the
transferor S corporation or transferor part-
nership. As a result, such recapture events
should not result in recapture of a trans-
ferred eligible investment tax credit to a
transferee taxpayer under section 6418(g)
(3)(B). Instead, the recapture tax liability
resulting from the reduction of an S corpo-
ration shareholder’s interest or a partner’s
interest in general profits should continue
to result in recapture to the applicable
disposing shareholder or partner. The
proposed regulations would clarify that
“indirect” dispositions under §§1.47-4(a)
(2) and 1.47-6(a)(2) do not result in recap-
ture tax liability to a transferee taxpayer
under section 6418. Instead, these rules
continue to apply to a disposing partner
or shareholder in a transferor partnership
or transferor S corporation, respectively.
Any recapture to a disposing partner is
calculated based on the partner’s share of
the basis (or cost) of the section 38 prop-
erty to which the eligible credits were
determined in accordance with §1.46-3(f).
Any recapture to a disposing shareholder
is calculated based on the shareholder’s
pro rata share of the basis (or cost) of the
section 38 property to which the eligible
credits were determined in accordance
with §1.48-5.
The Treasury Department and the IRS
request comments on whether additional
rules or clarifications are needed with
respect to how the indirect disposition
recapture rules under §§1.47-6(a)(2) and
1.47-4(a)(2) apply to partners or share-
holders in transferor partnerships or trans-
feror S corporations, respectively.
As previously stated, the proposed reg-
ulations would provide that any amount of
eligible credit determined with respect to
investment credit property held directly
by a partnership or S corporation would be
required to be determined by the partner-
ship or S corporation taking into account
the section 49 at-risk rules at the partner
or shareholder level as of the close of
the taxable year in which the investment
credit property is placed in service. The

Bulletin No. 2023–27 1171 July 3, 2023
proposed regulations also would provide
that any net increase in the amount of non-
qualified nonrecourse financing during the
recapture period for a partner or share-
holder in a transferor partnership or trans-
feror S corporation with respect to such
partner’s or shareholder’s credit base for
a transferred eligible investment tax credit
does not result in recapture to a trans-
feree taxpayer under section 6418(g)(3).
Similar to the indirect disposition recap-
ture rules described above, the recapture
rules under section 49(b) for partners or
shareholders in a transferor partnership or
transferor S corporation apply with respect
to a disposition or change in financing at
the partner or shareholder level and not at
the eligible taxpayer (i.e., the partnership
or S corporation) level. As such, these
rules would continue to apply to partners
or shareholders in transferor partnerships
or transferor S corporations that increase
their nonqualified nonrecourse financing
amount during the recapture period. Any
recapture to a disposing partner is calcu-
lated based on the partner’s share of the
basis (or cost) of the section 38 property
to which the eligible credits were deter-
mined in accordance with §1.46-3(f).
Any recapture to a disposing shareholder
is calculated based on the shareholder’s
pro rata share of the basis (or cost) of the
section 38 property to which the eligible
credits were determined in accordance
with §1.48-5.
The Treasury Department and the IRS
request comments on whether additional
rules or clarifications are needed with
respect to how the recapture rules under
section 49(b) apply to partners or share-
holders in transferor partnerships or trans-
feror S corporations. As a clarification,
recapture under section 49(b) applicable
directly to an eligible taxpayer (for exam-
ple, to an eligible taxpayer that is an indi-
vidual) results in recapture to a transferee
taxpayer under section 6418(g)(3).
The proposed regulations would
also provide that any net decrease in
the amount of nonqualified nonrecourse
financing during the recapture period
with respect to a partner’s or sharehold-
er’s credit base for a transferred specified
credit portion determined with respect
to investment credit property does not
result in additional eligible credit that can
be transferred by the applicable partner,
shareholder or transferor partnership or
transferor S corporation. Instead, any
net decrease in the amount of nonquali-
fied nonrecourse financing and resulting
increase in the credit base to a partner or
shareholder results in additional invest-
ment tax credit that can be used by the
applicable partner or shareholder. The
Treasury Department and the IRS request
comments on whether additional rules
or clarifications are needed with respect
to how decreases in nonqualified nonre-
course amounts under section 49(a)(2)
that increase the credit base for which eli-
gible credits have previously been trans-
ferred apply to partners or shareholders
in a transferor partnership or transferor S
corporation, respectively.
C. Rules solely applicable to transferor
and transferee partnerships
The proposed regulations include spe-
cial rules applicable to transferor and
transferee partnerships and their direct and
indirect partners. Section 6418(c)(1)(A)
provides that any amount received as con-
sideration for a transfer of eligible credits
by a transferor partnership is treated as tax
exempt income for purposes of section
705. Section 6418(c)(1)(B) provides that
a partner’s distributive share of such tax
exempt income is based on such partner’s
distributive share of the otherwise eligible
credit for each taxable year. Stakeholders
asked for clarity as to how this determina-
tion should be made.
The proposed regulations would pro-
vide generally that a partner’s distributive
share of tax exempt income resulting from
the receipt of cash by a transferor part-
nership for a transferred specified credit
portion is based on the partner’s propor-
tionate distributive share of the other-
wise eligible credit as determined under
§§1.46-3(f) and 1.704-1(b)(4)(ii). The
proposed regulations further clarify that
any tax exempt income resulting from the
receipt of cash by a transferor partnership
for a transferred specified credit portion is
treated as received or accrued, including
for purposes of section 705, as of the date
the specified credit portion is determined
with respect to the transferor partner-
ship. In effect, this means that tax exempt
income resulting from the receipt of cash
by a transferor partnership in exchange
for a transferred specified credit portion
should be allocated to the same partners
and in the same proportionate amount, as
the specified credit portion would have
been allocated if not transferred.
The proposed regulations would pro-
vide a special rule for allocations of tax
exempt income resulting from a transfer
of a specified credit portion of less than all
eligible credit(s) determined with respect
to an eligible credit property held by a
transferor partnership. This special rule
permits tax exempt income resulting from
the receipt of cash for a transfer of one
or more specified credit portion(s) of less
than all eligible credits from an eligible
credit property to, generally, be allocated
to those partners that desired to transfer
their distributive share of the underlying
credits. To take advantage of this special
rule, a transferor partnership would first
determine each partner’s distributive share
of the otherwise eligible credits determined
with respect to such eligible credit prop-
erty in accordance with §§1.46-3(f) and
1.704-1(b)(4)(ii). This amount is referred
to as a “partner’s eligible credit amount.”
Thereafter, the transferor partnership may
determine, either in a manner described in
the partnership agreement or as the partners
may agree, the portion of each partner’s
eligible credit amount to be transferred and
the portion of each partner’s eligible credit
amount to be retained and allocated to
such partner. Following the transfer of the
specified credit portion(s), the transferor
partnership may allocate to each partner its
agreed upon share of eligible credits, tax
exempt income resulting from the receipt
of consideration for the transferred speci-
fied credit portion(s), or both, as the case
may be; provided that, the amount of eli-
gible credits allocated to each partner may
not exceed such partner’s eligible credit
amount and the amount of tax exempt
income allocated to each partner would
equal such partner’s proportionate share of
tax exempt income resulting from the trans-
fer(s). Each partner’s proportionate share
of tax exempt income resulting from the
transfer(s) is equal to the total tax exempt
income resulting from the transfer(s) of
the specified credit portion(s) multiplied
by a fraction, (i) the numerator of which
is a partner’s total eligible credit amount
minus the amount of eligible credits actu-
ally allocated to the partner with respect to

July 3, 2023 1172 Bulletin No. 2023–27
the eligible credit property for the taxable
year, and (ii) the denominator of which is
the total amount of the specified credit por-
tion(s) transferred by the partnership with
respect to the eligible credit property for
the taxable year. The proposed regulations
provide examples of this rule.
The Treasury Department and the IRS
request comments on whether additional
rules or clarifications are needed with
respect to when allocations of tax exempt
income and eligible credits under sec-
tion 6418 will be respected under section
704(b).
The proposed regulations would clar-
ify that a partnership that is an indirect or
direct partner of a transferor partnership
(an upper-tier partnership) is not an eli-
gible taxpayer with respect to an eligible
credit allocated by a transferor partner-
ship. The proposed regulations also would
clarify that for any tax exempt income
allocated to an upper-tier partnership as
a result of the receipt of consideration
for a transfer of a specified credit portion
by a transferor partnership, the upper-tier
partnership would determine its partners’
distributive shares of the tax exempt
income in proportion to the partners’ dis-
tributive shares of the otherwise eligible
credit. In effect, this means that the upper-
tier partnership would allocate any tax
exempt income resulting from a transfer
of a specified credit portion by a lower-tier
partnership among its partners as of the
same time, and in the same proportionate
amount, as the eligible credit would have
been allocated if not transferred by the
transferor partnership.
Stakeholders asked for confirmation
that cash payments received by a trans-
feror partnership as consideration for
a transfer of eligible credits can be dis-
tributed in a manner different from the
partners’ distributive shares of the tax
exempt income resulting from the receipt
of the cash payment. A transferor partner-
ship that receives a cash payment from
a transfer of a specified credit portion is
under no restriction on how it can use
such cash payment (including on how it
makes distributions to its partners). Such
cash payment is treated in the same man-
ner as the transferor partnership’s other
cash flows.
The proposed regulations would pro-
vide rules for transferee partnerships and
clarify that allocations of a transferred
specified credit portion by a transferee
partnership are not a violation of the no
additional transfer rule in §1.6418-2(c)
(2). The proposed regulations also would
provide that cash payments by a trans-
feree partnership for a transferred speci-
fied credit portion are treated as a section
705(a)(2)(B) expenditure. Each partner’s
distributive share of any transferred
specified credit portion is based on such
partner’s distributive share of the section
705(a)(2)(B) expenditures used to fund
the purchase of such transferred specified
credit portion. Each partner’s distributive
share of the section 705(a)(2)(B) expen-
ditures used to fund the purchase of any
transferred specified credit portion is
determined by the partnership agreement.
Or, if the partnership agreement does not
provide for the allocation of such nonde-
ductible expenditures, then each partner’s
distributive share is based on the trans-
feree partnership’s general allocation of
nondeductible expenditures.
To prevent avoidance of the no addi-
tional transfer rule in proposed §1.6418-
2(c)(2) through transfers of interests in
transferee partnerships, the proposed reg-
ulations in proposed §1.6418-3(b)(4)(iv)
would provide that a transferred specified
credit portion purchased by a transferee
partnership is treated as an extraordinary
item under §1.706-4(e) (including also
a proposed addition to §1.706-4(e) con-
firming a transferred specified portion
is an extraordinary item). The proposed
regulations further provide that if the
transferee partnership and eligible tax-
payer have the same taxable years, such
extraordinary item is deemed to occur
on the date the transferee partnership
first makes a cash payment to an eligi-
ble taxpayer for any transferred specified
credit portion. If the transferee partner-
ship and eligible taxpayer have different
taxable years, the extraordinary item is
deemed to occur on the later of the first
date the transferee partnership takes the
transferred specified credit portion into
account under section 6418(d), or the first
date that the transferee partnership made
a cash payment to the eligible taxpayer
for the transferred specified credit por-
tion. For example, if an eligible taxpayer
is a calendar year taxpayer and a trans-
feree partnership is a fiscal year taxpayer
with its tax year beginning on June 1st,
and the transferee partnership makes its
first cash payment before June 1st for
a transferred specified credit portion
determined with respect to the eligible
taxpayer during year 1, then the trans-
ferred specified credit portion is deemed
to occur to the transferee partnership
on June 1st. However, if the transferee
partnership makes its first cash payment
at any point from June 1st to December
31st, the transferred specified credit
portion is deemed to occur on the cash
payment date. The Treasury Department
and the IRS continue to study whether
additional rules are required under sec-
tion 6418 to prevent avoidance of the no
additional transfer rule through transfers
of interests in transferee partnerships.
Finally, for transferee partnerships, the
proposed regulations would clarify that
an upper-tier partnership that is a direct
or indirect partner in a transferee part-
nership and that is allocated a transferred
specified credit portion is not an eligible
taxpayer with respect to such transferred
specified credit portion. The upper-tier
partnership would determine each part-
ner’s distributive share of the transferred
specified credit portion in accordance with
the same rules the transferee partnership
determines its partners’ distributive shares
of the transferred specified credit portion.
The Treasury Department and the
IRS request comments on whether addi-
tional rules or clarifications are needed
with respect to when allocations of a
transferred specified credit portion will
be respected under section 704(b). The
Treasury Department and the IRS also
request comments on whether additional
rules or clarifications are needed with
respect to transfers of partnership interests
that are made after the transferring part-
ner has contributed capital to a transferee
partnership for the purpose of purchasing
eligible credits, but before the transferee
partnership has made any cash payments
to an eligible taxpayer.
D. Rules solely applicable to transferor
and transferee S corporations
The proposed regulations would
include special rules applicable to trans-
feror and transferee S corporations and
their shareholders. Section 6418(c)(1)

Bulletin No. 2023–27 1173 July 3, 2023
(A) provides that any amount received
as consideration for a transfer of eligi-
ble credits by a transferor S corpora-
tion is treated as tax exempt income for
purposes of section 1366. The proposed
regulations would provide that each
shareholder would take into account such
shareholder’s pro rata share (as deter-
mined under section 1377(a) of the Code)
of any tax exempt income resulting from
the receipt of cash for the transfer of a
specified credit portion by a transferor
S corporation. The proposed regulations
would further clarify that any tax exempt
income resulting from the receipt of
cash for the transfer of a specified credit
portion by a transferor S corporation is
treated as received or accrued, includ-
ing for purposes of section 1366, as of
the date the transferred specified credit
portion is determined with respect to
the transferor S corporation. In effect,
this means that any tax exempt income
resulting from the receipt of cash by a
transferor S corporation for a transferred
specified credit portion should be allo-
cated to the same shareholders and in the
same proportionate amount as the speci-
fied credit portion would have been allo-
cated if not transferred.
The proposed regulations would also
provide rules for transferee S corporations
and indicate that allocations of a trans-
ferred specified credit portion by a trans-
feree S corporation are not a violation of
the no additional transfer rule in §1.6418-
2(d)(2).
The proposed regulations would clar-
ify that cash payments by a transferee
S corporation for a transferred specified
credit portion are treated as an expendi-
ture under section 1367(a)(2)(D) of the
Code since such payments are nonde-
ductible. The proposed regulations would
also provide rules for how shareholders of
a transferee S corporation account for a
transferred specified credit portion. Each
shareholder of a transferee S corporation
would take into account its pro rata share
(as determined under section 1377(a))
of any transferred specified credit por-
tion. If the transferee S corporation and
eligible taxpayer have the same taxable
years, the transfer of a specified credit
portion is treated as occurring to a trans-
feree S corporation during the transferee
S corporation’s permitted year (as defined
under sections 444 and 1378(b)) that the
transferee S corporation first makes a
cash payment as consideration to an eli-
gible taxpayer for the transferred specified
credit portion. If the transferee S corpo-
ration and eligible taxpayer have different
taxable years, then the transfer of a spec-
ified credit portion is treated as occurring
to a transferee S corporation during the
transferee S corporation’s first permitted
year (as defined under sections 444 and
1378(b)) ending with, or after, the taxable
year of the eligible taxpayer to which the
transferred specified credit portion was
determined.
E. Elections for transferor partnerships
and transferor S corporations
Finally, the proposed regulations would
provide specific rules relating to elections
for transferor partnerships or transferor S
corporations. Consistent with the rules for
other eligible taxpayers, partnerships and
S corporations would generally make a
transfer election for a specified credit por-
tion in the manner provided in proposed
§1.6418-2(b)(1) through (3) described
earlier in this preamble. The proposed reg-
ulations would also clarify that all docu-
ments required in §1.6418-2(b)(1) through
(3) would need to be attached to the part-
nership or S corporation return for the
taxable year during which the transferred
specific credit portion was determined.
For the transfer election to be valid, the
return would need to be filed not later than
the time prescribed by §§1.6031(a)-1(e)
and 1.6037-1(b) (including extensions of
time) for filing the return for such taxable
year.
IV. Registration under section 6418(g)(1)
Section 6418(g)(1) provides that as
a condition of, and prior to, any transfer
of any portion of an eligible credit under
section 6418, the Secretary may require
such information (including, in such form
or manner as is determined appropriate by
the Secretary, such information returns)
or registration as the Secretary deems
necessary for purposes of preventing
duplication, fraud, improper payments, or
excessive payments under this section.
In general, consistent with section
6417, stakeholders requested additional
information about this provision and
requested that the regulations balance the
need to prevent fraud and abuse with the
burden on taxpayers. Stakeholders recom-
mended a registration system that assigns
a transfer number to an eligible taxpayer
that can be used by transferee taxpayers
to claim transferred credits and allows
the IRS to track transfers of eligible
credits. Stakeholders also recommended
that information or registration require-
ments should be as consistent as possible
across sections 48D(d)(1), 6417(d)(5),
and 6418(g)(1). In order to meet the pur-
pose of section 6418(g)(1), the Treasury
Department and the IRS believe that it is
necessary to establish a mandatory regis-
tration process that is in place before the
end of the 2023 calendar year, which is
the first full taxable year during which
a transfer election under section 6418 is
available.
Proposed §1.6418-4 generally provides
rules requiring that eligible taxpayers
register before filing the return on which
a transfer election is made and provide
information related to each eligible credit
property for which the eligible taxpayer
intends to transfer a specified credit por-
tion. Proposed §1.6418-4(a), consistent
with section 6418(g)(1), requires that, as a
condition of, and prior to, making an elec-
tion to transfer a specified credit portion,
an eligible taxpayer satisfy the pre-filing
registration requirements in proposed
§1.6418-4(b). After the required pre-filing
registration process is successfully com-
pleted, an eligible taxpayer will receive a
unique registration number from the IRS
for each registered eligible credit property
for which the eligible taxpayer intends
to transfer a specified credit portion. The
Treasury Department and the IRS intend
for this pre-filling registration process to
occur through an IRS electronic portal
(unless otherwise allowed in guidance).
An eligible taxpayer that does not obtain
a registration number and report the reg-
istration number on its return with respect
to an eligible credit property is ineligible
to make a transfer election. However,
completion of the pre-filing registration
requirements and receipt of a registration
number does not, by itself, mean the eli-
gible taxpayer is eligible to transfer any
specified credit portion determined with
respect to the eligible credit property. The

July 3, 2023 1174 Bulletin No. 2023–27
registration number also must be reported
on the eligible taxpayer’s return.
Proposed §1.6418-4(b) provides
the following pre-filing registration
requirements.
First, an eligible taxpayer must com-
plete the pre-filing registration process
electronically through an IRS electronic
portal in accordance with the instruc-
tions provided therein, unless otherwise
provided in guidance. If the election is
by a member of a consolidated group,
the member must complete the pre-fil-
ing registration process as a condition of,
and prior to, making an elective payment
election. See §1.1502-77 (providing rules
regarding the status of the common parent
as agent for its members).
Second, an eligible taxpayer must
satisfy the registration requirements and
receive a registration number prior to
making a transfer election for a specified
credit portion on the eligible taxpayer’s
return for the taxable year at issue.
Third, an eligible taxpayer is required
to obtain a registration number for each
eligible credit property with respect to
which a transfer election of a specified
credit portion is made.
Finally, an eligible taxpayer must pro-
vide the specific information required to
be provided as part of the pre-filing reg-
istration process. The provision of such
information, which includes informa-
tion about the taxpayer, about the eligi-
ble credits, and about the eligible credit
property, will allow the IRS to prevent
duplication, fraud, improper payments,
or excessive transfers under section
6418. For example, verifying informa-
tion about the taxpayer will allow the IRS
to mitigate the risk of fraud or improper
transfers. Information about eligible
credit properties, including their address
and coordinates (longitude and latitude),
supporting documentation, beginning of
construction date, and placed in service
date will allow the IRS to mitigate the
risk of duplication, fraud, and improper
transfers for properties that are not eligi-
ble credit properties.
Proposed §1.6418-4(c) provides rules
related to the registration number that is
obtained after the IRS has reviewed and
approved the taxpayer’s submitted infor-
mation. First, these rules provide that a
registration number is valid for an eligible
taxpayer only for the taxable year for
which it is obtained, and for a transferee
taxpayer’s taxable year in which the spec-
ified credit portion is taken into account.
Second, proposed §1.6418-4(c) provides
rules for the renewal of a registration
number that has been previously obtained.
The eligible taxpayer is required to renew
the registration with respect to an eligible
credit property each year in accordance
with guidance, including attesting that
all the facts are still correct or updating
any facts. Third, the proposed regulations
provide that, if facts change with respect
to an eligible credit property for which a
registration number has been previously
obtained, an eligible taxpayer is required
to amend the registration to reflect these
new facts. Lastly, the proposed regula-
tions provide that an eligible taxpayer is
required to include the registration num-
ber of the eligible credit property on the
eligible taxpayer’s return for the taxable
year, as provided in proposed §1.6418-
2(b), for an election to be effective with
respect to any eligible credit determined
with respect to any eligible credit prop-
erty. The IRS will treat a transfer election
as ineffective with respect to an eligible
credit determined with respect to an eligi-
ble credit property for which the eligible
taxpayer does not include a valid registra-
tion number on its return.
A transferee taxpayer is also required
to report the registration number received
from an eligible taxpayer on its return for
the taxable year that the transferee tax-
payer takes the transferred eligible credit
into account.
V. Special rules
The proposed regulations would pro-
vide special rules relating to the deter-
mination of an excessive credit transfer,
reasonable cause for a transferee taxpayer,
the difference between an excessive credit
transfer and recapture under section 50(a)
or 45Q(f)(4), the mechanics for basis
reduction and recapture notification, and
rules for ineffective elections. The pro-
posed regulations also would provide
special rules relating to the carryback
and carryforward of transferred eligible
credits.
The proposed regulations describe the
rules related to an excessive credit transfer
consistent with section 6418(g)(2)(A).
Section 6418(g)(2)(A) provides in the
case of any specified credit portion that is
transferred to a transferee taxpayer pursu-
ant to section 6418(a) that the Secretary
determines constitutes an excessive credit
transfer, the tax imposed on the trans-
feree taxpayer by chapter 1, regardless of
whether such entity would otherwise be
subject to chapter 1 tax, for the taxable
year in which such determination is made
will be increased by an amount equal to
the sum of (i) the amount of such exces-
sive credit transfer, plus (ii) an amount
equal to 20 percent of such excessive
credit transfer.
Consistent with section 6418(g)(2)
(B), the proposed regulations would pro-
vide that the 20 percent penalty related
to an excessive credit transfer does not
apply if the transferee taxpayer demon-
strates to the satisfaction of the IRS that
the excessive credit transfer resulted
from reasonable cause. Under the pro-
posed regulations, reasonable cause
would be generally determined based on
the relevant facts and circumstances of
a transaction. The proposed regulations
would further provide that the deter-
mination of reasonable cause includes
an evaluation of a transferee taxpayer’s
efforts to determine that the amount of
eligible credit transferred by the eligi-
ble taxpayer to the transferee taxpayer
is not more than the eligible credit that
was determined with respect to the eligi-
ble credit property for the taxable year in
which the eligible credit was determined
and has not been transferred to any other
taxpayer. Further, based on a review of
suggestions by stakeholders, the pro-
posed regulations would provide a list of
factors that a transferee taxpayer could
show to demonstrate reasonable cause.
The list of factors is not exhaustive and
is also not intended as a list of required
actions in all transfers. Instead, the list of
factors, which includes a review of the
eligible taxpayer’s records with respect
to the determination of the eligible credit
(including documentation evidencing
eligibility for bonus credit amounts),
would be intended to provide more clar-
ity with respect to reasonable cause in
these circumstances for eligible taxpay-
ers, transferee taxpayers and the IRS in
administration of the provision.

Bulletin No. 2023–27 1175 July 3, 2023
The proposed regulations also would
define the term “excessive credit transfer”
consistent with section 6418(g)(2)(C) to
mean, with respect to an eligible credit
property for which an election is made
under proposed §1.6418-2 or §1.6418-3
for any taxable year, an amount equal
to the excess of—(i) the amount of the
specified credit portion claimed by the
transferee taxpayer with respect to such
eligible credit property for such taxable
year; over (ii) the amount of the eligible
credit that, without the application of sec-
tion 6418, would be otherwise allowable
under the Code with respect to such eligi-
ble credit property for such taxable year.
In the second part of the definition of the
term, the Treasury Department and the
IRS are interpreting the phrase “amount
of such credit... which would be other-
wise allowable” with respect to such eli-
gible credit property for the taxable year
to have the same meaning as the amount
of the eligible credit properly deter-
mined with respect to such eligible credit
property for such taxable year in the
hands of the eligible taxpayer. See Joint
Committee on Taxation, Description Of
Energy Tax Changes Made By Public
Law 117-169, JCX-5-23, 98 (April 17,
2023).
The proposed regulations would also
provide a rule for determining an exces-
sive credit transfer when there are multi-
ple transferees. The proposed regulations
would provide that all transferee tax-
payers are considered one transferee for
calculating whether there was an exces-
sive credit transfer and the amount of the
excessive credit transfer. If there was an
excessive credit transfer, then the amount
of excessive credit transferred to a specific
transferee taxpayer is equal to the total
excessive credit transferred multiplied by
the transferee’s portion of the total credit
transferred to all transferees. This rule
is applied on an eligible credit property
basis.
Finally, with respect to excessive credit
transfers, the proposed regulations pro-
vide three examples to illustrate when
there is no excessive credit transfer, when
there is an excessive credit transfer, and
when there is an excessive credit transfer
as to multiple transferees.
Stakeholders asked whether a recapture
event under section 50(a) would be treated
as an excessive credit transfer under sec-
tion 6418(g)(2). The excessive credit
transfer rules operate separately from the
recapture rules. The excessive credit trans-
fer rules apply where the credit amount
reported on the original credit source form
by the eligible taxpayer and transferred
to a transferee taxpayer was excessive.
Recapture of a tax credit occurs when the
original tax credit reported would have
been correct without the occurrence of a
subsequent recapture event. The proposed
regulations therefore would provide a rule
that recapture events under section 45Q(f)
(4) or 50(a) do not result in an excessive
credit transfer.
Stakeholders asked for clarification
whether the recapture tax under section
50(a) is imposed on the eligible taxpayer
or the transferee taxpayer. Section 6418(g)
(3)(B) provides that if, during any taxable
year, the applicable investment credit
property (as defined in section 50(a)(5))
is disposed of, or otherwise ceases to be
investment credit property with respect to
the eligible taxpayer, before the close of
the recapture period (as described in sec-
tion 50(a)(1))—(i) such eligible taxpayer
must provide notice of such occurrence to
the transferee taxpayer (in such form and
manner as the Secretary prescribes), and
(ii) the transferee taxpayer must provide
notice of the recapture amount (as defined
in section 50(c)(2)), if any, to the eligible
taxpayer (in such form and manner as
the Secretary prescribes). The proposed
regulations include a rule that the recap-
ture amount is calculated and taken into
account by the transferee taxpayer. This
interpretation is consistent with the stat-
utory framework for recapture tax under
section 50, which generally imposes
recapture tax on the taxpayer who claimed
the credit, regardless of whether such
taxpayer owns the underlying property
to which the credit is determined. This
interpretation is also consistent with sec-
tion 6418(a), which treats the transferee
taxpayer (and not the eligible taxpayer)
as the taxpayer for purposes of the Code
with respect to a specified credit portion,
and with section 6418(g)(3)(B)(ii), which
requires the transferee taxpayer to provide
notice of the recapture amount, if any, to
the eligible taxpayer.
Consistent with recapture tax liability
being imposed on the transferee taxpayer,
as a requested clarification, there is no
prohibition under section 6418 for an eli-
gible taxpayer and a transferee taxpayer to
contract between themselves for indemni-
fication of the transferee taxpayer in the
event of a recapture event.
The proposed regulations would also
provide guidance on the notifications that
are required by the eligible taxpayer and
the transferee taxpayer after a recapture
event, as described in section 6418(g)(3)
(B)(i) and (ii). The proposed regulations
would provide that an eligible taxpayer
would be required to provide notification of
a recapture event to a transferee taxpayer,
with such notification including all of the
information necessary for the transferee
taxpayer to calculate the recapture amount
(as defined under section 50(c)(2)). This
notification would need to be provided in
a timely manner so that a transferee tax-
payer can calculate the recapture amount
by the due date of the transferee taxpayer’s
return (without extensions). Beyond these
requirements, the parties can contract as to
the form the notice must take and to any
additional time periods for providing the
notice, provided the terms of the contract
do not otherwise conflict with the terms of
the proposed regulations. The IRS would
also be permitted to provide further infor-
mation requirements or more specific time
periods if required through instructions to
forms or further guidance. The proposed
regulations contain similar requirements
as to the notification required by the trans-
feree taxpayer of the recapture amount,
with the difference being the type of infor-
mation that is provided. Together, these
notification rules seek to inform parties
of the minimum information required in a
notice and the outer limits on time peri-
ods, but still allow for parties to agree to
other terms as needed.
Section 6418(g)(3) does not specif-
ically address recapture under section
45Q(f)(4). Instead, section 6418(g)(3)
only addresses recapture under section
50(a), which occurs when an investment
credit property for which an eligible credit
was determined is disposed of, or other-
wise ceases to be investment credit prop-
erty with respect to the eligible taxpayer
before the end of the recapture period.
However, applying rules consistent with
section 6418(g)(3) to eligible section
45Q credits is appropriate. Section 45Q

July 3, 2023 1176 Bulletin No. 2023–27
has similar requirements in that carbon
oxide that has been sequestered, utilized,
or used and to which a section 45Q credit
has been determined is generally intended
to remain sequestered, utilized or used for
the entire recapture period. Addressing
this issue is also consistent with the
authority granted in section 6418(h) to
issue regulations necessary to carry out
the purposes of section 6418. As such, the
proposed regulations would clarify that
the rules under proposed §§1.6418-5(d)
and 1.45Q-5 apply to a transferee taxpayer
to the extent any eligible section 45Q is
transferred under section 6418. The pro-
posed regulations would also clarify that
an eligible taxpayer would be required to
provide notice to a transferee taxpayer of
a recapture event, the amount of leaked
qualified carbon oxide, the amount of
qualified carbon oxide subject to recap-
ture and the recapture amount in accor-
dance with §1.45Q-5(c) through (e). Such
notice would be required to be provided in
a timely manner so that a transferee tax-
payer can calculate the recapture amount
by the due date of the transferee taxpay-
er’s tax return (without extensions).
The proposed regulations would also
provide a clarification that an ineffective
election is not considered an excessive
credit transfer to the transferee taxpayer.
An ineffective election to transfer an eli-
gible credit means that no transfer has
occurred for purposes of section 6418.
This means that section 6418 would not
apply to the transaction, and the tax con-
sequences are determined under any other
relevant provisions of the Code. For exam-
ple, an ineffective election results if an
eligible taxpayer tries to elect to transfer
an eligible credit, but the eligible taxpayer
did not complete or receive a registration
number with respect to the eligible credit
property to which the credit is determined
or if an eligible taxpayer attempts to trans-
fer an eligible credit to a related party.
Stakeholders asked whether eligible
credits are subject to new section 39(a)
(4), regarding additional carryback and
carryforward years. The proposed reg-
ulations would provide that a transferee
taxpayer can use section 39(a)(4) to the
extent an eligible credit is also listed in
section 6417(b). Section 39(a)(4) gen-
erally allows a 3-year carryback period
(as opposed to a 1-year) in the case of
any applicable credit (as defined in sec-
tion 6417(b)). This issue has two parts,
the first of which is broader than these
proposed regulations. The first issue is
whether the reference in section 39(a)
(4) to applicable credit is only referring
to an applicable credit determined by an
applicable entity under section 6417(a),
or, if the reference is only referring to the
list of credits in section 6417(b). The pro-
posed regulations would provide that the
language in section 39(a)(4) is referring
to the list of credits in section 6417(b).
Regardless of the taxpayer determining
the credit, if the credit is listed in section
6417(b), then the credit is an applicable
credit. The second issue is whether there
is any prohibition against a transferee
taxpayer using section 39(a)(4). No stat-
utory language prohibits a transferee tax-
payer from using the rule in section 39(a)
(4) with respect to an eligible credit. All
of the eligible credits would meet the
definition in section 6417(b), although
there are placed in service dates under
section 6417(b)(2), (3), and (5) that may
impact application of section 39(a)(4),
which must be taken into consideration.
With respect to real estate investment
trusts (REITs), stakeholders requested that
the proposed regulations clarify that eli-
gible credits that have not yet been trans-
ferred are treated as a real estate asset, cash,
or cash item and thus, will not potentially
cause a REIT to fail the asset test for REITs
under section 856(c)(4). The proposed
regulations do not directly adopt this com-
ment; however, the Treasury Department
and the IRS believe that the proposed regu-
lations, particularly with respect to the paid
in cash and timing of sale requirements,
will assist REITs in managing issues with
the REIT asset test. Further comments
are requested with respect to whether the
proposed regulations provide sufficient
guidance to enable REITs to manage the
potential REIT asset test issues.—ection
857(b)(6)—Section 857(b)(6)—
Proposed Applicability Dates
These regulations are proposed to
apply to taxable years ending on or after
the date the final regulations are published
in the Federal Register. Taxpayers may
rely on these proposed regulations for
taxable years beginning after December
31, 2022, and before the date the final
regulations are published in the Federal
Register, provided the taxpayers follow
the proposed regulations in their entirety
and in a consistent manner.
Special Analyses
I. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (“PRA”) generally
requires that a Federal agency obtain the
approval of the Office of Management
and Budget (OMB) before collecting
information from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. 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 dis-
plays a valid control number.
The collections of information in these
proposed regulations contain reporting
and recordkeeping requirements. The
recordkeeping requirements mentioned
within these proposed regulations are
considered general tax records under
§1.6001-1(e). These records are required
for the IRS to validate that transferee tax-
payers have met the regulatory require-
ments and are entitled to the transferred
specified credit portions. For PRA pur-
poses, general tax records are already
approved by OMB under 1545-0074 for
individuals and under 1545-0123 for
business entities.
These proposed regulations also men-
tion reporting requirements related to
making transfer elections as detailed in
proposed §§1.6418-2 and 1.6418-3. These
transfer elections will be made by eligible
taxpayers as part of filing a return (such
as the appropriate Form 1040, Form 1120,
Form 1120-S, or Form 1065), including
filling out the relevant source credit form
and completing the Form 3800. The pro-
posed regulation in proposed §1.6418-
2(b)(5) describes third-party disclosures,
which require eligible taxpayers and trans-
feree taxpayers to complete transfer elec-
tion statements and also require eligible
taxpayers to provide required minimum
documentation to transferee taxpayers as
part of making a transfer election. These
forms and third-party disclosures are

Bulletin No. 2023–27 1177 July 3, 2023
approved under 1545-0074 for individuals
and 1545-0123 for business entities.
These proposed regulations also
describe recapture procedures as detailed
in proposed §1.6418-5 that are required
by section 6418(g)(3). The reporting of a
recapture event will still be required to be
reported using Form 4255, Recapture of
Investment Credit. This form is approved
under 1545-0074 for individuals and
1545-0123 for business entities. The
proposed regulation is not changing or
creating new collection requirements not
already approved by OMB.
These proposed regulations mention
the reporting requirement to complete
pre-filing registration with IRS to be able
to transfer eligible credits to a transferee
taxpayer as detailed in proposed §1.6418-
4. For further information concerning the
registration and where to submit comments
on the collection of information and the
accuracy of the estimated burden, and sug-
gestions for reducing this burden, please
refer to the preamble to the corresponding
temporary regulations (T.D. 9975) pub-
lished in the Rules and Regulations sec-
tion of this issue of the Federal Register.
For burden estimates associated with the
pre-filing registration requirement as
detailed in proposed §1.6418-4, see the
preamble to the corresponding temporary
regulations. This proposed regulation is
not changing or creating new collection
requirements beyond the requirements
that are being reviewed and approved by
OMB under the temporary regulations.
II. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes certain
requirements with respect to Federal rules
that are subject to the notice and comment
requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C.
551 et seq.) and that are likely to have a
significant economic impact on a sub-
stantial number of small entities. Unless
an agency determines that a proposal is
not likely to have a significant economic
impact on a substantial number of small
entities, section 603 of the RFA requires
the agency to present an initial regulatory
flexibility analysis (IRFA) of the proposed
rule. The Treasury Department and the IRS
have not determined whether the proposed
rule, when finalized, will likely have a sig-
nificant economic impact on a substantial
number of small entities. This determi-
nation requires further study. However,
because there is a possibility of significant
economic impact on a substantial number
of small entities, an IRFA is provided in
these proposed regulations. The Treasury
Department and the IRS invite comments
on both the number of entities affected
and the economic impact on small entities.
Pursuant to section 7805(f), this notice of
proposed rulemaking has been submitted
to the Chief Counsel of Advocacy of the
Small Business Administration for com-
ment on its impact on small business.
1. Need for and Objectives of the Rule
The proposed regulations would pro-
vide guidance to taxpayers that intend to
make an election under section 6418 to
transfer eligible credits. The proposed reg-
ulations would also provide guidance to
transferee taxpayers as to the treatment of
transferred eligible credits under section
6418. The proposed rules would include
needed definitions, the time and manner
to make a transfer election, and informa-
tion about the pre-filing registration pro-
cess, among other items. The Treasury
Department and the IRS intend and expect
that providing taxpayers guidance that
allows them to effectively use section
6418 to transfer eligible credits will ben-
eficially impact various industries, deliver
benefits across the economy, and reduce
economy wide greenhouse gas emissions.
In particular, section 6418 allows eli-
gible taxpayers to transfer an eligible
credit (or portion thereof) to a transferee
taxpayer. Allowing eligible taxpayers
without sufficient Federal income tax lia-
bility to use a business tax credit to instead
transfer the tax credit to a taxpayer that
has sufficient tax liability to use the credit
will increase the incentive for taxpayers to
invest in clean energy projects that gener-
ate eligible credits. It will also increase the
amount of cash available to such taxpay-
ers, thereby reducing the amount of financ-
ing needed for clean energy projects.
2. Affected Small Entities
The RFA directs agencies to provide
a description of, and where feasible, an
estimate of, the number of small entities
that may be affected by the proposed
rules, if adopted. The Small Business
Administration’s Office of Advocacy
estimates in its 2023 Frequently Asked
Questions that 99.9 percent of American
businesses meet its definition of a small
business. The applicability of these pro-
posed regulations does not depend on
the size of the business, as defined by
the Small Business Administration. As
described more fully in the preamble to
this proposed regulation and in this IRFA,
section 6418 and these proposed regula-
tions may affect a variety of different enti-
ties across several different industries as
there are 11 different eligible credits that
may be transferred pursuant to a transfer
election. Although there is uncertainty as
to the exact number of small businesses
within this group, the current estimated
number of respondents to these proposed
rules is 50,000 taxpayers as described in
the Paperwork Reduction Act section of
the preamble. The Treasury Department
and the IRS expect to receive more infor-
mation on the impact on small businesses
through comments on this proposed rule
and again when taxpayers start to make
the transfer election using the guidance
and procedures provided in these pro-
posed regulations.
3. Impact of the Rules
The proposed regulations provide
rules for how taxpayers can take advan-
tage of the section 6418 credit monetiza-
tion regime. Taxpayers that elect to take
advantage of transferability will have
administrative costs related to reading
and understanding the rules in addition to
recordkeeping and reporting requirements
because of the pre-filing registration and
tax return requirements. The costs will
vary across different-sized taxpayers and
across the type of project(s) in which such
taxpayers are engaged.
The pre-filing registration process
requires a taxpayer to register itself as
intending to make a transfer election, to
list all eligible credits it intends to trans-
fer, and to list each eligible credit property
that contributed to the determination of
such credits. This process must be com-
pleted to receive a registration number for
each eligible credit property with respect

July 3, 2023 1178 Bulletin No. 2023–27
to which the eligible taxpayer intends to
transfer an eligible credit. On filing the
return, to make a valid transfer election,
the eligible taxpayer and transferee tax-
payer would be required to complete and
attach a transfer election statement. The
transfer election statement is generally a
written document that describes the trans-
fer of a specified credit portion between an
eligible taxpayer and transferee taxpayer.
Further, the eligible taxpayer is required
to provide certain required minimum doc-
umentation to the transferee taxpayer, and
the transferee taxpayer is required to retain
the documentation for as long as it may
be relevant. Many of the other require-
ments, such as completing the relevant
source credit form and completing the
Form 3800 would be required for any tax-
payer that is claiming a general business
credit, regardless of whether the taxpayer
was transferring the credit under section
6418. Although the Treasury Department
and the IRS do not have sufficient data
to determine precisely the likely extent
of the increased costs of compliance, the
estimated burden of complying with the
recordkeeping and reporting requirements
are described in the Paperwork Reduction
Act section of the preamble.
4. Alternatives Considered
The Treasury Department and the IRS
considered alternatives to the proposed
regulations. The proposed regulations
requirements of pre-filing registration
and the additional requirements to make
a valid transfer election were designed
to minimize burden while also mini-
mizing the opportunity for duplication,
fraud, improper payments, or excessive
payments under section 6418. For exam-
ple, in adopting these requirements, the
Treasury Department and the IRS con-
sidered whether such information could
be obtained strictly at filing of the rel-
evant return. However, the Treasury
Department and IRS decided that such an
option would increase the opportunity for
duplication, fraud, improper payments or
excessive payments under section 6418.
Section 6418(g)(1) specifically autho-
rizes the IRS to require such information
or registration as the Secretary deems
necessary for purposes of preventing
duplication, fraud, improper payments,
or excessive payments under section
6418 as a condition of, and prior to, any
transfer of any portion of an eligible
credit. As described in the preamble to
these proposed regulations, these pro-
posed rules carry out that Congressional
intent as pre-filing registration allows
for the IRS to verify certain information
in a timely manner and then process the
annual tax return of the eligible taxpayer
and the transferee taxpayer with minimal
delays. Having a distinction between eli-
gible taxpayers that are small businesses
versus others making a transfer election
would create a scenario where a subset
of taxpayers seeking to transfer eligible
credits would not have been verified or
received registration numbers, poten-
tially delaying return processing for
both eligible taxpayers and transferee
taxpayers.
Another example is the proposed
requirement that eligible taxpayers and
transferee taxpayers complete a trans-
fer election statement. In determining
to adopt this proposal, the Treasury
Department and the IRS considered that
such a statement would again minimize
opportunity for fraud and decrease the
chance of duplication but would also
benefit a transferee taxpayer by allowing
the filing of its return without having to
wait for an eligible taxpayer to file in all
cases. Further, the contents of the transfer
election statement were intended to be
available to eligible taxpayers, such that
the size of the business should not impact
greatly the time needed to prepare such
statements. The Treasury Department
and the IRS also considered whether any
required documentation was needed to be
provided by eligible taxpayers to trans-
feree taxpayers, which the transferee tax-
payers are then required to keep for so
long as the contents thereof may become
material in the administration of any
internal revenue law. Again, this require-
ment was considered consistent with the
goal of minimizing fraud, as the informa-
tion is generally documentation to vali-
date the existence of the eligible credit
property, any bonus credits amounts, and
the evidence of credit qualification. Any
size business generating an eligible credit
should have access to such information.
Further the recordkeeping duration is
consistent with general recordkeeping
rules under §1.6001-1(e). This proposed
requirement also will benefit small busi-
nesses that are transferee taxpayers as it
provides a mechanism to receive such
information from the eligible taxpayer.
Comments are requested on the require-
ments in the proposed regulations,
including specifically, whether there are
less burdensome alternatives that do not
increase the risk of duplication, fraud,
improper payments, or excessive pay-
ments under section 6418.
5. Duplicative, Overlapping, or
Conflicting Federal Rules
The proposed rule would not dupli-
cate, overlap, or conflict with any relevant
Federal rules. As discussed above, the
proposed rule would merely provide pro-
cedures and definitions to allow taxpayers
to take advantage of the ability to transfer
eligible credits. The Treasury Department
and the IRS invite input from interested
members of the public about identifying
and avoiding overlapping, duplicative, or
conflicting requirements.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in any
one year by a state, local, or tribal govern-
ment, in the aggregate, or by the private
sector, of $100 million (updated annually
for inflation). These proposed regulations
do not include any Federal mandate that
may result in expenditures by state, local,
or tribal governments, or by the private
sector in excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on state and local gov-
ernments, and is not required by statute,
or preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These proposed regulations do not

Bulletin No. 2023–27 1179 July 3, 2023
have federalism implications and do not
impose substantial, direct compliance
costs on state and local governments or
preempt state law within the meaning of
the Executive order.
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments) prohibits an agency from
publishing any rule that has tribal impli-
cations if the rule either imposes substan-
tial, direct compliance costs on Indian
tribal governments, and is not required by
statute, or preempts tribal law, unless the
agency meets the consultation and funding
requirements of section 5 of the Executive
order. This proposed rule does not have
substantial direct effects on one or more
federally recognized Indian tribes and
does not impose substantial direct com-
pliance costs on Indian tribal governments
within the meaning of the Executive order.
VII. Regulatory Planning and Review
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore,
a regulatory impact assessment is not
required.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consider-
ation will be given to comments that are
submitted timely to the IRS as prescribed
in the preamble under the ADDRESSES
section. The Treasury Department and the
IRS request comments on all aspects of the
proposed regulations. Any electronic com-
ments submitted, and any paper comments
submitted, will be made available at https://
www.regulations.gov or upon request.
Announcement 2023-16, 2023-20
I.R.B. 854 (May 15, 2023), provides that
public hearings will be conducted in per-
son, although the IRS will continue to pro-
vide a telephonic option for individuals
who wish to attend or testify at a hearing
by telephone. Any telephonic hearing
will be made accessible to people with
disabilities.
A public hearing has been scheduled
for August 23, 2023, beginning at 10:00
a.m. ET, in the Auditorium at the Internal
Revenue Building, 1111 Constitution
Avenue, NW., Washington, DC, unless no
outlines are received by August 14, 2023.
Due to building security procedures, visi-
tors must enter at the Constitution Avenue
entrance. In addition, all visitors must
present photo identification to enter the
building. Because of access restrictions,
visitors will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts.
The rules of 26 CFR 601.601(a)
(3) apply to the hearing. Persons who
wish to comment by telephone at the
hearing must submit written or electronic
comments and an outline of the topics
to be discussed as well as the time to be
devoted to each topic by August 14, 2023,
as prescribed in the preamble under the
ADDRESSES section.
A period of ten minutes will be allo-
cated to each person for making com-
ments. After the deadline for receiving
outlines has passed, the IRS will prepare an
agenda containing the schedule of speak-
ers. Copies of the agenda will be made
available at https://www.regulations.gov,
search IRS and REG-101610-23. Copies
of the agenda will also be available by
emailing a request to publichearings@irs.
gov. Please put “REG-101610-23 Agenda
Request” in the subject line of the email.
Individuals who want to testify in
person at the public hearing must send
an email to publichearings@irs.gov to
have your name added to the building
access list. The subject line of the email
must contain the regulation number REG-
101610-23 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY In Person at
Hearing for REG-101610-23.
Individuals who want to testify by
telephone at the public hearing must
send an email to publichearings@irs.
gov to receive the telephone number and
access code for the hearing. The subject
line of the email must contain the regu-
lation number REG-101610-23 and the
language TESTIFY Telephonically. For
example, the subject line may say: Request
to TESTIFY Telephonically at Hearing for
REG-101610-23.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number REG-101610-23 and the language
ATTEND In Person. For example, the
subject line may say: Request to ATTEND
Hearing In Person for REG-101610-23.
Requests to attend the public hearing
must be received by 5:00 p.m. EST on
August 21, 2023. Individuals who want
to attend the public hearing by telephone
without testifying must also send an email
to publichearings@irs.gov to receive the
telephone number and access code for
the hearing. The subject line of the email
must contain the regulation number REG-
101610-23 and the language ATTEND
Hearing Telephonically. For example, the
subject line may say: Request to ATTEND
Hearing Telephonically for REG-101610-
23. Requests to attend the public hearing
must be received by 5:00 p.m. EST on
August 21, 2023.
Hearings will be made accessible to
people with disabilities. To request special
assistance during a hearing please contact
the Publications and Regulations Branch
of the Office of Associate Chief Counsel
(Procedure and Administration) by send-
ing an email to publichearings@irs.gov
(preferred) or by telephone at (202) 317-
6901 (not a toll-free number) at least
August 18, 2023.
Statement of Availability of IRS
Documents
IRS notices and other guidance cited in
this preamble are published in the Internal
Revenue Bulletin (or Cumulative Bulletin)
and are available from the Superintendent
of Documents, U.S. Government
Publishing Office, Washington, DC
20402, or by visiting the IRS website at
https://www.irs.gov.
Drafting Information
The principal authors of these pro-
posed regulations are James Holmes and
Jeremy Milton, Office of the Associate

July 3, 2023 1180 Bulletin No. 2023–27
Chief Counsel (Passthroughs and Special
Industries), IRS. However, other person-
nel from the Treasury Department and the
IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry in
numerical order for §§ 1.6418-0 through
1.6418-5 to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Sections 1.6418-0 through 1.6418-5
also issued under 26 U.S.C. 6418(g)(1)
and (h).
* * * * *
Par. 2. Section 1.706-4 is amended as
follows:
1. Redesignate paragraphs (e)(2)(ix)
through (xi) as paragraphs (e)(2)(x)
through (xii).
2. Add new paragraph (e)(2)(ix).
3. Revise the heading of paragraph (g).
4. Redesignate the text of paragraph (g)
as paragraph (g)(1).
5. Add paragraph (g)(2).
The addition and revisions read as
follows:
§1.706-4 Determination of distributive
share when a partner’s interest varies.
* * * * *
(e) * * *
(2) * * *
(ix) Any specified credit portion
transferred pursuant to section 6418 and
§§1.6418-1 through 1.6418-5;
* * * * *
(g) Applicability date. * * *
(2) Paragraph (e)(2)(ix) of this section
applies to taxable years ending on or after
date of publication of final rule.
Par. 3. Sections 1.6418-0 through
1.6418-5 are added to read as follows:
Sec.
* * * * *
1.6418-0 Table of contents.
1.6418-1 Transfer of eligible credits.
1.6418-2 Rules for making transfer
elections.
1.6418-3 Additional rules for partnerships
and S corporations.
1.6418-4 Additional information and
registration.
1.6418-5 Special rules.
* * * * *
§1.6418-0 Table of contents.
This section lists the captions contained
in §§1.6418-1 through 1.6418-5.
§1.6418-1 Transfer of eligible credits.
(a) Transfer of eligible credits.
(b) Eligible taxpayer.
(c) Eligible credit.
(d) Eligible credit property.
(e) Guidance.
(f) Paid in cash.
(g) Section 6418 regulations.
(h) Specified credit portion.
(i) Statutory references.
(j) Transfer election.
(k) Transferee partnership.
(l) Transferee S corporation.
(m) Transferee taxpayer.
(n) Transferor partnership.
(o) Transferor S corporation.
(p) Transferred specified credit portion.
(q) U.S. territory.
(r) Applicability date.
§1.6418-2 Rules for making transfer
elections.
(a) Transfer election.
(b) Manner and due date of making a
transfer election.
(c) Limitations after a transfer election
is made.
(d) Determining the eligible credit.
(e) Treatment of payments made in
connection with a transfer election.
(f) Transferee taxpayer’s treatment of
eligible credit.
(g) Applicability date.
§1.6418-3 Additional rules for
partnerships and S corporations.
(a) Rules applicable to both partner-
ships and S corporations.
(b) Rules applicable to partnerships.
(c) Rules applicable to S corporations.
(d) Transfer election by a partnership
or S corporation.
(e) Examples.
(f) Applicability date.
§1.6418-4 Additional information and
registration.
(a) Pre-filing registration and election.
(b) Pre-filing registration requirements.
(c) Registration number.
(d) Applicability date.
§1.6418-5 Special rules.
(a) Excessive credit transfer tax
imposed.
(b) Excessive credit transfer defined.
(c) Basis reduction under section 50(c).
(d) Notification and impact of recap-
ture under section 50(a) or 49(b).
(e) Notification and impact of recap-
ture under section 45Q(f)(4).
(f) Impact of an ineffective transfer
election by an eligible taxpayer.
(g) Carryback and carryforward.
(h) Applicability date.
§1.6418-1 Transfer of eligible credits.
(a) Transfer of eligible credits. An
eligible taxpayer may make a transfer
election under §1.6418-2(a) to transfer
any specified portion of an eligible credit
determined with respect to any eligible
credit property of such eligible taxpayer
for any taxable year to a transferee tax-
payer in accordance with section 6418 of
the Code and the section 6418 regulations
(defined in paragraph (g) of this section).
Paragraphs (b) through (q) of this section
provide definitions. See §1.6418-2 for
rules and procedures under which all trans-
fer elections must be made, limitations to
making transfer elections, the treatment of
payments made in connection with trans-
fer elections, and the treatment of eligible
credits transferred to transferee taxpayers.

Bulletin No. 2023–27 1181 July 3, 2023
See §1.6418-3 for special rules pertain-
ing to transfer elections made by partner-
ships or S corporations. See §1.6418-4 for
pre-filing registration requirements and
other information required to make any
transfer election effective. See §1.6418-5
for special rules related to the imposition
of tax on excessive credit transfers, basis
reductions, required notifications and
impacts of the recapture of transferred
credits, and rules regarding carrybacks
and carryforwards.
(b) Eligible taxpayer. The term eligible
taxpayer means any taxpayer (as defined
in section 7701(a)(14) of the Code), other
than one described in section 6417(d)(1)
(A) and §1.6417-1(b).
(c) Eligible credit—(1) In general. The
term eligible credit is a credit described
in paragraph (c)(2) of this section deter-
mined for a taxable year with respect to
a single eligible credit property of an eli-
gible taxpayer but does not include any
business credit carryforward or business
credit carryback determined under section
39 of the Code.
(2) Separately determined credit
amounts. The amount of any credit
described in this paragraph (c)(2) is the
entire amount of the credit separately
determined with respect to each single
eligible credit property of the eligible
taxpayer and includes any bonus credit
amounts described in paragraph (c)(3) of
this section determined with respect to
that single eligible credit property. The
eligible credits described in this paragraph
(c)(2) are:
(i) Alternative fuel vehicle refueling
property. So much of the credit for alter-
native fuel vehicle refueling property
allowed under section 30C of the Code
that, pursuant to section 30C(d)(1), is
treated as a credit listed in section 38(b) of
the Code (section 30C credit).
(ii) Renewable electricity production.
The renewable electricity production
credit determined under section 45(a) of
the Code (section 45 credit).
(iii) Carbon oxide sequestration. The
credit for carbon oxide sequestration
determined under section 45Q(a) of the
Code (section 45Q credit).
(iv) Zero-emission nuclear power
production. The zero-emission nuclear
power production credit determined under
section 45U(a) of the Code (section 45U
credit).
(v) Clean hydrogen production. The
clean hydrogen production credit deter-
mined under section 45V(a) of the Code
(section 45V credit).
(vi) Advanced manufacturing produc-
tion. The advanced manufacturing pro-
duction credit determined under section
45X(a) of the Code (section 45X credit).
(vii) Clean electricity production. The
clean electricity production credit deter-
mined under section 45Y(a) of the Code
(section 45Y credit).
(viii) Clean fuel production. The clean
fuel production credit determined under
section 45Z(a) of the Code (section 45Z
credit).
(ix) Energy. The energy credit deter-
mined under section 48 of the Code (sec-
tion 48 credit).
(x) Qualifying advance energy project.
The qualifying advanced energy project
credit determined under section 48C of
the Code (section 48C credit).
(xi) Clean electricity. The clean elec-
tricity investment credit determined under
section 48E of the Code (section 48E
credit).
(3) Bonus credit amounts. The bonus
credit amounts described in this paragraph
(c)(3) are:
(i) In the case of a section 30C credit,
the increased credit amounts for which the
requirements under section 30C(g)(2)(A)
and (3) are satisfied.
(ii) In the case of a section 45 credit,
the increased credit amounts for which the
requirements under section 45(b)(7)(A)
(8), (9), and (11) are satisfied.
(iii) In the case of a section 45Q credit,
the increased credit amounts for which the
requirements under section 45Q(h)(3) and
(4) are satisfied.
(iv) In the case of a section 45U credit,
the increased credit amount for which the
requirements under section 45U(d)(2) are
satisfied.
(v) In the case of a section 45V credit,
the increased credit amounts for which the
requirements under section 45V(e)(3) and
(4) are satisfied.
(vi) In the case of a section 45Y credit,
the increased credit amounts for which
the requirements under section 45Y(g)(7),
(9), (10), and (11) are satisfied.
(vii) In the case of a section 45Z credit,
the increased credit amounts for which the
requirements under section 45Z(f)(6) and
(7) are satisfied.
(viii) In the case of a section 48 credit,
the increased credit amounts for which
the requirements under section 48(a)(10),
(11), (12), (14), and (e) are satisfied.
(ix) In the case of a section 48C credit,
the increased credit amounts for which the
requirements under section 48C(e)(5) and
(6) are satisfied.
(x) In the case of a section 48E credit,
the increased credit amounts for which the
requirements under section 48E(a)(3)(A),
(B), (d)(3), (d)(4), and (h) are satisfied.
(d) Eligible credit property. The term
eligible credit property means each of
the units of property of an eligible tax-
payer described in paragraphs (d)(1)
through (11) of this section with respect
to which the amount of an eligible credit
is determined:
(1) In the case of a section 30C credit, a
qualified alternative fuel vehicle refueling
property described in section 30C(c).
(2) In the case of a section 45 credit, a
qualified facility described in section 45(d).
(3) In the case of a section 45Q credit,
a single process train of carbon capture
equipment described in §1.45Q-2(c)(3).
(4) In the case of a section 45U credit, a
qualified nuclear power facility described
in section 45U(b)(1).
(5) In the case of a section 45V credit, a
qualified clean hydrogen production facil-
ity described in section 45V(c)(3).
(6) In the case of a section 45X credit, a
facility that produces eligible components,
as described in guidance under sections
48C and 45X.
(7) In the case of a section 45Y credit,
a qualified facility described in section
45Y(b)(1).
(8) In the case of a section 45Z credit,
a qualified facility described in section
45Z(d)(4).
(9)(i) In general. In the case of a sec-
tion 48 credit and except as provided in
paragraph (d)(9)(ii) of this section, an
energy property described in section 48.
(ii) Pre-filing registration and elec-
tions. At the option of an eligible taxpayer,

July 3, 2023 1182 Bulletin No. 2023–27
and to the extent consistently applied for
purposes of the pre-filing registration
requirements of §1.6418-4 and the elec-
tion requirements of §§1.6418-2 through
1.6418-3, an energy project as described
in section 48(a)(9)(A)(ii) and defined in
guidance.
(10) In the case of a section 48C credit,
an eligible property described in section
48C(c)(2).
(11) In the case of a section 48E credit,
a qualified facility as defined in section
48E(b)(3) or, in the case of a section 48E
credit relating to a qualified investment
with respect to energy storage technology,
an energy storage technology described in
section 48E(c)(2).
(e) Guidance. The term guidance
means guidance published in the Federal
Register or Internal Revenue Bulletin, as
well as administrative guidance such as
forms, instructions, publications, or other
guidance on the IRS.gov website. See
§§601.601 and 601.602 of this chapter.
(f) Paid in cash. The term paid in cash
means a payment in United States dollars
that—
(1) Is made by cash, check, cashier’s
check, money order, wire transfer, auto-
mated clearing house (ACH) transfer, or
other bank transfer of immediately avail-
able funds;
(2) Is made within the period beginning
on the first day of the eligible taxpayer’s
taxable year during which a specified
credit portion is determined and ending
on the due date for completing a trans-
fer election statement (as provided in
§1.6418-2(b)(5)(iii)); and
(3) May include a transferee taxpayer’s
contractual commitment to purchase eligible
credits with United States dollars in advance
of the date a specified credit portion is trans-
ferred to such transferee taxpayer if all pay-
ments of United States dollars are made in a
manner described in paragraph (f)(1) of this
section during the time period described in
paragraph (f)(2) of this section.
(g) Section 6418 regulations. The term
section 6418 regulations means this sec-
tion and §§1.6418-2 through 1.6418-5.
(h) Specified credit portion. The term
specified credit portion means a propor-
tionate share (including all) of an eligible
credit determined with respect to a sin-
gle eligible credit property of the eligi-
ble taxpayer that is specified in a transfer
election. A specified credit portion of an
eligible credit must reflect a proportion-
ate share of each bonus credit amount
that is taken into account in calculating
the entire amount of eligible credit deter-
mined with respect to a single eligible
credit property.
(i) Statutory references—(1) Chapter
1. The term chapter 1 means chapter 1 of
the Code.
(2) Code. The term Code means the
Internal Revenue Code.
(3) Subchapter K. The term subchapter
K means subchapter K of chapter 1.
(4) Subtitle A. The term subtitle A
means subtitle A of the Code.
(j) Transfer election. The term transfer
election means an election under section
6418(a) of the Code to transfer to a trans-
feree taxpayer a specified portion of an
eligible credit determined with respect to
an eligible credit property in accordance
with the section 6418 regulations.
(k) Transferee partnership. The term
transferee partnership means a partner-
ship for Federal income tax purposes that
is a transferee taxpayer.
(l) Transferee S corporation. The term
transferee S corporation means an S cor-
poration within the meaning of section
1361(a) that is a transferee taxpayer.
(m) Transferee taxpayer. The term trans-
feree taxpayer means any taxpayer that is
not related (within the meaning of section
267(b) or 707(b)(1) of the Code) to the eligi-
ble taxpayer making the transfer election to
which an eligible taxpayer transfers a speci-
fied credit portion of an eligible credit.
(n) Transferor partnership. The term
transferor partnership means a partner-
ship for Federal income tax purposes that
is an eligible taxpayer that makes a trans-
fer election.
(o) Transferor S corporation. The term
transferor S corporation means an S cor-
poration within the meaning of section
1361(a) that is an eligible taxpayer that
makes a transfer election.
(p) Transferred specified credit por-
tion. The term transferred specified credit
portion means the specified credit portion
that is transferred from an eligible tax-
payer to a transferee taxpayer pursuant to
a transfer election.
(q) U.S. territory. The term U.S. terri-
tory means the Commonwealth of Puerto
Rico, Guam, the U.S. Virgin Islands,
American Samoa, and the Commonwealth
of the Northern Mariana Islands.
(r) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6418-2 Rules for making transfer
elections.
(a) Transfer election—(1) In general.
An eligible taxpayer can make a trans-
fer election as provided in this section.
If a valid transfer election is made by an
eligible taxpayer for any taxable year,
the transferee taxpayer specified in such
election (and not the eligible taxpayer)
is treated as the taxpayer for purposes
of the Code with respect to the specified
credit portion. This paragraph (a) pro-
vides rules on the number of transfers
permitted, rules for determining the eli-
gible taxpayer in certain ownership situa-
tions, and rules describing circumstances
where no transfer election is allowed.
Paragraph (b) of this section provides
specific rules regarding the scope, man-
ner, and timing of a transfer election.
Paragraph (c) of this section provides
rules regarding limitations applicable
to transfer elections. Paragraph (d) of
this section provides rules regarding an
eligible taxpayer’s determination of an
eligible credit. Paragraph (e) of this sec-
tion provides the treatment of payments
in connection with a transfer election.
Paragraph (f) of this section provides
rules regarding a transferee taxpayer’s
treatment of an eligible credit following
a transfer.
(2) Multiple transfer elections permit-
ted. An eligible taxpayer may make mul-
tiple transfer elections to transfer one or
more specified credit portion(s) to multi-
ple transferee taxpayers, provided that the
aggregate amount of specified credit por-
tions transferred with respect to any single
eligible credit property does not exceed
the amount of the eligible credit deter-
mined with respect to the eligible credit
property.
(3) Transfer election in certain owner-
ship situations—(i) Disregarded entities.
If an eligible taxpayer is the sole owner
(directly or indirectly) of an entity that is
disregarded as separate from such eligible
taxpayer for Federal income tax purposes
and such entity directly holds an eligible

Bulletin No. 2023–27 1183 July 3, 2023
credit property, the eligible taxpayer may
make a transfer election in the manner
provided in this section with respect to any
eligible credit determined with respect to
such eligible credit property.
(ii) Undivided ownership interests.
If an eligible taxpayer is a co-owner of
an eligible credit property through an
arrangement properly treated as a tenan-
cy-in-common for Federal income tax
purposes, or through an organization that
has made a valid election under section
761(a) of the Code, then the eligible tax-
payer’s undivided ownership share of the
eligible credit property will be treated for
purposes of section 6418 as a separate eli-
gible credit property owned by such eli-
gible taxpayer, and the eligible taxpayer
may make a transfer election in the man-
ner provided in this section for any eligi-
ble credit(s) determined with respect to
such eligible credit property.
(iii) Members of a consolidated group.
A member of a consolidated group is
required to make a transfer election in the
manner provided in this section to trans-
fer any eligible credit determined with
respect to the member. —
(iv) Partnerships and S corporations.
A partnership or S corporation that deter-
mines an eligible credit with respect to
any eligible credit property held directly
by such partnership or S corporation may
make a transfer election in the manner
provided in §1.6418-3(d) with respect to
eligible credits determined with respect to
such eligible credit property.
(4) Circumstances where no transfer
election can be made—(i) Prohibition on
election or transfer with respect to prog-
ress expenditures. No transfer election can
be made with respect to any amount of an
eligible credit that is allowed for progress
expenditures pursuant to rules similar to
the rules of section 46(c)(4) and (d) (as in
effect on the day before the enactment of
the Revenue Reconciliation Act of 1990).
(ii) No election allowed when non-
cash consideration. No transfer election
is allowed when an eligible taxpayer
receives any consideration other than cash
(as defined in §1.6418-1(f)) in connec-
tion with the transfer of a specified credit
portion.
(iii) No election allowed when eligi-
ble credits not determined with respect to
taxpayer. No transfer election is allowed
for eligible credits that are not determined
with respect to an eligible taxpayer as
described in paragraph (d) of this section.
For example, a section 45Q credit allow-
able to an eligible taxpayer because of an
election made under section 45Q(f)(3)
(B), or a section 48 credit allowable to an
eligible taxpayer because of an election
made under section 50(d)(5) and §1.48-
4, although described in §1.6418-1(c)(2),
is not an eligible credit that can be trans-
ferred by the taxpayer because such credit
is not determined with respect to the eligi-
ble taxpayer.
(b) Manner and due date of making
a transfer election—(1) In general. An
eligible taxpayer must make a transfer
election to transfer a specified credit por-
tion of an eligible credit on the basis of a
single eligible credit property. For exam-
ple, an eligible taxpayer that determines
eligible credits with respect to two eligi-
ble credit properties would need to make
a separate transfer election with respect
to any specified credit portion of the eli-
gible credit determined with respect to
each eligible credit property. Any trans-
fer election must be consistent with the
eligible taxpayer’s pre-filing registration
under §1.6418-4.
(2) Specific rules for certain eligi-
ble credits. In the case of any section 45
credit, section 45Q credit, section 45V
credit, or section 45Y credit that is an eli-
gible credit, the rules in paragraphs (b)(2)
(i) and (ii) of this section apply.
(i) Separate eligible credit property. A
transfer election must be made separately
with respect to each eligible credit prop-
erty described in §1.6418-1(d)(2), (3), (5),
and (7), as applicable, for which an eligi-
ble credit is determined.
(ii) Time period. A transfer election
must be made for each taxable year an
eligible taxpayer elects to transfer speci-
fied credit portions with respect to such an
eligible credit property during the 10-year
period beginning on the date such eligi-
ble credit property was originally placed
in service (or, in the case of a section
45Q credit, for each taxable year during
the 12-year period beginning on the date
the single process train of carbon cap-
ture equipment was originally placed in
service).
(3) Manner of making a valid transfer
election. A transfer election is made by
an eligible taxpayer on the basis of each
specified credit portion with respect to a
single eligible credit property that is trans-
ferred to a transferee taxpayer. To make a
valid transfer election, an eligible taxpayer
as part of filing a return (or a return for a
short year within the meaning of section
443 of the Code (short year return)), must
include the following—
(i) A properly completed relevant
source credit form for the eligible
credit (such as Form 7207, Advanced
Manufacturing Production Credit, if mak-
ing a transfer election for a section 45X
credit) for the taxable year that the eligible
credit was determined;
(ii) A properly completed Form 3800,
General Business Credit (or its succes-
sor), including reductions necessary
because of the transferred eligible credit
as required by the form and instructions
and the registration number received
during the required pre-filing registration
(as described in §1.6418-4) related to the
eligible credit property with respect to
which a transferred eligible credit was
determined;
(iii) A schedule attached to the Form
3800 (or its successor) showing the
amount of eligible credit transferred for
each eligible credit property (such as for
a section 45X election, the relevant lines
that include the eligible credit property
reported on Form 7207), except as other-
wise provided in guidance;
(iv) A transfer election statement as
described in paragraph (b)(5) of this sec-
tion; and
(v) Any other information related to the
election specified in guidance.
(4) Due date and original return
requirement of a transfer election. A
transfer election by an eligible taxpayer
with respect to a specified portion of an
eligible credit must be made on an original
return not later than the due date (includ-
ing extensions of time) for the original
return of the eligible taxpayer for the tax-
able year for which the eligible credit is
determined. No transfer election may be
made or revised on an amended return
or by filing an administrative adjustment
request under section 6227 of the Code.
There is no late-election relief available
under §§ 301.9100-1 through 301.9100-3
of this chapter for a transfer election that
is not timely filed.

July 3, 2023 1184 Bulletin No. 2023–27
(5) Transfer election statement—(i) In
general. A transfer election statement is a
written document that describes the trans-
fer of a specified credit portion between
an eligible taxpayer and transferee tax-
payer. An eligible taxpayer and transferee
taxpayer must each attach a transfer elec-
tion statement to their respective return
as required under paragraphs (b)(3)(iv)
and (f)(4)(ii) of this section, unless oth-
erwise provided in guidance. An eligible
taxpayer and transferee taxpayer can use
any document (such as a purchase and
sale agreement) that meets the conditions
in paragraph (b)(5)(ii) of this section
but must label the document a “Transfer
Election Statement” when attaching to a
return. The information required in para-
graph (b)(5)(ii) of this section does not
otherwise limit any other information that
the eligible taxpayer and transferee tax-
payer may agree to provide in connection
with the transfer of any specified credit
portion. The statement must be signed
under penalties of perjury by an individual
with authority to legally bind the eligible
taxpayer. The statement must also include
the written consent of an individual with
authority to legally bind the transferee
taxpayer.
(ii) Information required in transfer
election statement. A transfer election
statement must, at a minimum, include
each of the following:
(A) Name, address, and taxpayer identi-
fication number of the transferee taxpayer
and the eligible taxpayer. If the transferee
taxpayer or eligible taxpayer is a mem-
ber of a consolidated group (as defined in
§1.1502-1), then only include information
for the group member that is the transferee
taxpayer or eligible taxpayer (if different
from the return filer).
(B) A statement that provides the nec-
essary information and amounts to allow
the transferee taxpayer to take into account
the specified credit portion with respect to
the eligible credit property, including—
(1) A description of the eligible credit
(for example, advanced manufacturing
production credit for a section 45X trans-
fer election), the total amount of the credit
determined with respect to the eligible
credit property, and the amount of the
specified credit portion;
(2) The taxable year of the eligible tax-
payer and the first taxable year in which
the specified credit portion will be taken
into account by the transferee taxpayer;
(3) The amount(s) of the cash consid-
eration and date(s) on which paid by the
transferee taxpayer; and
(4) The registration number related to
the eligible credit property.
(C) Attestation that the eligible tax-
payer (or any member of its consolidated
group) is not related to the transferee tax-
payer (or any member of its consolidated
group) within the meaning of section
267(b) or 707(b)(1)).
(D) A statement or representation from
the eligible taxpayer that it has or will com-
ply with all requirements of section 6418,
the section 6418 regulations, and the provi-
sions of the Code applicable to the eligible
credit, including, for example, any require-
ments for bonus credit amounts described
in §1.6418-1(c)(3) (if applicable).
(E) A statement or representation from
the eligible taxpayer and the transferee
taxpayer acknowledging the notification
of recapture requirements under section
6418(g)(3) and the section 6418 regula-
tions (if applicable).
(F) A statement or representation from
the eligible taxpayer that the eligible tax-
payer has provided the required minimum
documentation (as described in paragraph
(b)(5)(iv) of this section) to the transferee
taxpayer.
(iii) Timing of transfer election state-
ment. A transfer election statement can be
completed at any time after the eligible tax-
payer and transferee taxpayer have suffi-
cient information to meet the requirements
of paragraph (b)(5)(ii) of this section, but
the transfer election statement cannot be
completed for any year after the earlier of:
(A) The filing of the eligible taxpayer’s
return for the taxable year for which the
specified credit portion is determined with
respect to the eligible taxpayer; or
(B) The filing of the return of the
transferee taxpayer for the year in which
the specified credit portion is taken into
account.
(iv) Required minimum documenta-
tion. Required minimum documentation
is the minimum documentation that the
eligible taxpayer is required to provide to
a transferee taxpayer. This documentation
consists of—
(A) Information that validates the
existence of the eligible credit property,
which could include evidence prepared by
a third party (such as a county board or
other governmental entity, a utility, or an
insurance provider);
(B) If applicable, documentation sub-
stantiating that the eligible taxpayer has
satisfied the requirements to include
any bonus credit amounts (as defined in
§1.6418-1(c)(3)) in the eligible credit that
was part of the transferred specified credit
portion; and
(C) Evidence of the eligible taxpay-
er’s qualifying costs in the case of a
transfer of an eligible credit that is part
of the investment credit or the amount
of qualifying production activities and
sales amounts, as relevant, in the case of
a transfer of an eligible credit that is a
production credit.
(v) Transferee recordkeeping require-
ment. Consistent with §1.6001-1(e),
the transferee taxpayer must retain the
required minimum documentation pro-
vided by the eligible taxpayer as long as
the contents thereof may become material
in the administration of any internal rev-
enue law.
(c) Limitations after a transfer elec-
tion is made—(1) Irrevocable. A transfer
election with respect to a specified credit
portion is irrevocable.
(2) No additional transfers. A speci-
fied credit portion may only be transferred
pursuant to a transfer election once. A
transferee taxpayer may not make a trans-
fer election of any specified credit portion
transferred to the transferee taxpayer.
(d) Determining the eligible credit—(1)
In general. An eligible taxpayer may only
transfer eligible credits determined with
respect to the eligible taxpayer (paragraph
(a)(4) of this section disallows transfer
elections in other situations). For an eligi-
ble credit to be determined with respect to
an eligible taxpayer, the eligible taxpayer
must own the underlying eligible credit
property or, if ownership is not required,
otherwise conduct the activities giving
rise to the underlying eligible credit. All
rules that relate to the determination of the
eligible credit, such as the rules in sections
49 and 50(b) of the Code, apply to the eli-
gible taxpayer and therefore can limit the
amount of eligible credit determined with
respect to an eligible credit property that
can be transferred. Rules relating to the
amount of an eligible credit that is allowed

Bulletin No. 2023–27 1185 July 3, 2023
to be claimed by an eligible taxpayer,
such as the rules in section 38(c) or 469
of the Code, do not limit the eligible credit
determined, but do apply to a transferee
taxpayer as described in paragraph (f)(3)
of this section.
(2) Application of section 49 at-risk
rules to determination of eligible cred-
its for partnerships and S corporations.
Any amount of eligible credit determined
with respect to investment credit property
held directly by a transferor partnership
or transferor S corporation that is eligi-
ble credit property (eligible investment
credit property) must be determined by
the partnership or S corporation taking
into account the section 49 at-risk rules
at the partner or shareholder level as of
the close of the taxable year in which
the eligible investment credit property is
placed in service. Thus, if the credit base
of an eligible investment credit prop-
erty is limited to a partner or S corpora-
tion shareholder by section 49, then the
amount of the eligible credit determined
by the transferor partnership or transferor
S corporation is also limited. A transferor
partnership or transferor S corporation
that transfers any specified credit portion
with respect to an eligible investment
credit property must request from each of
its partners or shareholders, respectively,
that is subject to section 49, the amount of
such partner’s or shareholder’s nonqual-
ified nonrecourse financing with respect
to the eligible investment credit prop-
erty as of the close of the taxable year in
which the property is placed in service.
Additionally, the transferor partnership or
transferor S corporation must attach to its
tax return for the taxable year in which
the eligible investment credit property
is placed in service, the amount of each
partner’s or shareholder’s section 49 lim-
itation with respect to any specified credit
portion transferred with respect to the eli-
gible investment credit property. Changes
to at-risk amounts under section 49 for
partners or S corporation shareholders
after the close of the taxable year in which
the eligible investment credit property is
placed in service do not impact the eli-
gible credit determined by the transferor
partnership or transferor S corporation,
but do impact the partner(s) or S cor-
poration shareholder(s) as described in
§1.6418-3(a)(6)(ii).
(e) Treatment of payments made in
connection with a transfer election—(1)
In general. An amount paid by a trans-
feree taxpayer to an eligible taxpayer is
in connection with a transfer election with
respect to a specified credit portion only if
it is paid in cash (as defined in §1.6418-
1(f)), directly relates to the specified credit
portion, and is not described in §1.6418-
5(a)(3) (describing payments related to an
excessive credit transfer).
(2) Not includible in gross income. Any
amount paid to an eligible taxpayer that is
described in paragraph (e)(1) of this sec-
tion is not includible in the gross income
of the eligible taxpayer.
(3) Not deductible. No deduction is
allowed under any provision of the Code
with respect to any amount paid by a
transferee taxpayer that is described in
paragraph (e)(1) of this section.
(4) Anti-abuse rule—(i) In general. A
transfer election of any specified credit
portion, and therefore the transfer of
that specified credit portion to a trans-
feree taxpayer, may be disallowed, or the
Federal income tax consequences of any
transaction(s) effecting such a transfer
may be recharacterized, in circumstances
where the parties to the transaction have
engaged in the transaction or a series of
transactions with the principal purpose of
avoiding any Federal tax liability beyond
the intent of section 6418. An amount of
cash paid by a transferee taxpayer will not
be considered as paid in connection with
the transfer of a specified credit portion
under paragraph (e)(1) of this section if a
principal purpose of a transaction or series
of transactions is to allow an eligible tax-
payer to avoid gross income. Conversely,
an amount of cash paid by a transferee
taxpayer will be considered paid in con-
nection with the transfer of a specified
credit portion under paragraph (e)(1) of
this section if a principal purpose of a
transaction or series of transactions is to
increase a Federal income tax deduction
of a transferee taxpayer.
(ii) Example 1. Taxpayer A, an eligible taxpayer,
generates $100 of an eligible credit with respect to
an eligible credit property in the course of its trade
or business. Taxpayer A also provides services to
customers. Taxpayer A offers Customer B, a trans-
feree taxpayer that cannot deduct the cost of the
services, the opportunity to be transferred $100 of
eligible credit for $100 while receiving Taxpayer A’s
services for free. Taxpayer A normally charges $20
for the same services without the purchase of the
eligible credit, and the average transfer price of the
eligible credit between unrelated parties is $80 paid
in cash for $100 of the eligible credit. Taxpayer A is
engaged in a transaction where it is undercharging
for services to Customer B to avoid recognizing $20
of gross income. This transaction is subject to rechar-
acterization under the anti-abuse rule in paragraph
(e)(4) of this section, and Taxpayer A will be treated
as transferring $100 of the eligible credit for $80, and
have $20 of gross income from the services provided
to Customer B.
(iii) Example 2. Taxpayer C, an eligible tax-
payer, generates $100 of an eligible credit with
respect to an eligible credit property in the course
of its trade or business. Taxpayer C also sells prop-
erty to customers. Taxpayer C offers Customer D,
a transferee taxpayer that can deduct the purchase
of property, the opportunity to receive the $100 of
eligible credit for $20 while purchasing Taxpayer
C’s property for $80. Taxpayer C normally charges
$20 for the same property without the transfer of the
eligible credit, and the average transfer price of the
eligible credit between unrelated parties is $80 paid
in cash for $100 of the eligible credit. Taxpayer C
is willing to accept the higher price for the property
because Taxpayer C has a net operating loss carry-
over to offset any taxable income from the transac-
tion. This transaction is subject to recharacterization
under the anti-abuse rule under paragraph (e)(4) of
this section, and Taxpayer C will be treated as sell-
ing the property for $20 and transferring $100 of the
eligible credit for $80, and Customer D will have a
$20 deduction related to the purchase of the prop-
erty instead of $80.
(f) Transferee taxpayer’s treatment of
eligible credit—(1) Taxable year in which
credit taken into account. In the case of
any specified credit portion transferred to
a transferee taxpayer pursuant to a trans-
fer election under this section, the trans-
feree taxpayer takes the specified credit
portion into account in the transferee
taxpayer’s first taxable year ending with
or ending after the taxable year of the eli-
gible taxpayer with respect to which the
eligible credit was determined. Thus, to
the extent the taxable years of an eligible
taxpayer and a transferee taxpayer end
on the same date, the transferee taxpayer
will take the specified credit portion into
account in that taxable year. To the extent
the taxable years of an eligible taxpayer
and a transferee taxpayer end on different
dates, the transferee taxpayer will take the
specified credit portion into account in the
transferee taxpayer’s first taxable year that
ends after the taxable year of the eligible
taxpayer.
(2) No gross income for a transferee
taxpayer when claiming a transferred
specified credit portion. A transferee tax-
payer does not have gross income when
claiming a transferred specified credit

July 3, 2023 1186 Bulletin No. 2023–27
portion even if the amount of cash paid
to the eligible taxpayer was less than the
amount of the transferred specified credit
portion, assuming all other requirements
of section 6418 are met. For example, a
transferee taxpayer who paid $9X for
$10X of a specified credit portion that
the transferee taxpayer then claims on its
return does not result in the $1X differ-
ence being included in the gross income
of the transferee taxpayer.
(3) Transferee treated as the eligible
taxpayer—(i) In general. A transferee
taxpayer (and not the eligible taxpayer)
is treated as the taxpayer for purposes of
the Code with respect to the transferred
specified credit portion. An eligible tax-
payer must apply the rules necessary to
determine the amount of an eligible credit
prior to making the transfer election for a
specified credit portion, and therefore a
transferee taxpayer does not re-apply rules
that relate to a determination of an eligi-
ble credit, such as the rules in section 49
or 50(b). However, a transferee taxpayer
must apply rules that relate to computing
the amount of the specified credit portion
that is allowed to be claimed in the taxable
year by the transferee taxpayer, such as the
rules in section 38 or 469, as applicable.
(ii) Application of section 469. A spec-
ified credit portion transferred to a trans-
feree taxpayer is treated as determined in
connection with the conduct of a trade or
business and, if applicable, such trans-
ferred specified credit portion is subject to
the rules in section 469. In applying sec-
tion 469, a transferee taxpayer is not con-
sidered to own an interest in the eligible
taxpayer’s trade or business at the time the
work was done (as required for material
participation under §1.469-5(f)(1)) and
cannot change the characterization of the
transferee taxpayer’s participation (or lack
thereof) in the eligible taxpayer’s trade or
business by using any of the grouping
rules under §1.469-4(c).
(4) Transferee taxpayer requirements
to take into account a transferred speci-
fied credit portion. In order for a transferee
taxpayer to take into account in a taxable
year (as described in paragraph (f)(1) of
this section) a specified credit portion that
was transferred by an eligible taxpayer, as
part of filing a return (or short year return),
an amended return, or a request for an
administrative adjustment under section
6227 of the Code, the transferee taxpayer
must include the following—
(i) A properly completed Form 3800,
General Business Credit (or its succes-
sor), to take into account the transferred
specified credit portion as a current gen-
eral business credit, and including all
registration number(s) related to the trans-
ferred specified credit portion;
(ii) The transfer election statement
described in paragraph (b)(5) of this sec-
tion attached to the return; and
(iii) Any other information related to
the transfer election specified in guidance.
(g) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6418-3 Additional rules for
partnerships and S corporations.
(a) Rules applicable to both part-
nerships and S corporations—(1)
Partnerships and S corporations as eli-
gible taxpayers and transferee taxpay-
ers. Under section 6418, a partnership or
an S corporation may qualify as a trans-
feror partnership or a transferor S corpo-
ration and may elect to make a transfer
election to transfer a specified credit por-
tion to a transferee taxpayer. A partner-
ship or S corporation may also qualify
as a transferee partnership or a transferee
S corporation. This section provides
rules applicable to transferor partner-
ships and transferor S corporations and
transferee partnerships and transferee S
corporations. Paragraph (b) of this sec-
tion provides rules applicable solely to
partnerships. Paragraph (c) of this sec-
tion provides rules applicable solely to S
corporations. Paragraph (d) of this sec-
tion provides guidelines for the manner
and due date for which a partnership or S
corporation makes an election under sec-
tion 6418(a). Paragraph (e) of this sec-
tion contains examples illustrating the
operation of the provisions of this sec-
tion. Except as provided in this section,
the general rules under section 6418 and
the section 6418 regulations apply to
partnerships and S corporations.
(2) Treatment of cash received for a
specified credit portion. In the case of any
specified credit portion determined with
respect to any eligible credit property held
directly by a partnership or S corporation,
if such partnership or S corporation makes
a transfer election with respect to such
specified credit portion—
(i) Any amount of cash payment
received as consideration for the trans-
ferred specified credit portion will be
treated as tax exempt income for purposes
of sections 705 and 1366 of the Code; and
(ii) A partner’s distributive share
of such tax exempt income will be as
described in paragraphs (b)(1) and (2) of
this section.
(3) No partner or shareholder level
transfers. In the case of an eligible credit
property held directly by a partnership
or S corporation, no transfer election by
any partner or S corporation shareholder
is allowed under §1.6418-2 or this section
with respect to any specified credit portion
determined with respect to such eligible
credit property.
(4) Disregarded entity ownership. In
the case of an eligible credit property held
directly by an entity disregarded as sep-
arate from a partnership or S corporation
for Federal income tax purposes, such
eligible credit property will be treated as
held directly by the partnership or S cor-
poration for purposes of making a transfer
election.
(5) Treatment of tax exempt income.
Tax exempt income resulting from the
receipt of consideration for the transfer of
a specified credit portion by a transferor
partnership or transferor S corporation
is treated as arising from an investment
activity and not from the conduct of a
trade or business within the meaning of
section 469(c)(1)(A). As such, any tax
exempt income is not treated as passive
income to any direct or indirect partners
or shareholders who do not materially
participate within the meaning of section
469(c)(1)(B).
(6) Certain recapture events not requir-
ing notice—(i) Indirect dispositions under
section 50—(A) Treatment of transferor
partnership or transferor S corporation
and transferee taxpayer. For purposes of
section 6418(g)(3)(B) only, the disposition
of a partner’s interest under §1.47-6(a)(2)
or an S corporation shareholder’s interest
under §1.47-4(a)(2) in an eligible taxpayer
that is treated as a transferor partnership
or transferor S corporation is disregarded.
As such, provided the investment credit
property that is eligible credit property

Bulletin No. 2023–27 1187 July 3, 2023
owned by the transferor partnership or
transferor S corporation is not disposed
of, and continues to be investment credit
property with respect to such transferor
partnership or transferor S corporation, a
transferor partnership or transferor S cor-
poration should not provide notice to a
transferee taxpayer of an interest disposi-
tion by the partner or shareholder because
the disposition does not result in recapture
under section 6418(g)(3)(B) to which the
transferee taxpayer is liable, and thus, the
transferee taxpayer does not have to cal-
culate a recapture amount.
(B) Treatment of partner or share-
holder. A partner or S corporation share-
holder that has disposed of an interest in a
transferor partnership or transferor S cor-
poration is subject to the rules relating to
such disposition under §1.47-6(a)(2) or
§1.47-4(a)(2), respectively. Any recapture
to a disposing partner is calculated based
on the partner’s share of the basis (or cost)
of the section 38 property to which the
specified credit portion was determined
in accordance with §1.46-3(f). Any recap-
ture to a disposing shareholder is calcu-
lated based on the shareholder’s pro rata
share of the basis (or cost) of the section
38 property to which the specified credit
portion was determined in accordance
with §1.48-5.
(ii) Changes in at-risk amounts under
section 49—(A) Treatment of transferor
partnership or transferor S corporation
and transferee taxpayer. For purposes
of section 6418 only, a change in the
nonqualified nonrecourse financing (as
defined in section 49(a)(1)(D)) amount
of any partner or shareholder of a trans-
feror partnership or transferor S corpo-
ration, respectively, after the close of
the taxable year in which the investment
credit property is placed in service and the
specified credit portion is determined, is
disregarded. A transferor partnership or
transferor S corporation should not pro-
vide notice to a transferee taxpayer of the
change because the change does not cause
recapture under section 6418(g)(3)(B) to
which the transferee taxpayer is liable,
and thus, the transferee taxpayer does not
have to calculate a recapture amount.
(B) Treatment of partner or share-
holder. A partner or shareholder in a
transferor partnership or transferor S cor-
poration, respectively, must apply the
rules under section 49 at the partner or
shareholder level if there is a change in
nonqualified nonrecourse financing with
respect to the partner or shareholder after
the close of the taxable year in which the
investment credit property is placed in
service and the specified credit portion
is determined. If there is an increase in
nonqualified nonrecourse financing to a
partner, any adjustment under the rules
of section 49(b) is calculated based on
the partner’s share of the basis (or cost)
of the section 38 property to which the
specified credit portion was determined
in accordance with §1.46-3(f). If there is
an increase in nonqualified nonrecourse
financing to a shareholder, any adjustment
under the rules of section 49(b) is calcu-
lated based on the shareholder’s pro rata
share of the basis (or cost) of the section
38 property to which the specified credit
portion was determined in accordance
with §1.48-5. If there is a decrease in
nonqualified nonrecourse financing, any
increase in the credit base is taken into
account by the partner or shareholder as
provided under section 49, and any result-
ing credit is not eligible for transfer under
section 6418.
(b) Rules applicable to partnerships—
(1) Allocations of tax exempt income
amounts generally. A transferor partner-
ship must generally determine a part-
ner’s distributive share of any tax exempt
income resulting from the receipt of con-
sideration for the transfer based on such
partner’s proportionate distributive share
of the eligible credit that would otherwise
have been allocated to such partner absent
the transfer of the specified credit portion
(otherwise eligible credit). A partner’s
distributive share of an otherwise eligi-
ble credit is determined under §§1.46-3(f)
and 1.704-1(b)(4)(ii). Tax exempt income
resulting from the receipt of consideration
for the transfer of a specified credit por-
tion by a transferor partnership is treated
as received or accrued, including for
purposes of section 705 of the Code, as
of the date the specified credit portion is
determined with respect to the transferor
partnership (such as, for investment credit
property, the date the property is placed in
service).
(2) Special rule for allocations of tax
exempt income amounts and eligible cred-
its for an election to transfer less than all
eligible credits determined with respect to
an eligible credit property. In the event
a transferor partnership elects to transfer
one or more specified credit portions of
less than all eligible credits determined
with respect to an eligible credit prop-
erty held directly by the partnership, the
partnership may allocate any tax exempt
income resulting from the receipt of con-
sideration for the specified credit por-
tion(s) in accordance with the rules in this
paragraph (b)(2).
(i) First, the partnership must deter-
mine each partner’s distributive share of
the otherwise eligible credits with respect
to such eligible credit property in accor-
dance with paragraph (b)(1) of this section
(partner’s eligible credit amount).
(ii) Thereafter, the transferor part-
nership may determine, in any manner
described in the partnership agreement, or
as the partners may agree, the portion of
each partner’s eligible credit amount to be
transferred, and the portion of each part-
ner’s eligible credit amount to be retained
and allocated to such partner. The part-
nership may allocate to each partner its
agreed upon share of eligible credits, tax
exempt income resulting from the receipt
of consideration for the specified credit
portion(s), or both, as the case may be,
provided that—
(A) The amount of eligible credits allo-
cated to each partner may not exceed such
partner’s eligible credit amount; and
(B) Each partner is allocated its propor-
tionate share of tax exempt income result-
ing from the transfer(s).
(iii) Each partner’s proportionate share
of tax exempt income resulting from the
transfer(s) is equal to the total amount
of tax exempt income resulting from the
transfer(s) of the specified credit por-
tion(s) by the partnership multiplied by a
fraction—
(A) The numerator of which is such
partner’s eligible credit amount minus
the amount of eligible credits actually
allocated to such partner with respect to
the eligible credit property for the taxable
year; and
(B) The denominator of which is the
specified credit portion(s) transferred by
the partnership with respect to the eligible
credit property for the taxable year.
(3) Transferor partnerships in tiered
structures. If a partnership (upper-tier

July 3, 2023 1188 Bulletin No. 2023–27
partnership) is a direct or indirect partner
of a transferor partnership and directly or
indirectly receives—
(i) An allocation of an eligible credit,
the upper-tier partnership is not an eligible
taxpayer under section 6418 with respect
to any eligible credit allocated by a trans-
feror partnership; or
(ii) An allocation of tax exempt income
resulting from the receipt of consideration
for the transfer of a specified credit portion
by a transferor partnership, the upper-tier
partnership must determine its partners’
distributive shares of such tax exempt
income in proportion to the partners’ dis-
tributive shares of the otherwise eligible
credit as provided in paragraph (b)(1) of
this section.
(4) Partnership as a transferee tax-
payer—(i) Eligibility under section 6418.
A partnership may qualify as a transferee
partnership to the extent it is not related
(within the meaning of section 267(b)
or 707(b)(1)) to an eligible taxpayer. A
transferee partnership is subject to the no
additional transfer rule in §1.6418-2(c)
(2), however, an allocation of a transferred
specified credit portion to a direct or indi-
rect partner of a transferee partnership
under section 704(b) is not a transfer for
purposes of section 6418.
(ii) Treatment of a cash payment for
a transferred specified credit portion. A
cash payment by a transferee partnership
as consideration for a transferred specified
credit portion is treated as an expenditure
described in section 705(a)(2)(B).
(iii) Allocations of transferred spec-
ified credit portions. A transferee part-
nership must determine each partner’s
distributive share of any transferred
specified credit portion based on such
partner’s distributive share of the non-
deductible expenses for the taxable
year used to fund the purchase of such
transferred specified credit portion. Each
partner’s distributive share of the nonde-
ductible expenses used to fund the pur-
chase of any transferred specified credit
portion is determined by the partnership
agreement, or, if the partnership agree-
ment does not provide for the allocation
of nondeductible expenses paid pursuant
to section 6418, then the allocation of the
specified credit portion is based on the
transferee partnership’s general alloca-
tion of nondeductible expenses.
(iv) Transferred specified credit por-
tion treated as an extraordinary item.
A transferred specified credit portion is
treated as an extraordinary item and must
be allocated among the partners of a trans-
feree partnership as of the time the trans-
fer of the specified credit portion to the
transferee partnership is treated as occur-
ring in accordance with this paragraph (b)
(4)(iv) and §1.706-4(e)(1) and (e)(2)(ix).
If the transferee partnership and eligible
taxpayer have the same taxable years, the
transfer of a specified credit portion to a
transferee partnership is treated as occur-
ring on the first date that the transferee
partnership makes a cash payment to the
eligible taxpayer as consideration for the
specified credit portion. If the transferee
partnership and eligible taxpayer have
different taxable years, the transfer of a
specified credit portion to a transferee
partnership is treated as occurring on the
later of–
(A) The first date of the taxable year
that the transferee partnership takes the
specified credit portion into account under
section 6418(d); or
(B) The first date that the transferee
partnership makes a cash payment to the
eligible taxpayer for the specified credit
portion.
(v) Transferee partnerships in tiered
structures. If an upper-tier partnership
is a direct or indirect partner of a trans-
feree partnership and directly or indirectly
receives an allocation of a transferred
specified credit portion, the upper-tier
partnership is not an eligible taxpayer
under section 6418 with respect to the
transferred specified credit portion. The
upper-tier partnership must determine
each partner’s distributive share of the
transferred specified credit portion in
accordance with paragraphs (b)(4)(iii)
and (iv) of this section and must report the
credits to its partners in accordance with
guidance.
(c) Rules applicable to S corpora-
tions—(1) Pro rata shares of tax exempt
income amounts. Each shareholder of a
transferor S corporation must take into
account such shareholder’s pro rata share
(as determined under section 1377(a)
of the Code) of any tax exempt income
resulting from the receipt of consideration
for the transfer. Tax exempt income result-
ing from the receipt of consideration for
the transfer of a specified credit portion
by a transferor S corporation is treated
as received or accrued, including for pur-
poses of section 1366, as of the date the
specified credit portion is determined with
respect to the transferor S corporation
(such as, for investment credit property,
the date the property is placed in service).
(2) S corporation as a transferee tax-
payer—(i) Eligibility under section 6418.
An S corporation may qualify as a trans-
feree taxpayer to the extent it is not related
(within the meaning of section 267(b) or
707(b)(1)) to an eligible taxpayer (trans-
feree S corporation). A transferee S cor-
poration is subject to the no additional
transfer rule in §1.6418-2(c)(2), however,
an allocation of a transferred specified
credit portion to a direct or indirect share-
holder of a transferee S corporation is not
a transfer for purposes of section 6418.
(ii) Treatment of a cash payment for a
transferred specified credit portion. A cash
payment by a transferee S corporation as
consideration for a transferred specified
credit portion is treated as an expenditure
described in section 1367(a)(2)(D) of the
Code.
(iii) Pro rata shares of transferred spec-
ified credit portions. Each shareholder of
a transferee S corporation must take into
account such shareholder’s pro rata share
(as determined under section 1377(a)) of
any transferred specified credit portion.
If the transferee S corporation and eligi-
ble taxpayer have the same taxable years,
the transfer of a specified credit portion
is treated as occurring to a transferee S
corporation during the transferee S corpo-
ration’s permitted year (as defined under
sections 444 and 1378(b)) that the trans-
feree S corporation first makes a cash
payment as consideration to the eligible
taxpayer for the specified credit portion.
If the transferee S corporation and eligi-
ble taxpayer have different taxable years,
then the transfer of a specified credit por-
tion is treated as occurring to a transferee
S corporation during the transferee S cor-
poration’s first permitted year (as defined
under sections 444 and 1378(b)) ending
with or after, the taxable year of the eligi-
ble taxpayer to which the transferred spec-
ified credit portion was determined.
(d) Transfer election by a partner-
ship or S corporation—(1) In general. A
partnership or S corporation may make

Bulletin No. 2023–27 1189 July 3, 2023
a transfer election to transfer a specified
credit portion under section 6418 if it files
an election in accordance with the rules
set forth in this paragraph (d). A transfer
election is made on the basis of an eligi-
ble credit property and only applies to the
specified credit portion identified in the
transfer election by such partnership or S
corporation in the taxable year for which
the election is made.
(2) Manner and due date of making a
transfer election. A transfer election for
a specified credit portion must be made
in the manner provided in §1.6418-2(b)
(1) through (3). All documents required
in §1.6418-2(b)(1) through (3) must be
attached to the partnership or S corpo-
ration return for the taxable year during
which the transferred specific credit por-
tion was determined. For the transfer
election to be valid, the return must be
filed not later than the time prescribed by
§§1.6031(a)-1(e) and 1.6037-1(b) (includ-
ing extensions of time) for filing the return
for such taxable year. No transfer election
may be made or revised on an amended
return or by filing an administrative
adjustment request under section 6227 of
the Code. There is no late-election relief
available under §§ 301.9100-1 through
301.9100-3 of this chapter for a transfer
election that is not timely filed.
(3) Irrevocable election. A transfer
election by a partnership or S corporation
is irrevocable.
(e) Examples. The examples in this
paragraph (e) illustrate the application
of paragraphs (a)(6), (b), and (c) of this
section.
(1) Example 1. Transfer of all eligible credits
by a transferor partnership—(i) Facts. A and B
each contributed $150X of cash to AB partnership
for the purpose of investing in energy property. The
partnership agreement provides that A and B share
equally in all items of income, gain, loss, deduction,
and credit of AB partnership. AB partnership invests
$300X in an energy property in accordance with sec-
tion 48 and places the energy property in service on
date X in year 1. As of the end of year 1, AB part-
nership has $90X of eligible credits under section
48 with respect to the energy property. Before AB
partnership files its tax return for year 1, AB part-
nership transfers the $90X of eligible credits to an
unrelated transferee taxpayer, Transferee Taxpayer X
for $80X and executes a transfer election statement
with Transferee Taxpayer X.
(ii) Analysis. Under §1.6418-3(b)(1), AB part-
nership allocates the tax exempt income resulting
from the transfer of the specified credit portion
proportionately among the partners based on each
partner’s distributive share of the otherwise eligible
section 48 credit as determined under §§1.46-3(f)
and 1.704-1(b)(4)(ii). Under §1.46-3(f)(2), each
partner’s share of the basis of the energy property
is determined in accordance with the ratio in which
the partners divide the general profits (or taxable
income) of the partnership. Under the AB partner-
ship agreement, A and B share partnership profits
equally. Thus, each partner’s share of the basis of
the energy property under §1.46-3(f) and distributive
share of the otherwise eligible credits under §1.704-
1(b)(4)(ii) is 50 percent. The transfer made pursuant
to section 6418(a) causes AB partnership’s eligible
credits under section 48 with respect to the energy
property to be reduced to zero, and the consider-
ation of $80X received by AB partnership for the
transferred specified credit portion is treated as tax
exempt income. Because the tax exempt income is
allocated in the same proportion as the otherwise eli-
gible credit would have been allocated, A and B will
each be allocated $40X of tax exempt income. Each
of partner A’s and partner B’s basis in its partnership
interest and capital account will be increased by
$40X. Also in year 1, the basis in the energy property
held by AB partnership and with respect to which the
credit is calculated is reduced under section 50(c)(3)
by 50 percent of the amount of the credit so deter-
mined, or $45. A’s and B’s basis in their partnership
interests and capital accounts will be appropriately
adjusted to take into account adjustments made to the
energy property under section 50(c)(5) and §1.704-
1(b)(2)(iv)(j). The tax exempt income received or
accrued by AB partnership as a result of the trans-
ferred specified credit portion is treated as received
or accrued, including for purposes of section 705, as
of date X in year 1, which is the date the transferred
specified credit portion was determined with respect
to AB partnership.
(2) Example 2. Recapture to a transferor part-
nership—(i) Facts. Assume the same facts as in
paragraph (e)(1)(i) of this section (Example 1),
except in year 3, within the recapture period related
to the energy property, A reduces its proportionate
interest in the general profits of the partnership by 50
percent causing a recapture event to A under §1.47-
6(a)(2). The energy property is not disposed of by
AB partnership and continues to be energy property
with respect to AB partnership.
(ii) Analysis. AB partnership should not provide
notice of recapture to Transferee Taxpayer X as
a result of the recapture event under §1.47-6(a)(2)
with respect to A. Transferee Taxpayer X is not liable
for any recapture amount. A, however, is subject to
recapture as provided in §1.47-6(a)(2) and based on
its share of the basis (or cost) of the energy property
to which the eligible credits were determined under
§1.46-3(f)(2).
(3) Example 3. Transfer of a portion of eligible
credits by a transferor partnership—(i) Facts. C and
D each contributed cash to CD partnership for the
purpose of investing in a qualified wind facility. The
partnership agreement provides that until a flip point,
C is allocated 99 percent of all items of income, gain,
loss, deduction and credit of CD partnership and D
is allocated the remaining 1 percent of such items.
After the flip point, C is allocated 5 percent of all
items of income, gain, loss, deduction and credit of
CD Partnership and D is allocated 95 percent of such
items. CD partnership invests in a qualified wind
facility and places the facility in service in year 1.
CD partnership generates $100X of credit under
section 45(a) for year 1. Before the due date for CD
partnership’s year 1 tax return (with extension), C
and D agree that D’s share of the eligible credit will
be transferred, and C will be allocated its share of
eligible credit. CD partnership transfers $1X of the
eligible credit to an unrelated transferee taxpayer for
$1X. The flip point has not been reached by the end
of year 1.
(ii) Analysis. Under paragraph (b)(2) of this sec-
tion, CD partnership must first determine each part-
ner’s eligible credit amount, which is equal to such
partner’s distributive share of the otherwise eligible
section 45(a) credit as determined under §1.704-
1(b)(4)(ii). Under §1.704-1(b)(4)(ii), for an eligible
credit that is not an investment tax credit, alloca-
tions of credit are deemed to be in accordance with
the partner’s interest in the partnership if the credit
is allocated in the same proportion as the partners’
distributive share of the receipts that give rise to the
credit. The CD partnership agreement provides that
until the flip point, C is allocated 99 percent of all
items of income, gain, loss, deduction and credit of
CD partnership and D is allocated the remaining 1
percent of such items. Assuming all requirements of
the safe harbor provided for in Revenue Procedure
2007-65, 2007-2 CB 967 are met, CD partnership’s
allocations of the otherwise eligible credits would
be respected as in accordance with section 704(b).
Thus, partner C’s and partner D’s distributive share
of the otherwise eligible credit is 99 percent and 1
percent, respectively. C and D have agreed to sell
D’s eligible credit amount of $1X for full value and
to allocate to C its eligible credit amount of $99X.
The transfer made pursuant to section 6418(a) causes
CD partnership’s eligible credits under section 45(a)
with respect to the wind facility to be reduced to
$99X, and the consideration of $1X received by CD
partnership is treated as tax exempt income. D is
allocated $1X of tax exempt income from the trans-
fer of the eligible credits, and C is allocated $99X
of eligible credits under section 45(a) with respect
to the wind facility. Neither C nor D is allocated
more eligible credits than its eligible credit amount.
Additionally, D is allocated an amount of tax exempt
income equal to $1X x (1 – 0)/1 and C is allocated
none of the tax exempt income. The allocations of
eligible credits and tax exempt income are permissi-
ble allocations under paragraph (b)(2) of this section.
(4) Example 4. Upper-tier partnership of a trans-
feror partnership—(i) Facts. E, F, and G each con-
tributed $100X of cash to EFG partnership for the
purpose of investing in an energy property. E, F, and
G are partnerships for Federal income tax purposes.
The partnership agreement provides that E, F and
G share equally in all items of income, gain, loss,
and deduction of EFG partnership. EFG partnership
invests $300X in an energy property in accordance
with section 48 and places the energy property
in service in year 1. As of the end of year 1, EFG
partnership has $90X of eligible credits under sec-
tion 48 with respect to the energy property. Before
the due date for EFG partnership’s year 1 tax return
(with extension), E, F and G agree that E’s share of
the eligible credits will be transferred, and F and G
will each be allocated their shares of eligible cred-
its (or basis). EFG partnership transfers $30X of the

July 3, 2023 1190 Bulletin No. 2023–27
eligible credits to an unrelated transferee taxpayer
for $25X. Assuming the allocations to E, F and G of
the eligible credits and tax exempt income resulting
from the receipt of cash for the transferred specified
credit portion are permissible allocations under para-
graph (b)(2) of this section, E is allocated $25X of
tax exempt income from the transfer of the eligible
credits and F and G are each allocated $30X of basis
with respect to the energy property.
(ii) Analysis. E must allocate the $25X of tax
exempt income to its partners as if it had retained
its share of the eligible credits. Under §1.46-3(f)(2),
each partner’s share of the basis of the section 48
energy property is determined in accordance with
the ratio in which the partners divide the general
profits (or taxable income) of the partnership. The
E partnership agreement provides for equal allo-
cations of income, gain, deduction, and loss to
its partners, and thus, E partnership must allocate
the otherwise eligible credits in the same manner.
Therefore, E partnership must allocate the $25X of
tax exempt income equally among its partners. In
accordance with paragraph (b)(3)(i) of this section,
F and G do not qualify as an eligible taxpayer for
purposes of section 6418 and thus, are not permit-
ted to make a transfer election for any portion of the
$30X of eligible credit allocated to them by EFG
partnership. Under §1.46-3(f)(2), each partner’s
share of the basis of the section 48 energy property
is determined in accordance with the ratio in which
the partners divide the general profits (or taxable
income) of the partnership. The F and G partnership
agreements provide for equal allocations of income,
gain, deduction, and loss to its partners, and F and
G must allocate the basis from the energy property
to their partners in the same manner.
(5) Example 5. Transferee partnership—(i)
Facts. Y and Z each contributed $50X of cash to YZ
partnership for the purpose of purchasing eligible
section 45 credits under section 6418. The partner-
ship agreement provides that all items of income,
gain, loss, deduction, and credit are shared equally
among Y and Z. The partnership agreement also pro-
vides that any nondeductible expenses used to fund
the purchase of any transferred specified credit por-
tion will be shared equally among Y and Z. On date
X in year 1, YZ partnership qualifies as a transferee
taxpayer and makes a cash payment of $80X to an
eligible taxpayer for $100X of a transferred speci-
fied credit portion. The eligible credits will be deter-
mined with respect to the eligible taxpayer as of the
end of year 1. Both YZ partnership and the eligible
taxpayer are calendar year taxpayers.
(ii) Analysis. The cash payment of $80X made
by YZ partnership for the transferred specified credit
portion is treated as a nondeductible expenditure
under section 705(a)(2)(B). Under paragraph (b)(4)
(iii) of this section, YZ partnership must determine
each partner’s distributive share of the transferred
specified credit portion based on such partner’s dis-
tributive share of the nondeductible expenses for the
taxable year used to fund the purchase of such trans-
ferred specified credit portion. The YZ partnership
agreement provides that nondeductible expenses
used to fund the purchase of any transferred specified
credit portion will be shared equally among Y and Z
and thus, the transferred specified credit portion is
also shared equally among Y and Z. The transferred
specified credit portion is treated as an extraordinary
item under §1.706-4(e)(2)(ix) that is deemed to occur
on date X in year 1. As of date X in year 1, each of
Y and Z are allocated $40X of a section 705(a)(2)
(B) expenditure with respect to the cash payment for
the transferred specified credit portion and $50X of
transferred section 45 credits.
(6) Example 6. Upper-tier partnership of a trans-
feree partnership—(i) Facts. Assume the same facts
as in paragraph (e)(5)(i) of this section (Example 5),
except Y is a partnership for Federal tax purposes,
and Z is a corporation for Federal tax purposes.
(ii) Analysis. In accordance with paragraph (b)(4)
(v) of this section, Y does not qualify as an eligible
taxpayer for purposes of section 6418 for that portion
of the transferred specified credit portion allocated
to it by YZ partnership. Under paragraph (b)(4)(iii)
of this section, Y must determine each partner’s dis-
tributive share of the transferred specified credit por-
tion based on such partner’s distributive share of the
nondeductible expenses for the taxable year used to
fund the purchase of such transferred specified credit
portion. The Y partnership agreement provides that
all items of income, gain, loss, deduction, and credit
are shared equally. The partnership agreement also
provides that any nondeductible expenses used to
fund the purchase of any specified credit portion are
shared equally. Thus, the transferred specified credit
portion must be shared equally among the partners
of Y.
(7) Example 7. Transferor S corporation—(i)
Facts. V and W each contributed $150X of cash
to an S corporation for the purpose of investing in
energy property. The S corporation invests $300X
in an energy property in accordance with section 48
and places the energy property in service on date X
in year 1. As of the end of year 1, the S corporation
has $90X of eligible credits under section 48 with
respect to the energy property. Before the due date
for S corporation’s year 1 tax return (with extension),
S corporation transfers the $90X of eligible credits to
an unrelated transferee taxpayer for $80X.
(ii) Analysis. The transfer made pursuant to
section 6418(a) causes the S corporation’s eligible
credits under section 48 with respect to the energy
property to be reduced to zero, and the consider-
ation of $80X received by the S corporation for the
transferred specified credit portion is treated as tax
exempt income. Under paragraph (c)(1) of this sec-
tion, each of V and W must take into account its pro
rata share (as determined under section 1377(a)) of
any tax exempt income resulting from the receipt of
consideration for the transfer of the eligible credit,
or $40X. Under section 1367(a)(1)(A), each of the
shareholder’s basis in its stock will be increased by
$40X. Also in year 1, the basis in the energy prop-
erty with respect to which the credit is calculated is
reduced under section 50(c)(3) by 50 percent of the
amount of the credit so determined, or $45. The tax
exempt income received or accrued by S corpora-
tion as a result of the transfer of the specified credit
portion is treated as received or accrued, including
for purposes of section 1366, as of date X in year
1, which is the date the transferred specified credit
portion was determined with respect to the transferor
S corporation.
(8) Example 8. Transferee S corporation—(i)
Facts. J and K each contributed $50X of cash to S
corporation for the purpose of purchasing eligible
section 48 credits under section 6418. At the begin-
ning of year 2, S corporation qualifies as a transferee
taxpayer and makes a cash payment of $80X to an
eligible taxpayer for $100X of a transferred specified
credit portion. The transferred specified credit por-
tion was determined with respect to the eligible tax-
payer for energy property placed in service in year
1. Both S corporation and the eligible taxpayer are
calendar year taxpayers.
(ii) Analysis. The cash payment of $80X made
by the S corporation for the transferred specified
credit portion is treated as an expenditure described
in section 1367(a)(2)(D). Each of J and K must take
into account its pro rata share (as determined under
section 1377(a)) of the transferred specified credit
portion. The transferred specified credit portion is
deemed to arise for purposes of sections 1366 and
1377 during year 2 of the S corporation. For year 2,
each of J and K take into account $40X of a section
1367(a)(2)(D) expenditure with respect to the cash
payment for the transferred specified credit portion
and $50X of transferred section 48 credits.
(f) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6418-4 Additional information and
registration.
(a) Pre-filing registration and election.
As a condition of, and prior to, any speci-
fied credit portion being transferred by an
eligible taxpayer to a transferee taxpayer
pursuant to an election under §1.6418-2,
or a specified credit portion being trans-
ferred by a partnership or S corporation
pursuant to §1.6418-3, the eligible tax-
payer is required to satisfy the pre-filing
registration requirements in paragraph
(b) of this section. An eligible taxpayer
that does not obtain a registration num-
ber under paragraph (c)(1) of this section,
and report the registration number on its
return pursuant to paragraph (c)(5) of this
section, is ineligible to make a transfer
election for a specified credit portion
under §1.6418-2 or §1.6418-3, with
respect to the eligible credit determined
with respect to the specific eligible credit
property for which the eligible taxpayer
has failed to obtain and report a regis-
tration number. However, completion of
the pre-filing registration requirements
and receipt of a registration number does
not, by itself, mean the eligible taxpayer
is eligible to transfer any specified credit
portion determined with respect to the
eligible credit property.
(b) Pre-filing registration require-
ments—(1) Manner of pre-filing

Bulletin No. 2023–27 1191 July 3, 2023
registration. Unless otherwise provided
in guidance, eligible taxpayers must com-
plete the pre-filing registration process
electronically through an IRS electronic
portal and in accordance with the instruc-
tions provided therein.
(2) Pre-filing registration and election
for members of a consolidated group.
A member of a consolidated group is
required to complete pre-filing registration
to transfer any eligible credit determined
with respect to the member. —
(3) Timing of pre-filing registration.
An eligible taxpayer must satisfy the
pre-filing registration requirements of this
paragraph (b) and receive a registration
number under paragraph (c) of this section
prior to making a transfer election under
§1.6418-2 or §1.6418-3 for a specified
credit portion on the taxpayer’s return for
the taxable year at issue.
(4) Each eligible credit property must
have its own registration number. An eli-
gible taxpayer must obtain a registration
number for each eligible credit property
with respect to which a transfer election
of a specified credit portion is made.
(5) Information required to complete
the pre-filing registration process. Unless
modified in future guidance, an eligible
taxpayer is required to provide the follow-
ing information to the IRS to complete the
pre-filing registration process:
(i) The eligible taxpayer’s general
information, including its name, address,
taxpayer identification number, and type
of legal entity;
(ii) Any additional information
required by the IRS electronic portal, such
as information establishing that the entity
is an eligible taxpayer;
(iii) The taxpayer’s taxable year, as
determined under section 441;
(iv) The type of annual tax return(s) nor-
mally filed by the eligible taxpayer, or that
the eligible taxpayer does not normally file
an annual tax return with the IRS;
(v) The type of eligible credit(s) for
which the eligible taxpayer intends to
make a transfer election;
(vi) Each eligible credit property that
the eligible taxpayer intends to use to
determine a specified credit portion for
which the eligible taxpayer intends to
make a transfer election;
(vii) For each eligible credit prop-
erty listed in paragraph (b)(5)(vi) of this
section, any further information required
by the IRS electronic portal, such as—
(A) The type of eligible credit property;
(B) Physical location (that is, address
and coordinates (longitude and latitude) of
the eligible credit property);
(C) Any supporting documentation relat-
ing to the construction or acquisition of the
eligible credit property (such as State, Indian
Tribal, or local government permits to oper-
ate the eligible credit property, certifications,
evidence of ownership that ties to a land
deed, lease, or other documented right to use
and access any land or facility upon which
the eligible credit property is constructed or
housed, and U.S. Coast Guard registration
numbers for offshore wind vessels);
(D) The beginning of construction
date, and the placed in service date of the
eligible credit property; and
(E) Any other information that the eli-
gible taxpayer believes will help the IRS
evaluate the registration request;
(viii) The name of a contact person for
the eligible taxpayer. The contact person
is the person whom the IRS may contact if
there is an issue with the registration. The
contact person must either:
(A) Possess legal authority to bind the
eligible taxpayer; or
(B) Must provide a properly exe-
cuted power of attorney on Form 2848,
Power of Attorney and Declaration of
Representative;
(ix) A penalties of perjury statement,
effective for all information submitted
as a complete application, and signed by
a person with personal knowledge of the
relevant facts that is authorized to bind the
registrant; and
(x) Any other information the IRS
deems necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under this
section that is provided in guidance.
(c) Registration number—(1) In gen-
eral. The IRS will review the registration
information provided and will issue a sep-
arate registration number for each eligi-
ble credit property for which the eligible
taxpayer provided sufficient verifiable
information.
(2) Registration number is only valid
for one taxable year. A registration num-
ber is valid to an eligible taxpayer only
for the taxable year in which the credit is
determined for the eligible credit property
for which the registration is completed,
and for a transferee taxpayer’s taxable
year in which the eligible credit is taken
into account under §1.6418-2(f).
(3) Renewing registration numbers. If
an election to transfer an eligible credit
will be made with respect to an eligible
credit property for a taxable year after a
registration number under this section has
been obtained, the eligible taxpayer must
renew the registration for that subsequent
taxable year in accordance with applicable
guidance, including attesting that all the
facts previously provided are still correct
or updating any facts.
(4) Amendment of previously submit-
ted registration information if a change
occurs before the registration number
is used. As provided in instructions to
the pre-filing registration portal, if spec-
ified changes occur with respect to one
or more applicable credit properties for
which a registration number has been
previously obtained, but not yet used, an
eligible taxpayer must amend the reg-
istration (or may need to submit a new
registration) to reflect these new facts.
For example, if the owner of a facility
previously registered for a transfer elec-
tion under §1.6418-2 or §1.6418-3 for
eligible credits determined with respect
to that facility and the facility undergoes
a change of ownership (incident to a cor-
porate reorganization or an asset sale)
such that the new owner has a different
employer identification number (EIN)
than the owner who obtained the origi-
nal registration, the original owner of the
facility must amend the original registra-
tion to disassociate its EIN from the eli-
gible credit property and the new owner
must submit separately an original regis-
tration (or if the new owner previously
registered other credit properties, must
amend its original registration) to associ-
ate the new owner’s EIN with the previ-
ously registered eligible credit property.
(5) Reporting of registration number
by an eligible taxpayer and a transferee
taxpayer—(i) Eligible taxpayer reporting.
As part of making a valid transfer election
under §1.6418-2 or §1.6418-3, an eligi-
ble taxpayer must include the registration
number of the eligible credit property on
the eligible taxpayer’s return (as provided
in §1.6418-2(b) or §1.6418-3(d)) for the
taxable year the specified credit portion

July 3, 2023 1192 Bulletin No. 2023–27
was determined. The IRS will treat an
election as ineffective if the eligible tax-
payer does not include a valid registration
number on the return.
(ii) Transferee taxpayer reporting. A
transferee taxpayer must report the reg-
istration number received (as part of the
transfer election statement as described in
§1.6418-2(b) or otherwise) from a trans-
feror taxpayer on the Form 3800, General
Business Credit, as part of the return for
the taxable year that the transferee tax-
payer takes the transferred specified credit
portion into account. The specified credit
portion will be disallowed to the trans-
feree taxpayer if the transferee taxpayer
does not include the registration number
on the return.
(d) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
§1.6418-5 Special rules.
(a) Excessive credit transfer tax
imposed—(1) In general. If any specified
credit portion that is transferred to a trans-
feree taxpayer pursuant to an election in
§1.6418-2(a) or §1.6418-3 is determined
to be an excessive credit transfer (as
defined in paragraph (b) of this section),
the tax imposed on the transferee taxpayer
by chapter 1 (regardless of whether such
entity would otherwise be subject to chap-
ter 1 tax) for the taxable year in which such
determination is made will be increased
by an amount equal to the sum of—
(i) The amount of such excessive credit
transfer; and
(ii) An amount equal to 20 percent of
such excessive credit transfer.
(2) Taxable year of the determination.
The taxable year of the determination for
purposes of paragraph (a)(1) of this sec-
tion is the taxable year that includes the
determination and not the taxable year
when the eligible credit was originally
determined by the eligible taxpayer, unless
those are the same taxable years.
(3) Payments related to excessive
credit transfer. Any payments made by a
transferee taxpayer to an eligible taxpayer
that directly relate to the excessive credit
transfer (as defined in paragraph (b) of this
section) are not subject to section 6418(b)
(2) or §1.6418-2(e).
(4) Reasonable cause. Paragraph (a)
(1)(ii) of this section does not apply if
the transferee taxpayer demonstrates to
the satisfaction of the IRS that the exces-
sive credit transfer resulted from reason-
able cause. Determination of reasonable
cause will be made based on the relevant
facts and circumstances. Generally, the
most important factor is the extent of the
transferee taxpayer’s efforts to determine
that the amount of specified credit por-
tion transferred by the eligible taxpayer
to the transferee taxpayer is not more
than the amount of the eligible credit
determined with respect to the eligible
credit property for the taxable year in
which the eligible credit was determined
and has not been transferred to any other
taxpayer. Circumstances that may indi-
cate reasonable cause can include, but
are not limited to, review of the eligi-
ble taxpayer’s records with respect to
the determination of the eligible credit
(including documentation evidencing
eligibility for bonus credit amounts),
reasonable reliance on third party expert
reports, reasonable reliance on represen-
tations from the eligible taxpayer that
the total specified credit portion trans-
ferred (including portions transferred to
other transferee taxpayers when an eli-
gible taxpayer makes multiple transfer
elections with respect to a single credit
property) does not exceed the total eli-
gible credit determined with respect to
the eligible credit property for the tax-
able year, and review of audited financial
statements provided to the Securities and
Exchange Commission (and underlying
information), if applicable.
(5) Recapture events. A recapture event
under section 45Q(f)(4) or 50(a) is not an
excessive credit transfer.
(b) Excessive credit transfer defined—
(1) In general. The term excessive credit
transfer means, with respect to an eligible
credit property for which a transfer elec-
tion is made under §1.6418-2 or §1.6418-3
for any taxable year, an amount equal to
the excess of—
(i) The amount of the transferred spec-
ified credit portion claimed by the trans-
feree taxpayer with respect to such eligible
credit property for such taxable year; over
(ii) The amount of the eligible credit
that, without the application of section
6418, would be otherwise allowable under
the Code with respect to such eligible
credit property for such taxable year.
(2) Multiple transferees treated as one.
All transferee taxpayers are considered
as one transferee for calculating whether
there was an excessive credit transfer and
the amount of the excess credit transfer. If
there was an excessive credit transfer, then
the amount of excessive credit transferred
to a specific transferee taxpayer is equal to
the total excessive credit transferred mul-
tiplied by the transferee taxpayer’s portion
of the total specified credit portions trans-
ferred to all transferees. The rule in this
paragraph (b)(2) is applied on an eligible
credit property basis, as applicable.
(3) Examples. The following examples
illustrate the rules of this paragraph (b):
(i) Example I – No excessive credit transfer.
Taxpayer A claims $50 of an eligible credit and trans-
fers $50 of an eligible credit to Transferee Taxpayer
B related to a single facility that was expected to
generate $100 of such eligible credit. In a later year
it is determined that the facility only generated $50
of such eligible credit. There is no excessive credit
transfer in this case because the amount of the eligi-
ble credit claimed by Transferee Taxpayer B of $50
is equal to the amount of the credit that would be
otherwise allowable with respect to such facility for
the taxable year the transfer occurred. Taxpayer A is
disallowed the $50 of the eligible credit claimed.
(ii) Example II – Excessive credit transfer.
Same facts as in paragraph (b)(3)(i) of this sec-
tion (Example I) except that Taxpayer A transfers
$80 of the $100 of eligible credit to Transferee
Taxpayer B. Taxpayer A claims $20 of the eligible
credit and Transferee Taxpayer B claims $80 of
the eligible credit. In this situation, there is a $30
excessive credit transfer because the amount of
the credit claimed by Transferee Taxpayer B ($80)
exceeds the amount of credit otherwise allowable
with respect to the facility ($50) by $30. Therefore,
Transferee Taxpayer B’s tax is increased in the
later year by $36, which is equal to the amount of
the excessive credit transfer plus 20 percent of the
excessive credit transfer as provided in paragraph
(a) of this section and section 6418(g)(2)(A). If
Transferee Taxpayer B can show reasonable cause
as provided in paragraph (a)(4) of this section and
section 6418(g)(2)(B), then Transferee Taxpayer B
will only have a tax increase of $30. Taxpayer A is
disallowed the $20 of the eligible credit claimed,
and pursuant to paragraph (a)(3) of this section
the payments made to Taxpayer A from Transferee
Taxpayer B that directly relate to the excessive
credit transfer are not subject to section 6418(b)(2)
or §1.6418-2(e).
(iii) Example III – Excessive credit with multi-
ple transferees. Same facts as in paragraph (b)(3)
(i) of this section (Example I) except that Taxpayer
A transfers $45 of the eligible credit to Transferee
Taxpayer B and $35 of the eligible credit to

Bulletin No. 2023–27 1193 July 3, 2023
Transferee Taxpayer C. Taxpayer A claims $20 of the
eligible credit, Transferee Taxpayer B claims $45 of
the eligible credit, and Transferee Taxpayer C claims
$35 of the eligible credit. In this situation, because
there are multiple transferees, all transferees are
treated as one transferee for determining the exces-
sive credit transfer amount under paragraph (b)(2) of
this section. There is a total excessive credit transfer
of $30 because the amount of the credit claimed by
the transferees in total ($80) exceeds the amount of
credit otherwise allowable with respect to the facil-
ity ($50) by $30. The excessive credit transfer to
Taxpayer B is equal to ($45/$80 * $30) = $16.88, and
the excessive credit transfer to Taxpayer C is equal
to ($35/$80 * $30) = $13.12. Therefore, Transferee
Taxpayer B and Transferee Taxpayer C are subject
to the provisions in paragraph (a) of this section.
Transferee Taxpayer B’s and Transferee Taxpayer
C’s tax is increased in the later year by the respec-
tive excessive credit transfer amount and 20 percent
of the excessive credit transfer amount ($20.26 for
Transferee Taxpayer B and $15.74 for Transferee
Taxpayer C) as provided in paragraph (a) of this
section and section 6418(g)(2)(A). If Transferee
Taxpayer B or Transferee Taxpayer C can show
reasonable cause as provided in paragraph (a)(4) of
this section and section 6418(g)(2)(B), then the tax
increase will only be $16.88 or $13.12, respectively.
Taxpayer A is disallowed the $20 of eligible credit
claimed and pursuant to paragraph (a)(3) of this sec-
tion the payments made to Taxpayer A that directly
relate to the excessive credit transfer are not subject
to section 6418(b)(2) or §1.6418-2(e).
(c) Basis reduction under section 50(c).
In the case of any transfer election under
§1.6418-2 or §1.6418-3 with respect to
any specified credit portion described in
§1.6418-1(c)(2)(ix) through (xi), section
50(c) will apply to the applicable invest-
ment credit property (as defined in section
50(a)(6)(A)) as if such credit was allowed
to the eligible taxpayer.
(d) Notification and impact of recap-
ture under section 50(a) or 49(b)—(1) In
general. In the case of any election under
§1.6418-2 or §1.6418-3 with respect to
any specified credit portion described
in §1.6418-1(c)(2)(ix) through (xi), if,
during any taxable year, the applicable
investment credit property (as defined
in section 50(a)(6)(A)) is disposed of, or
otherwise ceases to be investment credit
property with respect to the eligible tax-
payer, before the close of the recapture
period (as described in section 50(a)(1)
(A)), other than as described in §1.6418-
3(a)(6), or has a reduction in credit base
causing recapture under section 49, other
than as described in §1.6418-3(a)(6), such
eligible taxpayer and the transferee tax-
payer must follow the notification process
in paragraph (d)(2) of this section, with
recapture impacting the transferee tax-
payer and eligible taxpayer as described
in paragraph (d)(3) of this section.
(2) Notification requirements—(i)
Eligible taxpayer. The eligible taxpayer
must provide notice of the occurrence of
recapture to the transferee taxpayer. This
notice must provide all information neces-
sary for a transferee taxpayer to correctly
compute the recapture amount (as defined
under section 50(c)(2)), and the notifi-
cation must occur in sufficient time to
allow the transferee taxpayer to compute
the recapture amount by the due date of
the transferee taxpayer’s return (without
extensions) for the taxable year in which
the recapture event occurs. The eligi-
ble taxpayer and transferee taxpayer can
contract with respect to the form of the
notice and any specific time periods that
must be met, so long as the terms of the
contractual arrangement do not conflict
with the requirements of this paragraph
(d)(2)(i). Any additional information that
is required or other specific time periods
that must be met may be prescribed by the
IRS in guidance issued with respect to this
notification requirement.
(ii) Transferee taxpayer. The trans-
feree taxpayer must provide notice of
the recapture amount (as defined in sec-
tion 50(c)(2)), if any, to the eligible tax-
payer. This must occur in sufficient time
to allow the eligible taxpayer to calcu-
late any basis adjustment with respect
to the investment credit property by
the due date of the eligible taxpayer’s
return (without extensions) for the tax-
able year in which the recapture event
occurs. The eligible taxpayer and trans-
feree taxpayer can contract with respect
to the form of the notice and any specific
time periods that must be met, so long as
the terms of the contractual arrangement
do not conflict with the requirements of
this paragraph (d)(2)(ii). Any additional
information that is required or other spe-
cific time periods that must be met may
be provided in guidance prescribed by
the IRS issued with respect to this notifi-
cation requirement.
(3) Impact of recapture—(i) Impact of
recapture on transferee. The transferee
taxpayer is responsible for any amount of
tax increase under section 50(a) upon the
occurrence of a recapture event.
(ii) Impact on eligible taxpayer. The
eligible taxpayer must increase the basis
of the investment credit property (imme-
diately before the event resulting in such
recapture) by an amount equal to the
recapture amount provided to the eligible
taxpayer by the transferee taxpayer under
paragraph (d)(2)(ii) of this section and in
accordance with section 50.
(e) Notification and impact of recap-
ture under section 45Q(f)(4)—(1) In gen-
eral. In the case of any election under
§1.6418-2 or §1.6418-3 with respect to
any specified credit portion described in
§1.6418-1(c)(2)(iii), if, during any tax-
able year, there is recapture of any section
45Q credit allowable with respect to any
qualified carbon oxide that ceases to be
captured, disposed of, or used as a tertiary
injectant in a manner consistent with sec-
tion 45Q, before the close of the recapture
period (as described in §1.45Q-5(f)), such
eligible taxpayer and the transferee tax-
payer must follow the notification process
in paragraph (e)(2) of this section with
recapture impacting the transferee tax-
payer as described in paragraph (e)(3) of
this section.
(2) Notification requirements. The
notification requirements for the eligi-
ble taxpayer are the same as for an eligi-
ble taxpayer that must report a recapture
event as described in paragraph (d)(2)(i)
of this section, except that the recapture
amount that must be computed is defined
in §1.45Q-5(e).
(3) Impact of recapture. The transferee
taxpayer is responsible for any amount of
tax increase under section 45Q(f)(4) and
§1.45Q-5 upon the occurrence of a recap-
ture event.
(f) Impact of an ineffective transfer
election by an eligible taxpayer. An inef-
fective transfer election means that no
transfer of an eligible credit has occurred
for purposes of section 6418, includ-
ing section 6418(b). Section 6418 does
not apply to the transaction and the tax
consequences are determined under any
other relevant provisions of the Code.
For example, an ineffective election
results if an eligible taxpayer tries to
elect to transfer a specified credit portion,
but the eligible taxpayer did not register
and receive a registration number with
respect to the eligible credit property

July 3, 2023 1194 Bulletin No. 2023–27
(or otherwise satisfy the requirements
for making a transfer election under the
section 6418 regulations) with respect
to which the specified credit portion was
determined.
(g) Carryback and carryforward. A
transferee taxpayer can apply the rules in
section 39(a)(4) (regarding a 3-year carry-
back period for unused current year busi-
ness credits) to a specified credit portion
to the extent the specified credit portion
is described in section 6417(b) (list of
applicable credits, taking into account any
placed in service requirements in section
6417(b)(2), (3), and (5)).
(h) Applicability date. This section
applies to taxable years ending on or after
date of publication of final rule.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register June 14,
2023, 11:15 a.m., and published in the issue of the
Federal Register for June 21, 2023, ** FR *****)
Notice of Proposed
Rulemaking
Elective Payment of
Advanced Manufacturing
Investment Credit
REG-105595-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations concerning the
elective payment election of the advanced
manufacturing investment credit under
the Creating Helpful Incentives to
Produce Semiconductors (CHIPS) Act of
2022. The proposed regulations describe
rules for the elective payment election,
including special rules applicable to
partnerships and S corporations, repay-
ment of excessive payments, and basis
reduction and recapture. In addition,
the proposed regulations provide rules
related to an IRS pre-filing registration
process that taxpayers wanting to make
the elective payment election would be
required to follow. These proposed reg-
ulations affect taxpayers eligible to make
the elective payment election of the
advanced manufacturing investment tax
credit in a taxable year. This document
also provides notice of a public hearing
on the proposed regulations.
DATES: Written or electronic comments
must be received by August 14, 2023.
The public hearing on these proposed
regulations is scheduled to be held on
August 24, 2023, at 10 a.m. ET. Requests
to speak and outlines of topics to be
discussed at the public hearing must be
received by August 14, 2023. If no out-
lines are received by August 14, 2023,
the public hearing will be cancelled.
Requests to attend the public hearing
must be received by 5 p.m. ET on August
22, 2023. The public hearing will be
made accessible to people with disabil-
ities. Requests for special assistance
during the hearing must be received by
August 21, 2023.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-105595-23) by following
the online instructions for submitting
comments. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn. The Department of
the Treasury (Treasury Department) and
the IRS will publish for public availabil-
ity any comments submitted electronically
and comments submitted on paper to its
public docket. Send hard copy submis-
sions to: CC:PA:LPD:PR (REG-105595-
23), Room 5203, Internal Revenue
Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning this proposed
regulation, Lani M. Sinfield at (202) 317-
5871 (not a toll-free number); concerning
submissions of comments and or the public
hearing, Vivian Hayes at (202) 317-6901
(not a toll-free number) or by email to
publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background
Section 48D was added to the Internal
Revenue Code (Code) on August 9,
2022, by section 107(a) of the CHIPS
Act of 2022 (CHIPS Act), which was
enacted as Division A of the CHIPS and
Science Act of 2022, Public Law 117-
167, 136 Stat. 1366, 1393. Section 48D
established the advanced manufacturing
investment credit (section 48D credit)
and section 48D(d) allows taxpayers
(other than partnerships and S corpora-
tions) to elect to treat the amount of the
section 48D credit determined under sec-
tion 48D(a) as a payment against their
Federal income tax liabilities. Section
48D(d) also provides special rules relat-
ing to elective payments to partner-
ships and S corporations and directs the
Secretary of the Treasury or her delegate
(Secretary) to provide rules for mak-
ing elections under section 48D and to
require information or registration nec-
essary for purposes of preventing dupli-
cation, fraud, improper payments, or
excessive payments under section 48D.
Section 48D applies to qualified prop-
erty placed in service after December
31, 2022, and, for any property the con-
struction of which began prior to January
1, 2023, only to the extent of the basis
thereof attributable to the construction,
reconstruction, or erection of such qual-
ified property after August 9, 2022 (the
date of enactment of the CHIPS Act).
See section 107(f)(1) of the CHIPS Act.
On March 23, 2023, the Treasury
Department and the IRS published in the
Federal Register (88 FR 17451) a notice
of proposed rulemaking (REG-120653-
22), which contains proposed regulations
to implement the general provisions relat-
ing to the section 48D credit (March 2023
proposed regulations). The March 2023
proposed regulations included proposed
definitions of various statutory terms,
including “eligible taxpayer,” “qualified
property,” “advanced manufacturing facil-
ity,” and “semiconductor.” The March
2023 proposed regulations also proposed
rules under section 48D regarding the

Bulletin No. 2023–27 1195 July 3, 2023
beginning of construction requirement;
proposed rules requiring pre-filing regis-
tration with the IRS in advance of filing
an elective payment election; and pro-
posed rules implementing the “applicable
transaction” credit recapture rules under
section 50(a)(3) of the Code. In addition,
the March 2023 proposed regulations
requested comments on potential issues
with respect to the elective payment elec-
tion provisions under section 48D(d) that
may require guidance. This document
contains proposed amendments to the
Income Tax Regulations (26 CFR part 1)
to implement the statutory provisions of
section 48D(d) and revise the rules in pro-
posed § 1.48D-6 of the March 2023 pro-
posed regulations.
In the Rules and Regulations section
of this issue of the Federal Register,
the Treasury Department and the IRS
are issuing temporary regulations under
§ 1.48D-6T that implement the pre-filing
registration process described in proposed
§ 1.48D-6 of the proposed regulations.
The temporary regulations require taxpay-
ers that want to elect the elective payment
of the section 48D credit to register with
the IRS through an IRS electronic portal
in advance of the taxpayer filing the return
on which the election under section 48D
is made.
I. Overview of elective payment election
under section 48D
Section 48D(d)(1) allows a taxpayer to
elect to treat the section 48D credit deter-
mined for the taxpayer for a taxable year
as a payment against the tax imposed by
subtitle A of the Code (that is, treated as
a payment of Federal income tax) equal
to the amount of the credit rather than
a credit against the taxpayer’s Federal
income tax liability for that taxable year
(elective payment election).
II. Section 48D rules for partnerships and
S corporations
Section 48D(d)(2)(A) provides spe-
cial rules for partnerships (as defined in
section 761(a)) and for S corporations
(as defined in section 1361(a)(1) of the
Code). Section 48D(d)(2)(A)(i) provides
that, in the case of any credit determined
with respect to any property held directly
by a partnership or S corporation, any
election under section 48D(d)(1) is to be
made by such partnership or S corpora-
tion and must be made in such manner
as the Secretary may provide. If such
partnership or S corporation makes an
election under section 48D(d)(1), (1) the
Secretary will make a payment to such
partnership or S corporation equal to the
amount of such credit, (2) section 48D(d)
(3) is applied with respect to the credit
before determining any partner’s dis-
tributive share, or S corporation share-
holder’s pro rata share, of such credit,
(3) any credit amount with respect to
which the election in section 48D(d)(1)
is made is treated as tax exempt income
for purposes of sections 705 and 1366 of
the Code, and (4) a partner’s distributive
share of such tax exempt income is based
on such partner’s distributive share of the
otherwise applicable credit for each tax-
able year.
III. Special rules
Section 48D(d)(2)(B) requires the elec-
tive payment election to be made no later
than the due date (including extensions
of time) of the tax return for the taxable
year for which the election is made. The
elective payment election is irrevocable
once made and applies with respect to any
credit for the taxable year for which the
election is made.
Section 48D(d)(2)(E) provides that, as
a condition of, and prior to, any amount
between treated as a payment by or to
the taxpayer, the Secretary may require
such information or registration as the
Secretary deems necessary or appropriate
for purposes of preventing duplication,
fraud, improper payments, or excessive
payments.
Section 48D(d)(2)(F) provides rules
relating to excessive payments. In the case
of any amount treated as a payment which
is made by the taxpayer under section
48D(d)(1), or the amount of the payment
made pursuant to section 48D(d)(2)(A),
that the Secretary determines constitutes
an excessive payment, the tax imposed on
such taxpayer by chapter 1 of the Code,
for the taxable year in which such deter-
mination is made must be increased by an
amount equal to the sum of (1) the amount
of any payment treated as made by or to
the taxpayer which the Secretary deter-
mines constitutes an excessive payment,
(2) plus 20 percent of such excessive pay-
ment. The increase equal to 20 percent
of the excessive payment does not apply
if the taxpayer demonstrates to the satis-
faction of the Secretary that the excessive
payment resulted from reasonable cause.
Section 48D(d)(2)(F)(iii) defines
“excessive payment” as, with respect to
property for which an elective payment
election is made for any taxable year,
an amount equal to the excess of (I) the
amount treated as a payment made by
the taxpayer under section 48D(d)(1) or
the amount of the payment made pursu-
ant to section 48D(d)(2)(A)(i) over (II)
the amount of the credit which, without
application of section 48D(d), would be
otherwise allowable under section 48D(a)
(determined without regard to section
38(c)) with respect to such property for
such taxable year.
Section 48D(d)(3) provides a denial
of double benefit rule. It states that, in
the case of a taxpayer making an elective
payment election with respect to the credit
determined under section 48D(a), such
credit is reduced to zero and is deemed to
have been allowed to the taxpayer for such
taxable year for any other purposes under
the Code.
Section 48D(d)(5) provides basis
reduction and recapture rules. It states that
rules similar to the rules of section 50(a)
and (c) of the Code apply with respect to
amounts treated as a payment made by a
taxpayer under section 48D(d)(1) and any
payment made pursuant to section 48D(d)
(2)(A).
Section 48D(d)(6) authorizes the
Secretary to issue regulations or other
guidance determined to be necessary
or appropriate to carry out the elective
payment election provisions of sec-
tion 48D(d), including (A) regulations or
other guidance providing rules for deter-
mining a partner’s distributive share of
the tax exempt income described in sec-
tion 48D(d)(2)(A)(i) and (B) guidance
to ensure that the amount treated as a
payment under section 48D(d)(1) or pay-
ment made under section 48D(d)(2)(A)(i)
is commensurate with the amount of the
section 48D credit that generally would be
otherwise allowable (determined without
regard to section 38(c) of the Code).

July 3, 2023 1196 Bulletin No. 2023–27
Explanation of Provisions
I. Rules for Making Elective Payment
Elections
A. In general
These proposed regulations revise
§1.48D-6(a)(1) and (2) of the March 2023
proposed regulations to clarify that an elec-
tive payment election may only be made
on an original return of tax filed not later
than the due date (including extensions of
time) for the return for the taxable year for
which the section 48D credit is determined
and in the manner as provided in guidance,
and must include any required completed
source credit form(s) with respect to the
qualified property, a completed Form
3800, General Business Credit, and any
additional information, including support-
ing calculations, required in instructions
to the relevant forms. An original return
would include a superseding return filed
on or before the due date (including exten-
sions). No elective payment election would
be permitted to be made or revised on an
amended return or by filing an adminis-
trative adjustment request under section
6227 of the Code. There also would be
no relief available under §§ 301.9100-1
through 301.9100-3 of the Procedure and
Administration Regulations (26 CFR part
301) for an elective payment election that
is not timely filed.
These proposed regulations would fur-
ther provide that a taxpayer makes the elec-
tive payment election with respect to any
section 48D credit determined with respect
to such taxpayer in accordance with section
48D(d)(1), and the taxpayer must include a
statement with the election attesting under
penalties of perjury that the taxpayer claim-
ing to be an eligible taxpayer is not a for-
eign entity of concern and has not made an
applicable transaction during the taxable
year that the qualified property is placed in
service, and will not claim a double benefit
(within the meaning of section 48D(d)(3)
and § 1.48-6(d)(2)(ii)(B) and (C) and (e))
with respect to any elective payment elec-
tion made by the taxpayer.
II. Denial of Double Benefit
These proposed regulations revise
§1.48D-6(a)(4) of the March 2023
proposed regulations by explaining the
application of the section 48D(d)(3) denial
of a double benefit rule and addressing the
methodology for determining the amount
of an elective payment, reducing the
section 48D credit amount to zero, and
treating the section 48D credit as a credit
allowed for the taxable year for all other
purposes of the Code with respect to tax-
payers other than partnerships or S corpo-
rations. The proposed application of the
denial of a double benefit rule is redesig-
nated as proposed §1.48D-6(e). The meth-
odology with respect to a payment made
to a partnership or S corporation is pro-
vided in proposed §1.48D-6(d)(2)(ii)(B),
as described in part III of this Explanation
of Provisions.
A taxpayer (other than a partnership
or S corporation) making an elective
payment election applies section 48D(d)
(3) by taking the following steps. First,
the taxpayer would compute the amount
of the tax liability (if any) for the taxable
year, without regard to general business
credits (GBCs), that is payable on the due
date of the tax return (without regard to
extensions), and the amount of the Federal
income tax liability that may be offset by
GBCs pursuant to the limitation based on
the amount of tax under section 38 (Step
1). Second, the taxpayer would compute
the allowed amount of the GBCs carryfor-
wards carried to the taxable year plus the
amount of current year GBCs (including
the section 48D credit) allowed for the
taxable year under section 38 (that is, in
accordance with all the rules in section 38,
including the ordering rules provided in
section 38(d)). Since the election would
be required to be made on an original
return filed before the due date (including
extensions of time) for the taxable year
for which the section 48D credit is deter-
mined, any GBC carryback would not be
considered when determining the elec-
tive payment amount for the taxable year
(Step 2). Third, the taxpayer would apply
the GBCs allowed for the taxable year as
computed in Step 2, including those attrib-
utable to the section 48D credit as GBCs,
against the tax liability computed in Step
1. Fourth, the taxpayer would identify the
amount of any excess or unused current
year GBC, as defined under section 39,
attributable to current year section 48D
credit(s) for which the taxpayer is making
an elective payment election. The amount
of such unused section 48D credits would
be treated as a payment against the tax
imposed by subtitle A for the taxable
year with respect to which such credits
are determined (rather than having them
available for carryback or carryover) (net
elective payment amount) (Step 4). Fifth,
the taxpayer would reduce the section
48D credit(s) for which an elective pay-
ment election is made by the amount (if
any) allowed as a general business credit
under section 38 for the taxable year, as
provided in Step 3, and by the net elective
payment amount (if any) that is treated as
a payment against tax, as provided in Step
4, which results in the section 48D cred-
it(s) being reduced to zero.
The proposed regulations would pro-
vide, consistent with section 48D(d)(3),
that the full amount of the section 48D
credits for which an elective payment
election is made is deemed to have been
allowed for all other purposes of the Code,
including, but not limited to, the basis
reduction and recapture rules imposed
by section 50 and the calculation of any
underpayment of estimated taxes under
sections 6654 and 6655 of the Code.
The Treasury Department and the
IRS request comments on whether future
guidance should expand or clarify the
methodology that a taxpayer follows to
compute the amount of its elective pay-
ment. Comments are also requested on
additional Code sections under which it
may be necessary to consider the section
48D credit to have been deemed to have
been allowed for the taxable year in which
an elective payment election is made.
III. Partnership and S Corporations
A. Overview
Section 48D(d)(2)(A)(i) provides
that, in the case of any credit deter-
mined with respect to any property held
directly by a partnership or S corpora-
tion, any election under section 48D(d)
(1) is to be made by such partnership or
S corporation and must be made in such
manner as the Secretary may provide. If
such partnership or S corporation makes
an election under section 48D(d)(1), the
special rules of section 48D(d)(2)(A)(i)
(I) through (IV) apply. In that regard,

Bulletin No. 2023–27 1197 July 3, 2023
proposed §1.48D-6(d)(2)(ii) would
provide that (1) the IRS will make a
payment to such partnership or S corpo-
ration equal to the amount of such credit;
(2) before determining any partner’s
distributive share, or shareholder’s pro
rata share, of such credit, such credit is
reduced to zero and is, for any other pur-
poses under the Code, deemed to have
been allowed solely to such entity (and
not allocated by such entity, or otherwise
allowed, to any partner or shareholder)
for such taxable year; (3) any amount
with respect to which the election under
section 48D(d)(1) is made is treated as
tax exempt income for purposes of sec-
tions 705 and 1366; and (4) a partner’s
distributive share of such tax exempt
income is equal to such partner’s dis-
tributive share of its otherwise allocable
basis in the qualified property as deter-
mined under § 1.48D-2(h)(2)(i) for such
year. The tax exempt income is taken
into account by the partnership or S cor-
poration at the same time as the under-
lying credit would have been taken into
account by the partnership or S corpora-
tion absent an elective payment election.
Such tax exempt income resulting from
such election is treated as received or
accrued, including for purposes of sec-
tions 705 and 1366 of the Code, as of the
date the qualified property is placed in
service with respect to the partnership or
S corporation. The proposed regulations
provide an example illustrating this rule.
Because it is the section 48D credits, and
not the tax exempt income, that arise
from the conduct of the trade or busi-
ness, the proposed regulations would
treat the tax exempt income resulting
from an elective payment election by a
partnership or an S corporation as arising
from an investment activity and not from
the conduct of a trade or business within
the meaning of section 469(c)(1)(A). As
such, the tax exempt income would not
be treated as passive income to any part-
ners or shareholders who do not mate-
rially participate within the meaning of
section 469(c)(1)(B).
In response to stakeholder comments,
the Treasury Department and the IRS
clarify here that there are no restrictions
imposed under section 48D or the section
48D regulations on how a partnership or
S corporation that receives a payment
from the IRS pursuant to an elective pay-
ment election may use the cash payment
in its operations (including when it makes
distributions to its distributions to its part-
ners or shareholders).
Section 48D(d)(6)(B) requires that
the Secretary issue regulations or other
guidance to ensure that the amount of a
payment under section 48(D)(2)(A)(i)(I)
to a partnership or S corporation is com-
mensurate with the amount of the credit
that would otherwise be allowable (with-
out regard to section 38(c)). Therefore,
proposed §1.48D-6(d)(6) would provide
that, in determining the section 48D credit
amount that will result in a payment to a
partnership or S corporation, the partner-
ship or S corporation must compute the
amount of the section 48D credit allow-
able (without regard to section 38(c)) as
if an elective payment election were not
made. Because a partnership or S corpora-
tion is not subject to section 469 (that is,
section 469 applies at the partner or share-
holder level), the amount of the credit
determined with respect to any qualified
property owned by a partnership or S cor-
poration is not subject to limitation by sec-
tion 469.
However, section 49 generally impacts
the amount of a credit determined with
respect to a qualified property. Proposed
§1.48D-6(d)(6)(ii) provides rules for the
application of section 49 to a partnership
or S corporation. The proposed regu-
lations would provide that any amount
of section 48D credit determined with
respect to the qualified property held
directly by a partnership or S corpora-
tion must be determined by the partner-
ship or S corporation taking into account
the section 49 at-risk rules at the partner
or shareholder level as of the close of
the taxable year in which the qualified
property is placed in service. Thus, if
the credit base of the qualified property
is limited to a partner or shareholder by
section 49, then the amount of the section
48D credit determined by the partnership
or S corporation is also limited. The pro-
posed regulations would provide that a
partnership or S corporation that makes
an elective payment election must request
from each of its partners or sharehold-
ers, respectively, that is subject to sec-
tion 49, the amount of such partner’s or
shareholder’s nonqualified nonrecourse
financing with respect to the qualified
property as of the close of the taxable
year in which the property is placed in
service. Additionally, the partnership or S
corporation would attach to its tax return
for the taxable year in which the prop-
erty is placed in service, the amount of
each partner’s or shareholder’s section
49 limitation with respect to the qualified
property. The Treasury Department and
the IRS request comments as to whether
(1) any information or reporting require-
ments are needed for partnerships and
S corporations to apply these rules when
determining the amount of the section
48D credit for which an elective payment
election can be made by a partnership or
S corporation or (2) any additional clar-
ifications are needed regarding how the
at-risk rules apply to the determination of
the section 48D credit by a taxpayer.
B. BBA Partnership
Many partnerships are subject to the
centralized partnership audit regime found
in subchapter C of chapter 63 of the Code
as amended by the Bipartisan Budget
Act of 2015 (BBA).
2
In connection with
the implementation of section 48D, the
Treasury Department and the IRS identi-
fied several areas of the BBA regulations
that require updates to administer section
48D in the case of a partnership subject to
the BBA (BBA partnership). Section 6221
of the Code provides that any adjustment
to a partnership-related item with respect
to a BBA partnership, and any tax attrib-
utable thereto, is assessed and collected at
the partnership-level except to the extent
provided under the BBA. The BBA out-
lines centralized audit procedures which
generally must be followed before the
IRS can adjust a partnership-related item
(as defined in § 301.6241-1). Accordingly,
the notice of proposed rulemaking (REG-
101607-23) found in the Proposed Rules
of this issue of the Federal Register,
which primarily relates to proposed rules
under section 6417, would add a new para-
graph (j) to § 301.6241-7 to provide that
an election by a BBA partnership under
section 48D(d) can be adjusted outside of
the BBA audit rules. Proposed §1.48D-
6(d)(7) would cross-reference to proposed
§ 301.6241-7(j) for rules applicable to
payments made to BBA partnerships.

July 3, 2023 1198 Bulletin No. 2023–27
IV. Pre-filing Registration Requirements
and Additional Information
Proposed §1.48D-6(b)(1) would pro-
vide the mandatory pre-filing registra-
tion process that, except as provided in
guidance, a taxpayer must complete as
a condition of, and prior to, any amount
being treated as a payment against the
tax imposed under §1.48D-6(a)(1), or an
amount paid to a partnership or S cor-
poration pursuant to §1.48D-6(d)(2)(ii)
(A). A taxpayer would be required to
use the pre-filing registration process to
register each qualified investment in an
advanced manufacturing facility. A tax-
payer that does not obtain a registration
number or report the registration number
on its annual tax return with respect to an
advanced manufacturing facility would
be ineligible to receive any elective pay-
ment amount with respect to the amount
of any section 48D credit determined
with respect to that advanced manufactur-
ing facility. However, completion of the
pre-filing registration requirements and
receipt of a registration number would not,
by itself, mean that the taxpayer would be
eligible to receive a payment with respect
to the section 48D credits determined with
respect to the advanced manufacturing
facility.
The pre-filing registration require-
ments are proposed to be that a taxpayer:
(1) must complete the registration pro-
cess electronically through the IRS elec-
tronic portal and in accordance with the
instructions provided therein, unless oth-
erwise provided in guidance;
(2) must satisfy the registration require-
ments and receive a registration number
prior to making a section 48D(d)(1) elec-
tive payment election on the taxpayer’s
tax return for the taxable year at issue;
(3) is required to obtain a registration
number for each qualified investment in
an advanced manufacturing facility with
respect to which a section 48D credit will
be determined and for which the taxpayer
wishes to make a section 48D(d)(1) elec-
tive payment election; and
(4) provide the specific informa-
tion required to be provided as part of
the pre-filing registration process. The
provision of such information, which
includes information about the taxpayer
and about the qualified investment in
an advanced manufacturing facility that
would allow the IRS to prevent dupli-
cation, fraud, improper payments, or
excessive payments under section 48D.
For example, verifying information
about the taxpayer would allow the IRS
to mitigate the risk of fraud or improper
payments to entities that are not eligible
taxpayers. Information about the taxpay-
er’s taxable year would allow the IRS to
ensure that an elective payment election
is timely made on the entity’s annual tax
return. Information about the advanced
manufacturing facility, including its
address and coordinates (longitude and
latitude), supporting documentation,
beginning of construction date, and
placed in service date would allow the
IRS to mitigate the risk of duplication,
fraud, and improper payments for prop-
erties that are not advanced manufactur-
ing facilities.
Proposed §1.48D-6(b)(7)(i) provides
that, after a taxpayer completes pre-filing
registration with respect to each qualified
investment in an advanced manufacturing
facility with respect to which the taxpayer
intends to elect a section 48D(d) elective
payment election for the taxable year,
the IRS will review the information pro-
vided and will issue a separate registration
number for each qualified investment for
which the taxpayer provided sufficient
verifiable information.
Proposed §1.48D-6(b)(7)(ii) would
provide that a registration number is valid
only for the taxable year for which it is
obtained. Proposed §1.48D-6(c)(7)(iii)
would provide that, if an elective pay-
ment election will be made with respect
to qualified investment in an advanced
manufacturing facility for a taxable
year for which a registration number
under this section has been obtained for
a prior taxable year, the taxpayer must
renew the registration each subsequent
year in accordance with applicable guid-
ance, including attesting that all the facts
previously provided are still correct or
updating any facts that are relevant in
calculating the amount of the section
48D credit. Proposed §1.48D-6(b)(7)
(iv) would provide that, if facts change
with respect to the qualified investment
in an advanced manufacturing facil-
ity for which a registration number has
been previously obtained, the taxpayer
must amend the registration to reflect
these new facts. The regulations would
provide, for example, that if the facil-
ity previously registered for an elective
payment election undergoes a change of
ownership (incident to a corporate reor-
ganization or an asset sale) such that the
new owner has a different employer iden-
tification number (EIN) than the owner
who obtained the original registration,
the original owner would be required to
amend the original registration to disas-
sociate its EIN from the advanced man-
ufacturing facility and the new owner
must submit an original registration (or
if the new owner previously registered
other advanced manufacturing facilities,
must amend its original registration) to
associate the new owner’s EIN with the
previously registered advanced manufac-
turing facility.
Lastly, proposed §1.48D-6(b)(7)(v)
would provide that the taxpayer would
be required to include the registration
number of the advanced manufacturing
facility on the taxpayer’s annual return
for the taxable year for an election under
proposed §1.48D-6(a)(1). The IRS will
treat an elective payment election as
ineffective with respect to any section
48D credit determined with respect to
the advanced manufacturing facility for
which the taxpayer does not include a
valid registration number on the annual
tax return.
The corresponding temporary regula-
tions under § 1.48D-6T(b) published in
the Rules and Regulations section of this
edition of the Federal Register, which are
identical to those that would apply under
proposed § 1.48D-6(b), apply to taxable
years ending on or after June 21, 2023,
and expire on June 12, 2026.
V. Special Rules
These proposed regulations amend
the proposed rules relating to excessive
1
See section 1101 of the BBA, Public Law 114-74, 129 Stat. 584, 625-638 (2015), as amended by section 411 of the Protecting Americans from Tax Hikes Act of 2015, Public Law 114-113,
129 Stat. 2242, 3121 (2015), and sections 201 through 207 of the Tax Technical Corrections Act of 2018, Public Law 115-141, 132 Stat. 348, 1171-1183 (2018).

Bulletin No. 2023–27 1199 July 3, 2023
payment and basis reduction and recap-
ture under REG-120653-22 by adding
examples of excessive payment, clari-
fying the basis reduction and recapture
notice requirement and renumbering the
affected paragraphs as §1.48D-6(f) and
(g), respectively.
A. Excessive payment
Proposed §1.48D-6(f)(4) provides an
example of excessive payment, including
the year in which the tax is imposed and
the calculation of the additional 20 per-
cent tax. The Treasury Department and the
IRS request comments on whether addi-
tional guidance on excessive payments is
needed.
B. Basis reduction and recapture
Proposed §1.48D-6(g)(1) would pro-
vide that rules similar to the rules of sec-
tion 50(a) and (c) apply for purposes of
section 48D. Proposed §1.48D-6(g)(2)(i)
provides that the adjusted basis of prop-
erty generally must be reduced by the
amount of the section 48D credit deter-
mined with respect to property for which
the taxpayer has made an election under
section 48D(d)(1). Proposed §1.48D-
6(g)(2)(ii) would provide a similar basis
reduction rule for partnerships or S corpo-
rations making an election under section
48D(d)(1). Proposed §1.48D-6(g)(2)(iii)
would clarify the application of the basis
adjustment rule under section 50(c)(5) to
take into account adjustments made under
proposed §1.48D-6(e)(2)(ii) for partners
and S corporation shareholders of such
partnerships or S corporations.
Proposed §1.48D-6(g)(3) would clarify
that any reporting of recapture is made on
the taxpayer’s annual return in the man-
ner prescribed by the IRS in any guidance.
In addition, the excessive payment rules
operate separately from the recapture
rules. The excessive payment rules apply
where the credit amount reported on the
original credit source form by the tax-
payer was excessive. Recapture of a tax
credit occurs when the original tax credit
reported would have been correct without
the occurrence of a subsequent recapture
event. Thus, recapture events under sec-
tion 50(a) do not result in an excessive
payment.
Proposed Applicability Dates
Proposed § 1.48D-6 is proposed to
apply to taxable years ending on or after
the date the Treasury decision adopt-
ing these regulations as final regulations
is published in the Federal Register.
Taxpayers may rely on these proposed
regulations for elective payments of sec-
tion 48D credit amounts after December
31, 2022, in taxable years ending before
the date the Treasury decision adopting
these regulations as final regulations is
published in the Federal Register, pro-
vided the taxpayers follow the proposed
regulations in their entirety and in a con-
sistent manner with respect to all elections
made under section 48D(d).
Special Analyses
I. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (“PRA”) generally
requires that a federal agency obtain the
approval of the Office of Management
and Budget (OMB) before collecting
information from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. 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 dis-
plays a valid control number.
The collections of information in these
proposed regulations contain reporting and
recordkeeping requirements. The record-
keeping requirements mentioned within
these proposed regulations are considered
general tax records under § 1.6001-1(e).
These records are required for the IRS to
validate that taxpayers have met the reg-
ulatory requirements and are entitled to
make an elective payment election. For
PRA purposes, general tax records are
already approved by OMB under 1545-
0074 for individuals and 1545-0123 for
business entities.
These proposed regulations also men-
tion reporting requirements related to
making elections as detailed in § 1.48D-6.
These elections will be made by eligible
taxpayers as part of filing a return (such
as the appropriate Form 1040, Form 1120,
Form 1120-S, or Form 1065), including
filling out the relevant source credit form
and completing the Form 3800. These
forms are approved under 1545-0074 for
individuals and 1545-0123 for business
entities.
These proposed regulations also
describe recapture procedures as
detailed in proposed § 1.48D-6 that
are required by section 48D(d)(5). The
reporting of a recapture event will still
be required to be reported using Form
4255, Recapture of Investment Credit.
This form is approved under 1545-0074
for individuals and 1545-0123 for busi-
ness entities. These proposed regula-
tions are not changing or creating new
collection requirements for recapture
not already approved by OMB.
These proposed regulations mention
the reporting requirements to complete
pre-filing registration with the IRS to be
able to make an elective payment elec-
tion in proposed § 1.48D-6. For further
information concerning the registration
and where to submit comments on the
collection of information and the accu-
racy of the estimated burden, and sug-
gestions for reducing this burden, please
refer to the preamble to the correspond-
ing temporary regulations (T.D. 9975)
published in the Rules and Regulations
section of this issue of the Federal
Register. For burden estimates asso-
ciated with the pre-filing registration
requirement as detailed in proposed
§ 1.48D-6, see the preamble to the cor-
responding temporary regulations. These
proposed regulations are not changing
or creating new collection requirements
beyond the requirements that are being
reviewed and approved by OMB under
the temporary regulations.
II. Regulatory Flexibility Act
In accordance with the Regulatory
Flexibility Act (5 U.S.C. chapter 6), it is
hereby certified that these proposed reg-
ulations will not have a significant eco-
nomic impact on a substantial number
of small entities. Although these tempo-
rary regulations may affect small enti-
ties, data are not readily available about
the number of small entities affected.
The economic impact of these proposed
regulations is not likely to be signifi-
cant. Section 1.48D-6T(b) implements

July 3, 2023 1200 Bulletin No. 2023–27
the statutory authority granted by section
48D(d)(2)(E) that authorizes the IRS to
require such information or registration
as the Secretary deems necessary for pur-
poses of preventing duplication, fraud,
improper payments, or excessive pay-
ments. These proposed regulations will
assist small entities wanting to make the
elective payment election under section
48D(d). Notwithstanding this certifica-
tion, the Treasury Department and the IRS
welcome comments on the impact of these
temporary regulations on small entities.
III. Section 7805(f)
Pursuant to section 7805(f), these pro-
posed regulations will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
their impact on small business.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in
any one year by a State, local, or Tribal
government, in the aggregate, or by the
private sector, of $100 million in 1995
dollars (updated annually for inflation).
These proposed regulations do not include
any Federal mandate that may result in
expenditures by State, local, or Tribal
governments, or by the private sector in
excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These proposed regulations do not
have federalism implications and do not
impose substantial, direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
VII. Regulatory Planning and Review
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore,
a regulatory impact assessment is not
required.
Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final reg-
ulations, consideration will be given to
comments that are submitted timely to
the IRS as prescribed in this preamble
under the ADDRESSES section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. All comments will be made
available at www.regulations.gov or upon
request. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn.
Announcement 2023-16, 2023-20
I.R.B. 854 (May 15, 2023), provides that
public hearings will be conducted in per-
son, although the IRS will continue to
provide a telephonic option for individu-
als who wish to attend or testify at a hear-
ing by telephone. Any telephonic hearing
will be made accessible to people with
disabilities.
A public hearing has been sched-
uled for August 24, 2023, beginning
at 10 a.m. ET, in the Auditorium at
the Internal Revenue Building, 1111
Constitution Avenue, NW., Washington,
DC, unless no outlines are received by
August 14, 2023. Due to building secu-
rity procedures, visitors must enter at
the Constitution Avenue entrance. In
addition, all visitors must present photo
identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the immedi-
ate entrance area more than 30 minutes
before the hearing starts.
The rules of 26 CFR 601.601(a)
(3) apply to the hearing. Persons who
wish to comment by telephone at the
hearing must submit written or elec-
tronic comments and an outline of the
topics to be discussed as well as the time
to be devoted to each topic by August
14, 2023, as prescribed in the preamble
under the ADDRESSES section. If no
outline of the topics to be discussed at
the hearing is received by August 14,
2023, the public hearing will be can-
celled. If the public hearing is cancelled,
a notice of cancellation of the public
hearing will be published in the Federal
Register.
A period of ten minutes will be allo-
cated to each person for making com-
ments. After the deadline for receiving
outlines has passed, the IRS will prepare
an agenda containing the schedule of
speakers. Copies of the agenda will be
made available: (1) at the hearing, (2)
at https://www.regulations.gov, search
IRS and REG-105595-23, or (3) by
emailing a request to publichearings@
irs.gov. Please put “REG-105595-23
Agenda Request” in the subject line of
the email.
Individuals who want to testify in
person at the public hearing must send
an email to publichearings@irs.gov to
have your name added to the building
access list. The subject line of the email
must contain the regulation number REG-
105595-23 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY In Person at
Hearing for REG-105595-23.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-105595-23 and the language
TESTIFY Telephonically. For exam-
ple, the subject line may say: Request to
TESTIFY Telephonically at Hearing for
REG-105595-23.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number REG-105595-23 and the language
ATTEND In Person. For example, the
subject line may say: Request to ATTEND
Hearing In Person for REG-105595-23.
Requests to attend the public hearing must
be received by 5 p.m. EST on August 22,
2023.

Bulletin No. 2023–27 1201 July 3, 2023
Individuals who want to attend the
public hearing by telephone without
testifying must also send an email to
publichearings@irs.gov to receive the
telephone number and access code for
the hearing. The subject line of the email
must contain the regulation number REG-
105595-23 and the language ATTEND
Hearing Telephonically. For example, the
subject line may say: Request to ATTEND
Hearing Telephonically for REG-105595-
23. Requests to attend the public hearing
must be received by 5 p.m. EST on August
22, 2023.
Hearings will be made accessible to
people with disabilities. To request special
assistance during a hearing please contact
the Publications and Regulations Branch
of the Office of Associate Chief Counsel
(Procedure and Administration) by send-
ing an email to publichearings@irs.gov
(preferred) or by telephone at (202) 317-
6901 (not a toll-free number) at least
August 21, 2023.
Statement of Availability of IRS
Documents
Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin and
is available from the Superintendent of
Documents, U.S. Government Publishing
Office, Washington, DC 20402, or by vis-
iting the IRS website at https://www.irs.
gov.
Drafting Information
The principal author of this pro-
posed regulation is Lani M. Sinfield,
Office of the Associate Chief Counsel
(Passthroughs and Special Industries),
IRS. However, other personnel from the
Treasury Department and the IRS partic-
ipated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph. 1. The authority citation
for part 1 is amended by adding an entry
for §1.48D-6 in numerical order to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.48D-6 also issued under 26
U.S.C. 48D(d)(6).
* * * * *
Par. 2. Section 1.48D-6, as proposed
to be added by 88 FR 17451, March 23,
2023, is revised to read as follows:
§1.48D-6 Elective payment election.
(a) Elective payment election—(1) In
general. A taxpayer, after successfully
completing the pre-filing registration
requirements under paragraph (b) of this
section, may make an elective payment
election with respect to any section 48D
credit determined with respect to such tax-
payer in accordance with section 48D(d)
(1) of the Internal Revenue Code (Code)
and this section. A taxpayer, other than a
partnership or S corporation, that makes
an elective payment election in the man-
ner provided in paragraph (c) of this sec-
tion will be treated as making a payment
against the Federal income taxes imposed
by subtitle A of the Code (subtitle A) for
the taxable year with respect to which a
section 48D credit is determined equal
to the amount of the section 48D credit
with respect to any qualified property oth-
erwise allowable to the taxpayer (deter-
mined without regard to section 38(c)
of the Code). The payment described in
section 48D(d)(1) and this paragraph (a)
(1) will be treated as made on the later of
the due date (determined without regard to
extensions) of the return of tax imposed
by subtitle A for the taxable year or the
date on which such return is filed.
(2) Partnerships and S corporations.
See paragraph (d) of this section for spe-
cial rules regarding elective payment elec-
tions under section 48D(d) applicable to
partnerships and S corporations.
(3) Irrevocable. Any election under
section 48D(d)(1) and this section, once
made, will be irrevocable and, except
as otherwise provided, will apply with
respect to any amount of section 48D
credit for the taxable year for which the
election is made.
(b) Pre-filing registration required—
(1) In general. Pre-filing registration by
any taxpayer (including a partnership
or an S corporation) in accordance with
this paragraph (b) is a condition that
must be successfully completed prior
to making an elective payment election
under section 48D(d)(1) and this sec-
tion with respect to qualified property
placed in service by the taxpayer as part
of an advanced manufacturing facility
of an eligible taxpayer. An elective pay-
ment election will not be effective with
respect to the section 48D credit deter-
mined with respect to any such qual-
ified property placed in service by any
taxpayer unless the taxpayer received a
valid registration number for the taxpay-
er’s qualified investment in the advanced
manufacturing facility of an eligible
taxpayer in accordance with this para-
graph (b) and provided the registration
number for each qualified investment in
each advanced manufacturing facility on
its Form 3800, General Business Credit,
attached to the tax return in accordance
with guidance. —guidance—Federal
Register— However, completion of the
pre-filing registration requirements and
receipt of a registration number does
not, by itself, mean the taxpayer is eligi-
ble to receive a payment with respect to
any section 48D credit determined with
respect to the qualified property.
(2) Manner of registration. Unless oth-
erwise provided in guidance, a taxpayer
must complete the pre-filing registration
process electronically through the IRS
electronic portal and in accordance with
the instructions provided therein.
(3) Members of a consolidated group—
(4) Timing of pre-filing registration. A
taxpayer must satisfy the pre-filing regis-
tration requirements of this paragraph (b)
and receive a registration number under
paragraph (b)(6) of this section prior to
making any elective payment election
under this section on the taxpayer’s tax
return for the taxable year at issue.
(5) Each qualified investment in an
advanced manufacturing facility must
have its own registration number. A tax-
payer must obtain a registration num-
ber for each qualified investment in an
advanced manufacturing facility of an
eligible taxpayer with respect to which an
elective payment election is made.

July 3, 2023 1202 Bulletin No. 2023–27
(6) Information required to complete
the pre-filing registration process. Unless
modified in future guidance, a taxpayer
must provide the following information to
the IRS to complete the pre-filing registra-
tion process:
(i) The taxpayer’s general informa-
tion, including its name, address, taxpayer
identification number, and type of legal
entity;
(ii) Any additional information required
by the IRS electronic portal;
(iii) The taxpayer’s taxable year, as
determined under section 441 of the Code;
(iv) The type of annual return(s) nor-
mally filed by the taxpayer with the IRS;
(v) A list of each qualified investment
in an advanced manufacturing facility that
the taxpayer intends to use to determine
a section 48D credit for which the tax-
payer intends to make an elective payment
election;
(vi) For each qualified investment in
an advanced manufacturing facility listed
in paragraph (b)(6)(v) of this section, any
further information required by the IRS
electronic portal, such as:
(A) The type of qualified investment in
the advanced manufacturing facility;
(B) Physical location (that is, address
and coordinates (longitude and latitude) of
the advanced manufacturing facility);
(C) Any supporting documentation
relating to the construction, reconstruc-
tion or acquisition of the advanced man-
ufacturing facility (such as, State and
local government permits to operate the
advanced manufacturing facility, certifi-
cations, and evidence of ownership that
ties to the land deed, lease, or other doc-
umented right to use and access any land
upon which the advanced manufacturing
facility is constructed or housed);
(D) The beginning of construction date
and the placed in service date of any qual-
ified property that is part of the advanced
manufacturing facility;
(E) The source of funds the taxpayer
used to acquire the qualified property with
respect to which the qualified investment
was made; and
(F) Any other information that the tax-
payer or entity believes will help the IRS
evaluate the registration request;
(vii) The name of a contact person for
the taxpayer. The contact person is the
person whom the IRS may contact if there
is an issue with the registration. The con-
tact person must either:
(A) Possess legal authority to bind the
taxpayer; or
(B) Must provide a properly exe-
cuted power of attorney on Form 2848,
Power of Attorney and Declaration of
Representative;
(viii) A penalties of perjury statement,
effective for all information submitted
as a complete application, and signed by
a person with personal knowledge of the
relevant facts that is authorized to bind the
registrant; and
(ix) Any other information the IRS
deems necessary for purposes of pre-
venting duplication, fraud, improper pay-
ments, or excessive payments under this
section that is provided in guidance.
(7) Registration number—(i) In gen-
eral. The IRS will review the information
provided and will issue a separate registra-
tion number for each qualified investment
in an advanced manufacturing facility of
an eligible taxpayer for which the tax-
payer making the registration provided
sufficient verifiable information.
(ii) Registration number is only valid
for one year. A registration number is
valid only with respect to the taxpayer that
obtained the registration number under
this section and only for the taxable year
for which it is obtained.
(iii) Renewing registration numbers.
If an elective payment election will be
made with respect to any section 48D
credit determined with respect to a qual-
ified investment in an advanced manu-
facturing facility for a taxable year after a
registration number under this section has
been obtained, the taxpayer must renew
the registration for that subsequent year
in accordance with applicable guidance,
including attesting that all the facts previ-
ously provided are still correct or updating
any facts.
(iv) Amendment of previously submit-
ted registration information if a change
occurs before the registration number is
used. As provided in instructions to the
pre-filing registration portal, if specified
changes occur with respect to a qualified
investment in an advanced manufac-
turing facility for which a registration
number has been previously obtained, a
taxpayer must amend the registration (or
may need to submit a new registration)
to reflect these new facts. For example,
if an eligible taxpayer that is the owner
of an advanced manufacturing facility
previously registered for an elective pay-
ment election for a section 48D credit
determined with respect to that advanced
manufacturing facility and the advanced
manufacturing facility undergoes a
change of ownership (incident to a cor-
porate reorganization or an asset sale)
such that the new owner has a different
employer identification number (EIN)
than the owner who obtained the origi-
nal registration, the original owner of the
advanced manufacturing facility must
amend the original registration to disas-
sociate its EIN from the advanced man-
ufacturing facility and the new owner
must submit separately an original regis-
tration (or if the new owner previously
registered other qualified investments or
advanced manufacturing facilities, must
amend its original registration) to associ-
ate the new owner’s EIN with the previ-
ously registered advanced manufacturing
facility.
(v) Registration number is required to
be reported on the return for the taxable
year of the elective payment election. The
taxpayer must include the registration
number of the qualified investment in the
advanced manufacturing facility on the
taxpayer’s return as provided in this para-
graph (b) for the taxable year. The IRS
will treat an elective payment election as
ineffective with respect to a section 48D
credit determined with respect to a quali-
fied investment in an advanced manufac-
turing facility for which the taxpayer does
not include a valid registration number on
the annual return.
(c) Time and manner of election—(1)
In general. Any elective payment election
under section 48D(d)(1) and this section
with respect to any section 48D credit
determined with respect to a taxpayer’s
qualified investment must—
(i) Be made on the taxpayer’s origi-
nal return of tax (including a superseding
return) filed not later than the due date
(including extensions of time) for the tax-
able year for which the section 48D credit
is determined and the election is made
in the manner prescribed by the IRS in
guidance;
(ii) Include any required completed
source credit form(s), a completed Form

Bulletin No. 2023–27 1203 July 3, 2023
3800, and any additional information
required in instructions, including sup-
porting calculations;
(iii) Provide on the completed Form
3800 a valid registration number for the
qualified investment that is placed in ser-
vice as part of an advanced manufacturing
facility of an eligible taxpayer;
(iv) Include a statement attesting under
the penalties of perjury that—
(A) The taxpayer claiming to be an
eligible taxpayer is not a foreign entity of
concern within the meaning of §1.48D-
2(f)(2) and has not made an applicable
transaction as defined in §1.50-2(b)(3)
during the taxable year that the qualified
property is placed in service; and
(B) The taxpayer will not claim a dou-
ble benefit (within the meaning of sec-
tion 48D(d)(3) and paragraphs (d)(2)(ii)
(B) and (C) and (e) of this section) with
respect to any elective payment election
made by the taxpayer; and
(v) Be made not later than the due date
(including extensions of time) for the tax-
able year for which the election is made,
but in no event earlier than May 8, 2023.
—Limitations—
(d) Special rules for partnerships and S
corporations—(1) In general. If a partner-
ship or S corporation directly holds any
property for which an advanced manu-
facturing investment credit is determined,
any election under this section must be
made by the partnership or S corporation.
No election under section 48D(d) and this
section by any partner or shareholder is
allowed.
(2) Election—(i) Time and manner of
election. An elective payment election by
a partnership or S corporation is made at
the same time and in the same manner,
and subject to the pre-filing registration
and other requirements for the election to
be effective, as provided in paragraphs (b)
and (c) of this section.
(ii) Effect of election. If a partnership or
S corporation makes an elective payment
election with respect to a section 48D
credit, the following rules will apply:
(A) The Internal Revenue Service will
make a payment to such partnership or
S corporation equal to the amount of such
credit, determined in accordance with
paragraph (d)(6) of this section (unless
the partnership or S corporation owes
a Federal tax liability, in which case the
payment may be reduced by such tax
liability);
(B) Before determining any partner’s
distributive share, or S corporation share-
holder’s pro rata share, of such credit, such
credit is reduced to zero and is, for any
other purposes under the Code, deemed
to have been allowed solely to such entity
(and not allocated or otherwise allowed to
its partners or shareholders) for such tax-
able year; and
(C) Any partner’s or S corporation
shareholder’s share of any qualified invest-
ment in an advanced manufacturing facility
for which an elective payment election has
been made for the taxable year, is reduced
to zero for such taxable year.
(iii) Coordination with sections 705
and 1366. Any amount with respect to
which the election is made is treated as tax
exempt income for purposes of sections
705 and 1366 of the Code.
(iv) Partner’s distributive share. A
partner’s distributive share of such tax
exempt income is equal to such partner’s
distributive share of its otherwise allo-
cable basis in qualified property under
§1.48D-2(h)(2)(i) for such taxable year.
(v) S corporation shareholder’s pro-
rata share. An S corporation sharehold-
er’s pro rata share (as determined under
section 1377(a) of the Code) of such tax
exempt income is taken into account by
the S corporation shareholder in the tax-
able year (as determined under sections
444 and 1378(b) of the Code) in which
the section 48D credit is determined and
is based on the shareholder’s otherwise
apportioned basis in qualified property
under §1.48D-2(h)(2)(ii) for the taxable
year.
(vi) Timing of tax exempt income. Such
tax exempt income resulting from such
election is treated as received or accrued,
including for purposes of sections 705
and 1366 of the Code, as of the date the
qualified property is placed in service with
respect to the partnership or S corporation.
(3) Disregarded entity ownership.
In the case of a qualified property held
directly by an entity disregarded as sep-
arate from a partnership or S corporation
for Federal income tax purposes, such
qualified property will be treated as held
directly by the partnership or S corpora-
tion for purposes of making an elective
payment election.
(4) Electing partnerships in tiered
structures. If a partnership (upper-tier
partnership) is a direct or indirect partner
of a partnership that makes an elective
payment election and directly or indi-
rectly receives an allocation of tax exempt
income resulting from the elective pay-
ment election made by the partnership, the
upper-tier partnership must determine its
partners’ distributive shares of such tax
exempt income in proportion to each part-
ner’s distributive share of its otherwise
allocable basis in qualified property under
§1.48D-2(h)(2)(i) for such taxable year.
(5) Character of tax exempt income.
Tax exempt income resulting from an
elective payment election by an S corpo-
ration or a partnership is treated as aris-
ing from an investment activity and not
from the conduct of a trade or business
within the meaning of section 469(c)(1)
(A). As such, the tax exempt income is not
treated as passive income to any partners
or shareholders who do not materially
participate within the meaning of section
469(c)(1)(B).
(6) Determination of amount of the sec-
tion 48D credit—(i) In general. In deter-
mining the amount of the section 48D
credit that will result in a payment under
paragraph (d)(2)(ii)(A) of this section, the
partnership or S corporation must com-
pute the amount of the credit allowable
(without regard to section 38(c)) as if an
elective payment election were not made.
Because a partnership or S corporation is
not subject to section 469 (that is, section
469 applies at the partner or shareholder
level), the amount of the credit deter-
mined by a partnership or S corporation
is not subject to limitation by section
469. Because the section 48D credit is an
investment credit under section 46, sec-
tions 49 and 50 apply to limit the amount
of the credit.
(ii) Application of section 49 at-risk
rules to determination of section 48D
credit for partnerships and S corpora-
tions. Any amount of section 48D credit
determined with respect to qualified
property held directly by a partnership
or S corporation must be determined
by the partnership or S corporation tak-
ing into account the section 49 at-risk
rules at the partner or shareholder level
as of the close of the taxable year in
which the qualified property is placed

July 3, 2023 1204 Bulletin No. 2023–27
in service. Thus, if the credit base of a
qualified property is limited to a partner
or S corporation shareholder by section
49, then the amount of the section 48D
credit determined by the partnership or S
corporation is also limited. A partnership
or S corporation that directly holds qual-
ified property must request from each of
its partners or shareholders, respectively,
that is subject to section 49, the amount of
such partner’s or shareholder’s nonqual-
ified nonrecourse financing with respect
to the qualified property as of the close
of the taxable year in which the property
is placed in service. Additionally, the
partnership or S corporation must attach
to its tax return for the taxable year in
which the qualified property is placed
in service, the amount of each partner’s
or shareholder’s section 49 limitation
with respect to any qualified property.
Changes to at-risk amounts under section
49 for partners or S corporation share-
holders after the close of the taxable year
in which the qualified property is placed
in service do not impact the section 48D
credit determined by the partnership or
S corporation, but do impact the part-
ner(s) or S corporation shareholder(s) as
provided in paragraph (d)(6)(iii) of this
section.
(iii) Changes in at-risk amounts under
section 49 at partner or shareholder level.
A partner or shareholder in a partnership
or S corporation, respectively, must apply
the rules under section 49 at the partner
or shareholder level if there is a change
in nonqualified nonrecourse financing
with respect to the partner or shareholder
after the close of the taxable year in which
the qualified property is placed in service
and the section 48D credit is determined.
If there is an increase in nonqualified
nonrecourse financing to a partner, any
adjustment under the rules of section
49(b) is calculated based on the partner’s
share of the basis (or cost) of the qual-
ified property to which the section 48D
credit was determined in accordance with
§1.48D-2(h)(2)(i). If there is an increase
in nonqualified nonrecourse financing to
a shareholder, any adjustment under the
rules of section 49(b) is calculated based
on the shareholder’s pro rata share of the
basis (or cost) of the qualified property to
which the section 48D was determined
in accordance with §1.48D-2(h)(2)(ii). If
there is a decrease in nonqualified non-
recourse financing, any increase in the
credit base is taken into account by the
partner or shareholder as provided under
section 49, and any resulting credit is not
eligible for an elective payment election
under section 48D(d).
(7) Partnerships subject to subchap-
ter C of chapter 63 of the Code. See
§301.6241-7(j) of this chapter for rules
applicable to payments made to partner-
ships subject to subchapter C of chapter
63 of the Code for a partnership taxable
year.
(8) Example. The following example
illustrates the rules of this paragraph (d).
(i) Example. P is a calendar-year partnership
consisting of partners A and B, each 50% owners.
P constructs Facility A, an advanced manufacturing
facility, at V. P completes the pre-filing registration
with respect to Facility A at V for 2024 in accordance
with paragraph (b) of this section. In 2024, P places
in service qualified property which is part of Facility
A at V. P timely files its 2024 Form 1065 and prop-
erly makes the elective payment election in accor-
dance with paragraph (c) of this section. On its Form
1065, P properly determines that the amount of sec-
tion 48D credit with respect to the qualified property
placed in service at Facility A for 2024 is $100,000.
The IRS processes P’s return and makes a $100,000
payment to P. Before determining A’s and B’s dis-
tributive shares, P reduces the section 48D credit to
zero. However, for other purposes of the Code, the
$100,000 section 48D credit is deemed to have been
allowed to P for 2024. The $100,000 is treated as
tax exempt income for purposes of section 705, and
A’s and B’s distributive shares of such tax exempt
income is based on each partner’s otherwise allo-
cable basis in qualified property under §1.48D-2(h)
(2)(i) for the 2024 taxable year ($50,000 each). A’s
and B’s basis in their partnership interests and cap-
ital accounts will be appropriately adjusted to take
into account basis adjustments made to the qualified
property under section 50(c)(5) and §1.704-1(b)(2)
(iv)(j). See paragraph (g)(2) of this section. The tax
exempt income received or accrued by P as a result
of the elective payment election is treated as received
or accrued, including for purposes of section 705, as
of date P placed in service the qualified property in
2024.
(ii) [Reserved]
(e) Denial of double benefit—(1) In
general. In the case of a taxpayer making
an election under section 48D(d) and this
section with respect to any section 48D
credit determined under section 48D(a)
and § 1.48D-1, such credit is reduced to
zero and is, for any other purposes under
the Code, deemed to have been allowed
to the taxpayer for such taxable year.
Paragraphs (e)(2) and (3) of this section
explain the application of the section
48D(d)(3) denial of a double benefit rule
to a taxpayer (other than a partnership or
S corporation). The application of section
48D(d)(3) to a partnership or S corpora-
tion is provided in paragraphs (d)(2)(ii)
(B) and (C) of this section.
(2) Application of the denial of dou-
ble benefit rule. A taxpayer (other than a
partnership or S corporation) making an
elective payment election applies section
48D(d)(3) by taking the following steps:
(i) Compute the amount of the Federal
income tax liability (if any) for the taxable
year, without regard to the general busi-
ness credit under section 38 (GBC), that
is payable on the due date of the tax return
(without regard to extensions), and the
amount of the Federal income tax liability
that may be offset by GBCs pursuant to
the limitation based on the amount of tax
under section 38.
(ii) Compute the amount of the GBCs
carryforwards carried to the taxable year
plus the amount of the current year GBCs
(including the current section 48D credit)
allowed for the taxable year under sec-
tion 38. Because the election must made
on an original return of tax for the taxable
year for which the section 48D credit is
determined, any business credit carry-
backs are not considered when determin-
ing the elective payment amount for the
taxable year.
(iii) Apply the GBCs allowed for the
taxable year as computed under paragraph
(e)(2)(ii) of this section, including those
attributable to the section 48D credit as
GBC, against the tax liability computed in
paragraph (e)(2)(i) of this section.
(iv) Identify the amount of any excess
or unused current year GBC, as defined
under section 39, attributable to current
year section 48D credit for which the
taxpayer is making an elective payment
election. Treat the amount of such unused
section 48D credit as a payment against
the tax imposed by subtitle A for the tax-
able year with respect to which such credit
is determined (rather than having them
available for carryback or carryover) (net
elective payment amount).
(v) Reduce the section 48D credit for
which an elective payment election is
made by the amount (if any) allowed as
a general business credit under section 38
for the taxable year, as provided in para-
graph (e)(2)(iii) of this section, and by
the net elective payment amount (if any)

Bulletin No. 2023–27 1205 July 3, 2023
that is treated as a payment against tax,
as provided in paragraph (e)(2)(iv) of this
section, which results in the section 48D
credit being reduced to zero.
(3) Use of the section 48D credit for
other purposes. The full amount of the
section 48D credit for which an elective
payment election is made is deemed to
have been allowed for all other purposes
of the Code, including, but not limited to,
the basis reduction and recapture rules
imposed by section 50, and the calcula-
tion of any underpayment of estimated
taxes under sections 6654 and 6655 of
the Code.
(4) Examples. The following examples
illustrate the rules of this paragraph (e).
(i) Example 1. Z Corp is a calendar-year C cor-
poration. Z Corp places in service qualified property
which is part of an advanced manufacturing facility
in June of 2024. Z Corp completes the pre-filing reg-
istration in accordance with this section and receives
a registration number for the qualified property. Z
Corp timely files its 2024 Form 1120 on April 15,
2025, properly making the elective payment election
with respect to the section 48D credit in accordance
with this section. On its return, Z Corp properly
determines that it has $500,000 of tax imposed by
subtitle A of the Code (see paragraph (e)(2)(i) of
this section). For simplicity, assume the maximum
amount of GBCs that can be claimed for the taxable
year is $375,000. Z Corp properly determines that
the amount of the section 48D credit determined
with respect to the qualified property (its GBC for
the taxable year) is $100,000 (see paragraph (e)(2)
(ii) of this section. Under paragraph (e)(2)(iii) of
this section, the section 48D credit reduces Z Corp’s
tax liability to $400,000. Z Corp pays its $400,000
tax liability on April 15, 2025. Because there is no
unused section 48D credit, paragraph (e)(2)(iv) of
this section does not apply. Under paragraph (e)
(2)(v) of this section, the $100,000 of section 48D
credit is reduced by the $100,000 of section 48D
credit claimed as GBCs for the taxable year, which
results in the section 48D credit being reduced to
zero. However, the $100,000 of section 48D credit
is deemed to have been allowed to Z Corp for 2024
for all other purposes of the Code under paragraph
(e) of this section.
(ii) Example 2. Assume the same facts as in
paragraph (e)(4)(i) of this section (Example 1),
except that Z Corp has $80,000 of tax imposed by
subtitle A (paragraph (e)(2)(i) of this section). Z
Corp’s GBC credit is still $100,000 (paragraph (e)
(2)(ii) of this section). For simplicity, assume the
maximum amount of GBCs that can be claimed for
the taxable year under section 38(c) is $60,000. Z
Corp uses $60,000 of its section 48D credit against
its tax liability under paragraph (e)(2)(iii) of this
section. Z Corp’s net elective payment amount is
$40,000 determined under paragraph (e)(2)(iv)
of this section. Z Corp reduces the elective pay-
ment amount by the $60,000 claimed against tax
in paragraph (e)(2)(iii) of this section and by the
$40,000 net elective payment amount determined
in paragraph (e)(2)(iv) of this section, resulting in
the applicable credit being reduced to zero (para-
graph (e)(2)(v) of this section). When the IRS pro-
cesses Z Corp’s 2024 Form 1120, the net elective
payment amount results in a $40,000 refund to Z
Corp. However, for other purposes of the Code, the
$100,000 section 48D credit is deemed to have been
allowed to Z Corp for 2024 (paragraph (e) of this
section). Even though Z Corp did not owe tax after
applying the net elective payment amount against
its net tax liability, Z Corp may be subject to the
section 6655 penalty for failure to pay estimated
income tax. The net elective payment is not an esti-
mated tax installment, rather it is treated as a pay-
ment made at the filing of the return.
(f) Excessive payment—(1) In general.
Except as provided in paragraph (f)(2) of
this section, in the case of any amount
treated as a payment which is made by
the taxpayer under section 48D(d)(1) and
paragraph (a) of this section, or any pay-
ment made pursuant to section 48D(d)
(2)(A)(i)(II) and paragraph (d) of this
section, with respect to any property,
which amount the Commissioner deter-
mines constitutes an excessive payment
as defined in paragraph (f)(3) of this sec-
tion, the tax imposed on such taxpayer by
chapter 1 of the Code for the taxable year
in which such determination is made is
increased by an amount equal to the sum
of—
(i) The amount of such excessive pay-
ment; plus
(ii) An amount equal to 20 percent of
such excessive payment.
(2) Reasonable cause. Paragraph (f)
(1)(ii) of this section will not apply if the
taxpayer demonstrates to the satisfaction
of the Commissioner that the excessive
payment resulted from reasonable cause.
(3) Excessive payment defined. For
purposes of section 48D(d) and this para-
graph (f), the term excessive payment
means, with respect to any property for
which an election is made under section
48D(d) and this section for any taxable
year, an amount equal to the excess of—
(i) The amount treated as a payment
which is made by the taxpayer pursuant
to section 48D(d)(1) and paragraph (a) of
this section, or any payment made by the
Commissioner pursuant to section 48D(d)
(2)(A)(I)(i) and paragraph (d) of this sec-
tion, with respect to such property for
such taxable year; over
(ii) The amount of the section 48D
credit which, without application of sec-
tion 48D(d) and this section, would be
otherwise allowable (determined without
regard to section 38(c)) under section
48D(a) and the section 48D regulations
with respect to such property for such tax-
able year.
(4) Examples. The following example
illustrates the principles of this paragraph
(f).
(i) Example. A Corp is a calendar-year C corpo-
ration. A Corp places in service qualified property
which is part of Facility A, an advanced manufac-
turing facility in 2023. A Corp properly completes
the pre-filing registration in accordance with para-
graph (b) of this section and receives a registration
number for the advanced manufacturing facility.
A Corp timely files its 2023 Form 1120, properly
providing the registration number for Facility A
and otherwise complying with paragraph (c) of this
section. On its return, Corp A calculates that the
amount of the section 48D credit with respect to the
qualified property is $100,000 and that the net elec-
tive payment amount is $100,000. Corp A receives
a refund in the amount of $100,000. In 2025, the
IRS determines that the amount of the section 48D
credit properly allowable to Corp A in 2023 with
respect to Facility A (as determined pursuant to
§1.48D-1(b) and without regard to the limitation
based on tax in section 38(c)) was $60,000. Corp
A is not able to show reasonable cause for the dif-
ference. The excessive payment amount is $40,000
($100,000 treated as a payment - $60,000 allowable
amount). In 2025, the tax imposed under chapter 1
on Corp A is increased in the amount of $48,000
($40,000+ (20% * $40,000 = $8,000).
(ii) [Reserved]
(g) Basis reduction and recapture—(1)
In general. The rules in section 50(a) and
(c) of the Code apply with respect to elec-
tive payments under paragraphs (a) and
(d) of this section.
(2) Basis adjustment—(i) In general.
If a section 48D credit is determined with
respect to property for which a taxpayer
makes an election under section 48D(d)
(1), then the adjusted basis of the property
shall be reduced by the amount of the sec-
tion 48D credit determined for which the
taxpayer made an election under section
48D(d)(1).
(ii) Basis adjustment by partnership or
S corporation. If an advanced manufactur-
ing investment credit is determined with
respect to property for which a partner-
ship or S corporation makes an election
under section 48D(d)(1), then the adjusted
basis of the property shall be reduced by
the amount of the advanced manufactur-
ing investment credit determined with
respect to the property held by the part-
nership or S corporation, for which the
IRS made a payment to the partnership or

July 3, 2023 1206 Bulletin No. 2023–27
S corporation pursuant to section 48D(d)
(2)(A)(i)(I).
(iii) Basis adjustment of partners and
S corporation shareholders. The adjusted
basis of a partner’s interest in a partner-
ship, and stock in an S corporation, shall
be appropriately adjusted pursuant to sec-
tion 50(c)(5) to take into account adjust-
ments made under paragraph (g)(2)(ii) of
this section in the basis of property held
by the partnership or S corporation, as the
case may be.
(3) Recapture reporting. Any report-
ing of recapture is made on the taxpayer’s
annual return in the manner prescribed by
the IRS in any guidance.
(h) Applicability date. This section
applies to property that is placed in ser-
vice after December 31, 2022, and during
a taxable year ending on or after date of
publication of final rule.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register June 14,
2023, 11:15 a.m., and published in the issue of the
Federal Register for June 21, 2023, ** FR *****)

Bulletin No. 2023–27 i July 3, 2023
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

July 3, 2023 ii Bulletin No. 2023–27
Numerical Finding List
1
Bulletin 2023–27
Announcements:
2023-2, 2023-2 I.R.B. 344
2023-1, 2023-3 I.R.B. 422
2023-3, 2023-5 I.R.B. 447
2023-4, 2023-7 I.R.B. 470
2023-5, 2023-9 I.R.B. 499
2023-6, 2023-9 I.R.B. 501
2023-8, 2023-14 I.R.B. 632
2023-9, 2023-15 I.R.B. 639
2023-10, 2023-16 I.R.B. 663
2023-7, 2023-17 I.R.B. 797
2023-11, 2023-17 I.R.B. 798
2023-12, 2023-17 I.R.B. 799
2023-13, 2023-18 I.R.B. 833
2023-14, 2023-19 I.R.B. 853
2023-16, 2023-20 I.R.B. 854
2023-15, 2023-21 I.R.B. 856
AOD:
2023-1, 2023-10 I.R.B. 502
2023-2, 2023-11 I.R.B. 529
Notices:
2023-4, 2023-2 I.R.B. 321
2023-5, 2023-2 I.R.B. 324
2023-6, 2023-2 I.R.B. 328
2023-8, 2023-2 I.R.B. 341
2023-1, 2023-3 I.R.B. 373
2023-2, 2023-3 I.R.B. 374
2023-3, 2023-3 I.R.B. 388
2023-7, 2023-3 I.R.B. 390
2023-9, 2023-3 I.R.B. 402
2023-10, 2023-3 I.R.B. 403
2023-11, 2023-3 I.R.B. 404
2023-12, 2023-6 I.R.B. 450
2023-13, 2023-6 I.R.B. 454
2023-16, 2023-8 I.R.B. 479
2023-17, 2023-10 I.R.B. 505
2023-18, 2023-10 I.R.B. 508
2023-20, 2023-10 I.R.B. 523
2023-19, 2023-11 I.R.B. 560
2023-21, 2023-11 I.R.B. 563
2023-22, 2023-12 I.R.B. 569
2023-23, 2023-13 I.R.B. 571
2023-24, 2023-13 I.R.B. 571
2023-26, 2023-13 I.R.B. 577
2023-25, 2023-14 I.R.B. 629
2023-27, 2023-15 I.R.B. 634
2023-28, 2023-15 I.R.B. 635
2023-31, 2023-16 I.R.B. 661
2023-30, 2023-17 I.R.B. 766
2023-33, 2023-18 I.R.B. 803
2023-34, 2023-19 I.R.B. 837
Notices:—Continued
2023-38, 2023-22 I.R.B. 872
2023-39, 2023-22 I.R.B. 877
2023-40, 2023-22 I.R.B. 879
2023-41, 2023-23 I.R.B. 905
2023-43, 2023-24 I.R.B. 919
2023-44, 2023-25 I.R.B. 924
2023-42, 2023-26 I.R.B. 1085
2023-46, 2023-26 I.R.B. 1086
2023-49, 2023-26 I.R.B. 1087
2023-48, 2023-27 I.R.B. 1124
Proposed Regulations:
REG-100442-22, 2023-3 I.R.B. 423
REG-146537-06, 2023-3 I.R.B. 436
REG-114666-22, 2023-4 I.R.B. 437
REG 122286-18, 2023-11 I.R.B. 565
REG-120653-22, 2023-15 I.R.B. 640
REG-105954-22, 2023-16 I.R.B. 713
REG-120080-22, 2023-16 I.R.B. 746
REG 109309-22, 2023-17 I.R.B. 770
REG 121709-19, 2023-17 I.R.B. 789
REG-124064-19, 2023-17 I.R.B. 789
REG-108054-21, 2023-23 I.R.B. 907
REG-106228-22, 2023-26 I.R.B. 1088
REG-110412-23, 2023-26 I.R.B. 1098
REG-101607-23, 2023-27 I.R.B. 1127
REG-101610-23, 2023-27 I.R.B. 1161
REG-105595-23, 2023-27 I.R.B. 1194
Revenue Procedures:
2023-1, 2023-1 I.R.B. 1
2023-2, 2023-1 I.R.B. 120
2023-3, 2023-1 I.R.B. 144
2023-4, 2023-1 I.R.B. 162
2023-5, 2023-1 I.R.B. 265
2023-7, 2023-1 I.R.B. 305
2023-8, 2023-3 I.R.B. 407
2023-10, 2023-3 I.R.B. 411
2023-11, 2023-3 I.R.B. 417
2023-14, 2023-6 I.R.B. 466
2023-9, 2023-7 I.R.B. 471
2023-13, 2023-13 I.R.B. 581
2023-17, 2023-13 I.R.B. 604
2023-18, 2023-13 I.R.B. 605
2023-19, 2023-13 I.R.B. 626
2023-20, 2023-15 I.R.B. 636
2023-12, 2023-17 I.R.B. 768
2023-15, 2023-18 I.R.B. 806
2023-21, 2023-19 I.R.B. 837
2023-22, 2023-19 I.R.B. 838
2023-23, 2023-22 I.R.B. 883
Revenue Rulings:
2023-1, 2023-2 I.R.B. 309
2023-3, 2023-6 I.R.B. 448
Revenue Rulings:—Continued
2023-4, 2023-9 I.R.B. 480
2023-5, 2023-10 I.R.B. 503
2023-6, 2023-14 I.R.B. 627
2023-7, 2023-15 I.R.B. 633
2023-2, 2023-16 I.R.B. 658
2023-8, 2023-18 I.R.B. 801
2023-9, 2023-19 I.R.B. 835
2023-10, 2023-23 I.R.B. 884
2023-11, 2023-23 I.R.B. 886
2023-12, 2023-27 I.R.B. 1111
Treasury Decisions:
9970, 2023-2 I.R.B. 311
9771, 2023-3 I.R.B. 346
9772, 2023-11 I.R.B. 530
9773, 2023-11 I.R.B. 557
9975, 2023-27 I.R.B. 1113
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin
2022–52, dated December 27, 2022.

Bulletin No. 2023–27 iii July 3, 2023
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2023–27
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

Internal Revenue Service
Washington, DC 20224
Official Business
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