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IRS and Treasury release final regulations on clean energy tax credits

The IRS and the Treasury Department have released final regulations on the transfer of clean energy manufacturing, investment, and production tax credits. The rules aim to increase investment in clean energy technologies by making tax incentives transferable between project developers and investors. The Inflation Reduction Act created new credit delivery mechanisms that allow various entities to leverage clean energy tax credits. The regulations also include special rules for excessive credit transfers and recapture events, as well as a mandatory IRS pre-filing registration process. The Inflation Reduction Act's transferability provisions enable businesses to transfer clean energy credits to a third party in exchange for immediate funds. The final regulations affirm last June's proposed transferability guidance and provide clarity on financing clean energy and manufacturing projects. The IRS confirmed that project owners can obtain loans secured by a tax credit sale agreement. The market for transferable tax credits is expected to accelerate rapidly with the release of these final rules.

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