The Internal Revenue Service has issued a notice of changes to Revenue Procedure 2007-65, which establishes safe harbor requirements for the allocation of Section 45 wind energy production tax credits by partnerships. The notice makes three changes:

  • it expands the rights of developers and owners to enter into agreements for the purchase of the wind energy property owned by the partnership;
  • it clarifies how Section 469 — which provides that deductions from a passive business activity, to the extent that they exceed income from the passive activity, may not be deducted against other income — applies to credits generated by wind energy facilities; and
  • it clarifies that the revenue procedure only provides safe harbor requirements.

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