IRS Expands EPAct (§179D) Opportunities By Allowing Taxpayers To File Form 3115 For Projects Completed Starting in 2006
Taxpayers that installed energy efficient building improvements after 2005 and did not previously claim the §179D deduction should take advantage of this opportunity to improve cash flow.
The Energy Policy Act of 2005 (EPAct) created IRC §179D which permits an immediate first year tax deduction for energy efficient building projects completed after December 31, 2005 and before January 1, 2014.
Prior to Revenue Procedure 2011-14, the deduction could only be claimed for improvements placed in service on the current tax return or within the past three years through amended returns. Now, the deduction can be claimed for prior tax returns starting in 2006 through Form 3115 (Application for Change In Accounting Method) without amended returns.
EPAct provides an immediate tax deduction of up to $1.80 per square foot for certain building investments that achieve specified energy cost reductions beyond an identified building energy code standard (ASHRAE 90.1-2001). A one-time $1.80 per square foot deduction is the maximum attainable deduction, with partial deductions of up to 60 cents per square foot for the three eligible building system components: lighting; heating, ventilation and air conditioning; and building envelope.
If you or one of your clients installed energy efficient building improvements after 2005, please contact us to learn about this cash flow improvement opportunity.
