The U.S. Department of the Treasury and the Internal Revenue Service have issued proposed regulations to provide guidance for the advanced manufacturing production credit established by the Inflation Reduction Act (IRA).
The new Section 45X provides a credit for the production (within the United States) and sale of certain eligible components, including solar and wind energy components, inverters, qualifying battery components and applicable critical minerals.
The proposed regulations affect taxpayers who produce and sell eligible components and intend to claim the credit.
The guidance provides rules for the production of eligible components and sale to unrelated persons, as well as special rules that apply to sales between related persons. The proposed regulations also include rules for a taxpayer to make an election to treat sales to related persons as made to unrelated persons, known as the “related person election.”
Finally, the proposed regulations provide definitions of eligible components, rules related to calculating the credit, as well as specific recordkeeping and reporting requirements.
More information about IRA guidance can be found on the Inflation Reduction Act of 2022 page on IRS.gov.
