Tax Expenditure

Production Tax Credit for Municipal Solid Waste

Renewable electricity production tax credits (PTC) provide a per-kilowatt-hour (kWh) tax credit for electricity generated from certain renewable sources for the first 10 years of a project under Section 45 of the tax code. In the case of facilities that use municipal solid waste as a feedstock to produce electricity, the PTC is 1.3 cents […]

Special Rules for Mining Reclamation Reserves

This provision allows taxpayers to deduct the estimated reclamation and closing costs for mining and solid waste disposal sites as if closing and reclamation were currently occurring, even before such work has begun or the costs incurred. Standard treatment would be that these costs cannot be deducted until economic performance actually occurs and so results […]

Incentives for Biodiesel, Renewable Biodiesel, and Alternative Fuels

The incentives for biodiesel and renewable biodiesel include: a $1 credit against income tax for every gallon of biodiesel or renewable biodiesel produced; a $1 credit against fuel excise taxes for every gallon of biodiesel or renewable diesel used in producing a biodiesel mixture; and, a 10-cent credit for every gallon produced by a small […]

Expensing of Timber Growing Costs

This tax expenditure allows individuals and companies to deduct the costs of growing commercial timber stands immediately. This is an exception to general tax rules, which normally require companies to capitalize these costs (i.e. depletion or depreciation) over a number of years. Growing or production costs include indirect carrying costs, such as interest and property […]

Expensing of Tertiary Injectants

Tertiary recovery, sometimes called “enhanced oil recovery,” refers to a variety of methods used to increase the productivity of an oil and gas reservoir by injecting materials into the formation to increase the reservoir pressure, increase the mobility of the remaining hydrocarbons within the formation, or increase separation between injected fluids (used for secondary recovery) […]

Capital Gains Treatment for Royalties from Coal

Individual owners, as opposed to companies, are allowed to treat income from dispositions of coal held for more than one year before disposal as a capital gain, rather than ordinary income, thus allowing them to be taxed at a lower rate. The current maximum applicable capital gains rate is 20 percent, compared to the top […]

Cellulosic (Second Generation Biofuel) Production Tax Credit

Established by the Food, Conservation, and Energy Act of 2008, the Cellulosic Production Tax Credit is a credit of up to $1.01/gallon for “liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable basis or any cultivated algae, cyanobacteria, or lemna.” Lignocellulose and hemicellulose are both components of the cell […]

Credit for Investment in Clean Coal Facilities

An investment tax credit is available for power generation projects that use integrated gasification combined cycle (IGCC) or certain other coal-based electricity generation technologies. IGCC and other advanced coal projects must separate and sequester at least 65 percent of the project’s total carbon emissions and gasification projects must separate and sequester at least 75 percent […]