Allowed
(2) Allowed. For purposes of paragraph (c)(1) of this section, the term allowed only includes credits that a taxpayer has claimed on a Federal income tax return or Federal return, as appropriate, and that the Internal Revenue Service (IRS) has not challenged in terms of the taxpayer's eligibility. (3) Examples. This paragraph (c)(3) provides examples illustrating the rules of paragraph (c) of this section. (i) Example 1. Taxpayer claims a section 45Y credit on a solar farm and section 48E credit on co-located EST. X owns a solar farm that is a qualifying facility (Solar Qualified Facility), and X owns a co-located EST (as defined in 1.48E-2(g)) (Energy Storage). The Energy Storage is not part of the Solar Qualified Facility, and, therefore, X may claim the section 45Y credit based on the kWh of electricity produced by the Solar Qualified Facility, and X may also claim the section 48E credit based on its qualified investment in the Energy Storage. (ii) Example 2. Different taxpayers claim a section 45Y credit for a solar farm and a section 48E credit for co-located Energy Storage Technology. X owns a solar farm that is a qualifying facility (Solar Qualified Facility), and Y owns a co-located EST (as defined in 1.48E-2(g)) (Energy Storage). The Energy Storage is not part of the Solar Qualified Facility, and therefore, X may claim the section 45Y credit based on the kWh of electricity produced by the Solar Qualified Facility, and Y may claim the section 48E credit based on its qualified investment in the Energy Storage. (iii) Example 3. Taxpayer claiming another credit is not allowed a section 45Y credit. X owns a wind facility that satisfies the requirements of a qualified facility as well as the requirements of a qualified facility as defined in 1.48E-2(a). X claims a section 48E credit with respect to the wind facility. While a credit may be available with regard to the wind facility under section 45Y, because X has already claimed a section 48E credit with respect to the wind facility, a section 45Y credit is not allowed. (iv) Example 4. Interaction of section 45Y and section 45Q credits for single qualified facility. X owns a qualified facility (Facility A) that includes carbon capture equipment, which is needed for the facility to meet the zero greenhouse gas requirement, so it is functionally interdependent to the production of electricity by Facility A. X used the carbon capture equipment to capture and utilize (as described in section 45Q(f)(5)) qualified carbon dioxide and claimed a section 45Q credit in a prior taxable year. As a result, X cannot claim a credit for its Facility A because a qualified facility does not include a facility for which a credit determined under section 45Q is allowed. (v) Example 5. Interaction of section 45Y and section 45Q credits for co-located qualified facilities. Assume the same facts as in paragraph (c)(3)(iv) of this section (Example 4), except that X owns a co-located qualified facility (Facility B) that also includes carbon capture equipment, which is needed for the facility to meet the zero greenhouse gas requirement, so it is functionally interdependent to the production of electricity by Facility B. X used the carbon capture equipment to capture and utilize (as described in section 45Q(f)(5)) qualified carbon dioxide, but has not claimed a section 45Q credit with respect to Facility B. While X claimed a section 45Q credit in a prior taxable year for Facility A (see paragraph (c)(3)(iv) of this section (Example 4)), Facility B is not part of Facility A, and, therefore, X may claim the section 45Y credit for Facility B.