Category: Tax

The Impact of the Inflation Reduction Act on the Energy Investment Tax Credit and Certain Other Energy Tax Provisions

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Act”), which includes a number of tax provisions related to green energy. Below is a brief summary of the Act pertaining to the energy investment tax credit (ITC) of Internal Revenue Code (IRC) Section 48 and certain other energy tax provisions, with the following link to our more detailed article highlighting the impact of the Act on the ITC. Prior Law With Respect to Energy ITC: Until somewhat recently, taxpayers could obtain a 30% ITC for purchasing and placing in service qualifying energy property, especially a solar power system, with that percentage being gradually phased out with reductions commencing for energy property for which construction began in the year 2020. Main Revisions to Energy ITC – New Base Credit Percentage of 6%: Under the Act, the base energy percentage for qualifying energy property placed in service after December 31, 2021 is reduced to 6% unless new prevailing wage requirements and apprenticeship requirements are met. Taxpayers will qualify for a 30% ITC (instead of the base 6% credit) if they meet the new prevailing wage requirements and the apprenticeship requirements. The Prevailing Wage and Apprenticeship Requirements: The prevailing wage requirements require that any laborers and mechanics employed by the taxpayer...

IRS Provides Guidance on the Full Deductibility of Restaurant Meals

One of the sensual and ineffable pleasures of life is a satisfying meal, whether prepared at home or partaken of at a restaurant. The Consolidated Appropriations Act, 2021 (CAA) temporarily expanded the pathway to this pleasure by providing for the full deductibility of business expenses paid or incurred from January 1, 2021 to December 31, 2022 for food or beverages provided by restaurants. Full deductibility is set forth in Section 274(n)(2)(D) of the Internal Revenue Code of 1986, as amended (the “Code”). Prior to the CAA, the deductibility of restaurant meals, like all other food and beverage business expenses, was subject to a 50 percent limitation. Since the CAA did not define “restaurant,” the precise scope of full deductibility remained uncertain. In Notice 2021-25, the IRS defined “restaurant,” and its definition removes a significant degree of this uncertainty. A restaurant means a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premises. A restaurant does not include a business that primarily sells pre-packaged food or beverages not for immediate consumption, such as a beer, wine, or liquor store; convenience store; drug store; grocery store; kiosk; newsstand; specialty food store; or vending machine. The 50 percent deduction continues to...