Solar facility owner received more time for leased-property credit election

Plain-English summary

A partnership owned a solar energy facility and leased it to another entity, intending to pass the facility's energy credit to the lessee. The parties' timely returns reflected that intended treatment, but the required election under Treas. Reg. § 1.48-4 was inadvertently omitted. The owner believed the election had been filed and later requested relief under Treas. Reg. § 301.9100-3. Based on the submitted information and representations, the IRS found that the requirements for relief were satisfied. It granted 120 days to make the election and required an amended return with the prescribed summary statement and a copy of the ruling.

Ruling snapshot

• Question: Could the solar facility owner receive additional time to elect to treat its lessee as purchasing the property for energy credit purposes?
• Outcome: Approved
• Key authorities: IRC §§ 38, 46, 48, and 50(d)(5); Treas. Reg. §§ 1.48-4 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202530006 Third Party Communication: None
Release Date: 7/25/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 48.01-00, 38.00-
00 Person To Contact:
----------------, ID No. -----------------
----------------------------------- Telephone Number:
-------------------------- ---------------------
-------------------- Refer Reply To:
------------------------------ CC:ECE:B02
------------------------- PLR-119788-24
Date:
April 22, 2025

Re: -------------------------

Legend

Taxpayer = ----------------------------
----------------------
Location = --------------
Lessee = ----------------------------
----------------------
Tax Year = -------
Discovery Year = -------
Date 1 = ---------------------------
Date 2 = -------------------------
Parent Group = ----------------------------
Tax Advisor = ---------------------

Dear ------------:

This letter responds to your letter dated October 28, 2024, submitted on behalf of
Taxpayer requesting extension of time under §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to make a late election under § 1.48-4 of the
Income Tax Regulations for Tax Year.

                                              FACTS

According to the relevant facts submitted and representations made, Taxpayer was
formed to design, install, and maintain the solar photovoltaic energy generation facility

PLR-119788-24 2

(the Facility) in Location. Taxpayer represents that the Facility is eligible for the energy
credit under § 48 (Tax Credit).

Lessee was formed to lease the Facility, and ultimately became a partner of Taxpayer.
On Date 1, Taxpayer entered into a lease with Lessee, in which Taxpayer agreed to
pass through to Lessee the Tax Credit related to the Facility.

Under the terms of the lease, Taxpayer was required to file an election under Treas.
Reg. § 1.48-4(f) by the due date of Lessee’s return, including extensions (the Election).

On Date 2, Taxpayer placed certain qualified solar property into service at the Facility
and intended to make the Election timely for the property to be treated as owned by
Lessee for purposes of any applicable Tax Credits.

Taxpayer does not maintain a tax department and relies upon personnel at Parent
Group to engage outside tax advisor to assist with its tax filings. Parent Group provided
Tax Advisor the lease and other relevant documents necessary to prepare Taxpayer’s
and Lessee’s Tax Year tax returns.

Taxpayer timely filed its Tax Year return. Taxpayer’s Form 1065 included a Schedule
K-1 issued to Lessee, which reflected the qualified solar assets passed through to
Lessee, as well as potential credits and section 50(d) income, consistent with the
intended tax treatment; however, the Election was inadvertently not filed. Lessee’s
timely filed Form 1065 for Tax Year also reflected allocated eligible solar property and
corresponding information at the partner level. At the time Taxpayer filed its Tax Year
tax return, it believed the Election had been timely made pursuant to the terms of the
lease.

In Discovery Year, it was discovered that Taxpayer's Tax Year return did not include the
Election.

                              RULING REQUESTED

Taxpayer requests an extension of time under § 301.9100-1 and § 301.9100-3 to file a
late election with Lessee pursuant to § 1.48-4(f) and to file a copy pursuant to § 1.48-
4(j).

                              LAW AND ANAYLYSIS

Section 38(a) allows a credit against the tax for the taxable year in an amount equal to
the sum of: (1) the business credit carryforwards carried to the taxable year, (2) the
amount of the current year business credit, plus (3) the business credit carrybacks
carried to the taxable year.

PLR-119788-24 3

Under § 38(b)(1), the amount of the current year business credit includes the
investment credit under § 46. Under § 46(2), the energy credit is a component of the
investment credit.

Section 48(a)(1) provides that, for purposes of § 46, except as provided in paragraphs
(1)(B), (2)(B), and (3)(B) of subsection (c), the energy credit for any taxable year is the
energy percentage of the basis of each energy property placed in service during such
taxable year.

Section § 50(d)(5), makes applicable rules similar to the rules of former § 48(d) (relating
to certain leased properties). Under former § 48(d)(1), a person (other than a person
referred to in former § 46(e)(1) who is a lessor of property may (at such time, in such
manner, and subject to such conditions as are provided by regulations prescribed by the
Secretary) elect with respect to any new section 38 property (other than property
described in former § 48(d)(4)) to treat the lessee as having acquired such property.

Section 1.48-4(a)(1) provides that a lessor of property may elect to treat the lessee of
such property as having purchased such property for purposes of the credit allowed by
§ 38, if the conditions contained in § 1.48-4(a)(1)(i)-(v) are satisfied.

Section 1.48-4(a)(1)(iv) requires a statement of election to treat the lessee as a
purchaser to be filed in the manner and within the time provided in § 1.48-4(f) or (g).

Section 1.48-4(f)(1) provides that the election of a lessor with respect to a particular
property (or properties) must be made by filing a statement with the lessee, signed by
the lessor and including the written consent of the lessee, containing the information as
described in § 1.48-4(f)(1)(i)-(vii).

Section 1.48-4(f)(2) provides that the § 1.48-4(f)(1) election statement must be filed with
the lessee on or before the due date (including any extensions of time) of the lessee's
return for the lessee's taxable year during which possession of the property is
transferred to the lessee.

Section 1.48-4(j) provides, in part, that the lessor and the lessee shall keep as a part of
their records the statement referred to in § 1.48-4(f)(1), and that the lessor shall attach
to his income tax return a summary statement of all property leased during his taxable
year with respect to which an election is made.

Section 301.9100-1(a) provides that the regulations under this section and §§ 301.9100-
2 and 301.9100-3 establish the standards the Commissioner will use to determine
whether to grant an extension of time to make a regulatory election. An extension of
time is available for elections that a taxpayer is otherwise eligible to make. However,
the granting of an extension of time is not a determination that the taxpayer is otherwise
eligible to make the election.

PLR-119788-24 4

Section 301.9100-1(b) provides that the term "regulatory election" includes an election
whose due date is prescribed by a regulation published in the Federal Register.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G,
H, and I.

Section 301.9100-2 provides automatic extensions of time for making certain elections.
Section 301.9100-3 provides rules for requesting extensions of time for regulatory
elections that do not meet the requirements of § 301.9100-2.

Section 301.9100-3 provides that requests for relief subject to this section will be
granted when the taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and that granting
relief will not prejudice the interests of the government.

                                  CONCLUSIONS

Based solely on the information submitted and representations made, we conclude that
the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly,
Taxpayer is granted an extension of time of 120 days from the date of this letter to make
an election in accordance with § 1.48-4(f). Further, Taxpayer must file an amended
return for Tax Year with the appropriate service center, consistent with this ruling,
attaching a summary statement as required under § 1.48-4(j) and a copy of this letter.
A copy is enclosed for that purpose.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

PLR-119788-24 5

                                              Sincerely,




                                              Maggie Stehn
                                              Senior Counsel, Branch 2
                                              Office of Associate Chief Counsel
                                              (Energy, Credits, and Excise Tax)

Enclosure (1)

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