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Patrick J. Duffany, CPA, JD leads
CohnReznick's National Tax and
State and Local Tax practices. He
provides guidance and assistance
on various state and local tax mat-
ters including income/franchise,
sales and use, conveyance, prop-
erty, and gross receipts taxes. Patrick is a frequent
speaker and author for the CTCPA and other organi-
zations and is the chair of the CTCPA State Taxation
Interest Group. He can be reached at patrick.duffany@ or 959-200-7270.
Edmund S. Kindelan, CPA is
CohnReznick's Regional Manag-
ing Partner New England. He fo-
cuses on client service and growth
within the Connecticut and Mas-
sachusetts offices. Ed is also the
practice leader in New England for the Commercial
Real Estate Industry practice and provides account-
ing, tax, and advisory services to commercial real
estate developers, property managers, private eq-
uity funds, and contractors. He can be reached at or 959-200-7004.
Renewable Energy
While Congress left the wind production tax credit (PTC)
and the solar energy investment tax credit (ITC) intact
and unaltered, the tax equity financing sector will likely
be impacted by the new tax legislation. Specifically, the
reduction of the overall corporate income tax rate to
21%, the new bonus depreciation regime, the imposition
of the new Border Erosion Anti-Abuse Tax (BEAT), the
elimination of the Section 708(b) technical termination
rules, and a host of other new tax rules for limiting and
suspending some business interest deductions will all
impact tax equity renewable energy financing transactions
previously negotiated, as well as affect renewable energy
project financings currently being negotiated.
In addition, the elimination of the corporate AMT, the
modification of the NOL rules, and the imposition of less
taxpayer-favorable revenue recognition rules (which may
impact the use of pre-paid power purchase agreements
[PPAs]) will also impact the renewable industry.
Because most renewable tax equity financings are typically
done through legal entities taxed as partnerships for federal
income tax purposes, the new law's treatment and special
handling of pass-through entities, including the taxation
of the partners in those entities, is expected to give rise to
complex tax issues for both existing deals and new projects.
On new deals, these changes are expected to impact both
the pricing of tax equity and the amount of such equity that
renewable energy project sponsors may raise. However, the
level of impact to tax equity remains to be seen, especially
given the year-by-year, case-by-case nature of the BEAT, as
experienced by that segment of the renewable energy tax
equity capital markets that generate a BEAT liability against
which the PTC and ITC can now only partially offset.
There may also be some opportunities created by the Act;
for example, in the area of repowering existing wind energy
What's Next?
We are certainly living in interesting times! Clearly, the Act
has sweeping changes impacting most taxpayers. As they
say, "the devil is in the details." As with any legislation of
this size, we expect that there will be technical corrections
required at some point in time.
Similarly, we expect the Internal Revenue Service to issue
regulations and other guidance to provide additional insight
on these changes. However, it will be some time before the
bulk of such guidance is available.
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Connecticut CPA
March/April 2018