Description

Carbon oxide capture, utilization, and sequestration are important decarbonization tools. Use of these technologies is associated with diminished greenhouse gas emissions and contribution to climate change goals. Accordingly, carbon capture, utilization, and sequestration represent a rapidly growing industry delivering economic advantages.

Section 45Q of the Internal Revenue Code permits taxpayers to claim a federal income tax credit for capturing and sequestering, disposing, or utilizing carbon oxides. On July 24, 2024, more than six years after Section 45Q was amended to allow for utilization, the IRS released Notice 2024-60, providing Section 45Q guidance, including the information required to be included in the LCA report, procedures for submitting the LCA report, and supporting information that must be provided to the IRS and U.S. Department of Energy (DOE) to facilitate the LCA report review process. A few days earlier, DOE released its 45Q LCA Guidance Toolkit containing details and a template for LCA reports.

Notice 2024-60 and the 45Q LCA Guidance Toolkit together will provide critical guidance for taxpayers seeking to claim Section 45Q credit. Nevertheless, significant questions remain regarding qualification for the credit.

Listen as our panel discusses the components of recent IRS Notice 2024-60, including submission of LCA reports, the review process, approval requests, and more.