The U.S. Department of the Treasury yesterday updated its frequently asked questions regarding the beginning of construction for projects seeking payments through the Section 1603 program. Treasury added questions #23 and #24, which address 5 percent safe harbor and changes of ownership after the safe harbor is met but before projects are placed in service.
- If a person transfers property to a second person (the transferee) and the transferee uses the property in a project, the transferee is treated for purposes of the 5% safe harbor as having paid or incurred the costs that the transferor incurred to acquire the property, but only if the transferor acquired the property for use in that project and is related to the transferee.
- If ownership of the entity that met the 5% safe harbor changes after December 31, 2011, and before the property is placed in service, eligibility is not affected if (1) the purchaser is an otherwise eligible Section 1603 applicant and (2) the entity being sold had commenced development of a project.
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