Notice #2008-40

The information contained in this document about The Energy Policy Act of 2005 is not offered as tax advice and should not be taken as such.  Any information in this document or any other document referred to is meant for general informational purposes only. Please consult with your tax advisor to determine the specific tax treatment appropriate for your company

Notice 2008-40 has been issued providing additional clarification on the followings issues:

(click here to view full notice.)

• The assignment of the tax deduction to designers for government-owned buildings.
• The list of approved software programs for certifying under the permanent rules.
• Certification requirements under the interim lighting rule.
• Application of the interim lighting rule to unconditioned garage spaces.
• Changes relating to partially qualifying property.

Assignment of Tax Deduction:

• The owner of the property may allocate the § 179D deduction to the person primarily responsible for designing the property (the designer). The deduction will be allowed to the designer for the taxable year that includes the date on which the property is placed in service.
• A designer is a person that creates the technical specifications for installation of energy efficient commercial building property. A designer may include, for example, an architect, engineer, contractor, environmental consultant or energy services provider who creates the technical specifications for a new building or an addition to an existing building that incorporates energy efficient commercial building property. A person that merely installs, repairs, or maintains the property is not a designer.
• If more than one designer is responsible for creating the technical specifications for installation of energy efficient commercial building property on or in a government-owned building, the owner of the building shall--
  (1) determine which designer is primarily responsible and allocate the full deduction to that designer, or
  (2) at the owner’s discretion, allocate the deduction among several designers.
• An allocation of the § 179D deduction to the designer of a government-owned building must be in writing and will be treated as satisfying the requirements of this section with respect to energy efficient commercial building property if the allocation contains all of the following:
  (1) The name, address, and telephone number of an authorized representative of the owner of the government-owned building;
  (2) The name, address, and telephone number of an authorized representative of the designer receiving the allocation of the § 179D deduction;
  (3) The address of the government-owned building on or in which the property is installed;
  (4) The cost of the property;
  (5) The date the property is placed in service;
  (6) The amount of the § 179D deduction allocated to the designer;
  (7) The signatures of the authorized representatives of both the owner of the government-owned building and the designer or the designer’s authorized representative; and
  (8) A declaration, applicable to the allocation and any accompanying documents, signed by the authorized representative of the owner of the government owned
  building, in the following form:
  “Under penalties of perjury, I declare that I have examined this allocation, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of this allocation are true, correct, and complete.”
• Before a designer may claim the § 179D deduction with respect to property installed on or in a government-owned building, the designer must obtain the written allocation described in section 3.04. A designer is not required to attach the allocation to the return on which the deduction is taken. However, §1.6001-1(a) of the Income Tax Regulations requires that taxpayers maintain such books and records as are sufficient to establish the entitlement to, and amount of, any deduction claimed by the taxpayer. Accordingly, a designer claiming a deduction under § 179D should retain the allocation as part of the taxpayer’s records for purposes of §1.6001-1(a) of the Income Tax Regulations.
• See full notice RE additional tax consequences.

List of Approved Software programs

• Go to: http://www.eere.energy.gov/buildings/info/tax_incentives.html and see full notice.

Certification Requirements For Interim Lighting Rules

• The Interim Lighting Rule is satisfied by a reduction in lighting power density and such a reduction may be computed using a spreadsheet or other similar software. This computation does not require qualified computer software to model the entire building system or a determination of projected annual energy costs. Accordingly, the requirements of section 4 of Notice 2006-52 do not apply to certifications under the Interim Lighting Rule.

Application of the Interim Lighting Rule to Unconditioned Garage Space

• For purposes of the Interim Lighting Rule, the definition of a Building within the Scope of Standard 90.1-2001 (found in Section 5.01 of Notice 2006-52) is expanded to include a structure that--
  (1) Encloses space affording shelter to persons, animals, or property within exterior walls (or within exterior and party walls) and a roof;
  (2) Is not a single-family house, a multi-family structure of three stories or fewer above grade, a manufactured house (mobile home), or a manufactured house (modular); and
  (3) Is unconditioned attached or detached garage space as referenced by Tables 9.3.1.1 and 9.3.1.2 of Standard 90.1-2001.