IRS Issues 2011 Inflation Adjustment Factor for Carbon Dioxide Capture Credit (Notice 2011-50)

The IRS has released the 2011 inflation adjustment factor for the carbon dioxide (CO2) sequestration credit. The 2011 inflation-adjusted credit applies to the amount of qualified CO2 captured by a taxpayer at a qualified facility and disposed of in secure geological storage. The inflation adjustment factor for 2011 is 1.0187. The credit is $20.37 per metric ton of qualified CO2 under Code Sec. 45Q(a)(1) and $10.19 per metric ton of qualified CO2 under Code Sec. 45Q(a)(2).

Code Sec. 45Q provides a credit of $20 per metric ton of qualified CO2 that is captured at a qualified facility, disposed of by the taxpayer at a secure geological site and not used by the taxpayer as a tertiary injectant. Qualified CO2 must be captured from an industrial source that would otherwise release it into the atmosphere as greenhouse gas and it must be measured at the source of capture and verified at the point of disposal or injection. For tax years beginning after December 31, 2009, the dollar amount in Code Sec. 45Q(a) must be adjusted for inflation by multiplying $20 by the inflation adjustment factor for the calendar year as determined under Code Sec. 43(b)(3)(B) using 2008 instead of 1990 as the base year.

Notice 2011-50, 2011FED ¶46,391

Other References:

Code Sec. 45Q

CCH Reference – 2011FED ¶4500ZL.45

Tax Research Consultant

CCH Reference – TRC BUSEXP: 55,600

AUTHOR

Wolters Kluwer Tax and Accounting

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