Eligibility for Allocation of Deduction for Energy Efficient Commercial Building Property Clarified
The IRS has issued a memo that sets forth guidelines for determining various factual scenarios such as whether a taxpayer may qualify as a designer of energy efficient commercial building property under Code Sec. 179D(d)(4). The Service also analyzed if designers could qualify for the maximum Code Sec. 179D deduction of $1.80 per square foot, if they only designed one system of energy efficient commercial building property in a government-owned building.
The Service clarified that a taxpayer could qualify as a designer of these particular properties under Code Sec. 179D(d)(4) if the taxpayer created technical specifications for construction and contract documents for the design. Further, the Service stipulated that the $1.80 deduction could be allocated to the primary designer or spread amongst several designers of the property at the building owner’s discretion. However, the owner would need to qualify for the $1.80 deduction for the installation of the property.
IRS Advice Memorandum AM 2018-005