Federal Register / Vol. 89, No. 182 / Thursday, September 19, 2024 / Notices 76821 

1 Inflation Reduction Act of 2022 (IRA), H.R. 

5376—117th Congress (2021–2022). The IRA 

transferability provision allows a non-tax-exempt 

entity (seller) with an income tax credit to transfer 

the income tax credit to another non-tax-exempt 

entity (purchaser) and such credit cannot later be 

resold; as such, the seller would effectively receive 

cash from the sale as if it was paid directly by the 

IRS, as an incentive to encourage investment in 

energy projects, and the buyer would be able to use 

the purchased income tax credit for its own income 

tax return purposes. 

2 Inflation Reduction Act of 2022, H.R. 5376— 

117th Congress (2021–2022) (which includes a 

provision that allows a non-tax-exempt entity 

(seller) with an income tax credit to transfer the 

income tax credit to another non-tax-exempt entity 

(purchaser) and such credit cannot later be resold; 

as such, the seller would effectively receive cash 

from the sale as if it was paid directly by the IRS, 

as an incentive to encourage investment in energy 

projects, and the buyer would be able to use the 

purchased income tax credit for its own income tax 

return purposes). 

Any person desiring to intervene, to 

protest, or to answer a complaint in any 

of the above proceedings must file in 

accordance with Rules 211, 214, or 206 

of the Commission’s Regulations (18 

CFR 385.211, 385.214, or 385.206) on or 

before 5:00 p.m. Eastern time on the 

specified comment date. Protests may be 

considered, but intervention is 

necessary to become a party to the 

proceeding. 

eFiling is encouraged. More detailed 

information relating to filing 

requirements, interventions, protests, 

service, and qualifying facilities filings 

can be found at: http://www.ferc.gov/ 

docs-filing/efiling/filing-req.pdf. For 

other information, call (866) 208–3676 

(toll free). For TTY, call (202) 502–8659. 

The Commission’s Office of Public 

Participation (OPP) supports meaningful 

public engagement and participation in 

Commission proceedings. OPP can help 

members of the public, including 

landowners, environmental justice 

communities, Tribal members and 

others, access publicly available 

information and navigate Commission 

processes. For public inquiries and 

assistance with making filings such as 

interventions, comments, or requests for 

rehearing, the public is encouraged to 

contact OPP at (202) 502–6595 or OPP@

ferc.gov. 

Dated: September 12, 2024. 

Debbie-Anne A. Reese, 

Acting Secretary. 

[FR Doc. 2024–21292 Filed 9–18–24; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket No. AI24–1–000] 

Accounting for Transferability of 

Income Tax Credits; Notice of 

Proposed Accounting Release 

Take notice that the Chief Accountant 

of the Federal Energy Regulatory 

Commission proposes to issue an 

accounting release (attached) to provide 

guidance on the accounting for the 

transferability of income tax credits 

related to certain energy projects as a 

result of the Inflation Reduction Act of 

2022, which allows entities to monetize 

such credits via transfers to 

independent third parties for cash.1 The 

proposed accounting release would 

require an entity to treat the transfer of 

income tax credits as a nonoperating 

activity, including revenue (i.e., the 

entirety of the cash received) and 

associated costs to facilitate the transfer. 

This proposed accounting release would 

apply to jurisdictional public utilities 

and licensees and natural gas 

companies. 

This proposed accounting release is 

not intended to prejudice the rate 

treatment of the transfer of income tax 

credits in any proceeding before the 

Commission. 

The Commission has reviewed the 

proposed Accounting Release. At the 

conclusion of the comment period 

specified at the end of this notice, the 

Chief Accountant will consider the 

comments received, make any necessary 

changes, and issue the final accounting 

release. The effective date of the final 

accounting release will be the day that 

it is issued. 

Specifically, comments on the 

following accounting topics are 

requested: 

1. The proposed accounting release 

would require an entity to treat the 

transfer of income tax credits as a 

nonoperating activity, including the 

revenue received from the transfer of the 

income tax credit (i.e., the entirety of the 

cash proceeds) and any costs to 

facilitate the transfer of income tax 

credits. If you disagree with this 

conclusion, please provide the basis for 

your disagreement. 

2. The proposed accounting release 

would require an entity, upon the 

transfer of its income tax credits to an 

independent third party, to derecognize 

all associated balances previously 

recorded on its books, including 

associated accumulated deferred income 

tax (ADIT) balances. If you disagree 

with this conclusion, please provide the 

basis for your disagreement. 

3. The proposed accounting release 

would require an entity that purchases 

a non-investment tax credit, such as a 

production tax credit, from an 

independent third party, to record the 

tax credit on its books using the same 

account (i.e., an ADIT asset) that it 

would have used had it itself generated 

the tax credit for use on its own income 

tax return, with any costs incurred to 

facilitate the purchase recorded as 

nonoperating. If you disagree with this 

conclusion, please provide the basis for 

your disagreement. 

4. The proposed accounting release 

would require an entity that purchases 

an investment tax credit from an 

independent third party to use either 

the flow-through or deferred method of 

accounting for investment tax credits, 

consistent with the Commission’s 

existing accounting regulations, as if it 

itself received the upfront tax credit 

from the IRS, with any costs incurred to 

facilitate the purchase recorded as 

nonoperating. If you disagree with this 

conclusion, please provide the basis for 

your disagreement. 

All interested parties are invited to 

submit comments on this proposed 

accounting release using the ‘‘eFiling’’ 

link at http://www.ferc.gov. In lieu of 

electronic filing, you may submit a 

paper copy which must reference the 

accounting docket number. 

To file via U.S. Postal Service: DebbieAnne A. Reese, Acting Secretary, 

Federal Energy Regulatory 

Commission, 888 First Street NE, 

Washington, DC 20426 

To file via any other courier: DebbieAnne A. Reese, Acting Secretary, 

Federal Energy Regulatory 

Commission, 12225 Wilkins Avenue, 

Rockville, Maryland 20852 

Comment Date: 5:00 p.m. Eastern 

Time on October 25, 2024. 

Dated: September 12, 2024. 

Debbie-Anne A. Reese, 

Acting Secretary. 

Attachment 

Federal Energy Regulatory Commission 

Proposed Accounting Release: Docket 

No. AI24–1–000 Accounting for 

Transferability of Income Tax Credits 

To All Jurisdictional Public Utilities 

and Licensees and Natural Gas 

Companies 

Subject: Accounting for Transferability 

of Income Tax Credits 

The Inflation Reduction Act of 2022 

allows for transferability of income tax 

credits related to certain energy projects 

and permits entities to monetize such 

credits via transfers to independent 

third parties for cash.2 The Commission 

has previously determined that 

dispositions of assets are not part of 

normal recurring operating activities, 


lotter on DSK11XQN23PROD with NOTICES1
76822 Federal Register / Vol. 89, No. 182 / Thursday, September 19, 2024 / Notices 

3See 18 CFR parts 101 and 201, Plant Instruction 

No. 5 (f), Plant Purchased or Sold (where the 

Commission’s regulations require the use of 

nonoperating accounts to record gains and losses, 

and sales costs, associated with the sale of plant); 

Cent. La. Elec. Co., Opinion No. 394, 71 FERC 

¶ 61,225 (1995) (where the Commission determined 

that sales of receivables should be treated as 

nonoperating activities, and the expenses associated 

with such sales should likewise be recorded as 

nonoperating); and Sw. Pub. Serv. Co., 188 FERC 

¶ 61,102 (2024) (where the Commission determined 

transaction costs associated with sales of 

production tax credits are nonoperating in nature). 

4See, e.g., Ga. Power Co., Docket No. AC16–109– 

000 (Aug. 5, 2016) (unpublished letter order). 

and, therefore, generally should be 

accounted for using nonoperating 

accounts.3 Consistent with this longstanding policy, the transfer of income 

tax credits should be treated as a 

nonoperating activity. 

Accordingly, this accounting 

guidance requires an entity to treat the 

revenue received from the transfer of the 

income tax credit (i.e., the entirety of the 

cash proceeds) and any costs to 

facilitate the transfer, as nonoperating 

income or expense consistent with the 

underlying nature of the transfer as a 

nonoperating activity. Additionally, 

upon a transfer of an income tax credit 

to an independent third party, an entity 

must derecognize all associated 

balances previously recorded on its 

books, including associated 

accumulated deferred income tax 

(ADIT) balances, consistent with the 

accounting treatment for a disposition of 

an asset that had associated ADIT prior 

to a sale.4

An entity that purchases a noninvestment tax credit, such as a 

production tax credit, from an 

independent third party, is required to 

record the tax credit on its books using 

the same account (i.e., an ADIT asset) 

that it would have used had the entity 

itself generated the tax credit for use on 

its own income tax return. An entity 

that purchases an investment tax credit 

from an independent third party is 

required to use either the flow-through 

or deferred method of accounting for 

investment tax credits, consistent with 

the Commission’s existing accounting 

regulations, as if the entity itself 

received the upfront tax credit from the 

IRS. In all cases, an entity is required to 

record the costs incurred to facilitate a 

transfer of income tax credits as 

nonoperating. 

This guidance is for accounting 

purposes only and is not intended to 

prejudice the rate treatment of the 

transfer of income tax credits in any 

proceeding before the Commission. 

Appendix A provides an example that 

describes the accounting for 

transferability of an investment tax 

credit, and an example that describes 

the accounting for transferability of a 

non-investment tax credit such as a 

production tax credit. 

Appendix A 

Illustrative Examples of the Application 

of the Accounting Release 

Example 1: Accounting for 

transferability of an Investment Tax 

Credit (ITC). 

The entire cash received from the 

transfer of ITCs is treated as 

nonoperating income because the 

transferred ITC is intended to merely 

take a new form (i.e., the ITC is 

monetized into cash) upon its sale to a 

third party (i.e., the seller effectively 

receives the entirety of the cash from the 

sale as if the IRS directly paid the seller 

for the ITC). Any costs to facilitate the 

sale are likewise treated as nonoperating 

expense. If an entity previously 

maintained accumulated deferred 

income tax (ADIT) (e.g., in Account 190) 

associated with ITCs (i.e., in Account 

255), such an entity should derecognize, 

both the ITC and its associated ADIT 

upon transfer. 

Journal entry to record the entire cash 

proceeds from the sale of the ITC: 

Debit Account 131, Cash, Credit 

Account 421, Miscellaneous 

Nonoperating Income 

Journal entry to record costs to facilitate 

the sale of the ITC: 

Debit Account 426.5, Other 

Deductions Credit Account 131, 

Cash 

Journal entry to derecognize the ITC 

upon the sale: 

Debit Account 255, Accumulated 

Deferred Investment Tax Credits, 

Credit Account 411.4, ITC 

Adjustments, Utility Operations 

Journal entry to derecognize the 

associated ADIT asset upon the sale 

of the ITC: 

Debit Account 410.1, Provision for 

Deferred Income Taxes, Operating 

Income, Credit Account 190, 

Accumulated Deferred Income 

Taxes 

Example 2: Accounting for 

transferability of a Production Tax 

Credit (PTC). 

The entire cash received from the 

transfer of PTCs is treated as 

nonoperating income, and any costs to 

facilitate the sale are likewise treated as 

nonoperating expense. If an entity 

previously maintained ADIT assets (e.g., 

in Account 190) for unutilized PTCs 

(i.e., unused on the entity’s income tax 

return), such ADIT should be 

derecognized upon the sale of the PTC. 

Journal entry to record the entire cash 

proceeds from the sale of the PTC: 

Debit Account 131, Cash, Credit 

Account 421, Miscellaneous 

Nonoperating Income 

Journal entry to record costs to facilitate 

the sale of the PTC: 

Debit Account 426.5, Other 

Deductions, Credit Account 131, 

Cash 

Journal entry to derecognize the 

associated ADIT asset upon the sale 

of the PTC: 

Debit Account 410.1, Provision for 

Deferred Income Taxes, Operating 

Income, Credit Account 190, 

Accumulated Deferred Income 

Taxes 

[FR Doc. 2024–21290 Filed 9–18–24; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

Combined Notice of Filings 

Take notice that the Commission has 

received the following Natural Gas 

Pipeline Rate and Refund Report filings: 

Filings Instituting Proceedings 

Docket Numbers: RP24–1062–000. 

Applicants: Equitrans, L.P. 

Description: 4(d) Rate Filing: Formula 

Based Negotiated Rate—10/1/2024 

Update to be effective 10/1/2024. 

Filed Date: 9/12/24. 

Accession Number: 20240912–5001. 

Comment Date: 5 p.m. ET 9/24/24. 

Docket Numbers: RP24–1063–000. 

Applicants: Equitrans, L.P. 

Description: Compliance filing: 

Operational Purchases and Sales 2024 to 

be effective N/A. 

Filed Date: 9/12/24. 

Accession Number: 20240912–5007. 

Comment Date: 5 p.m. ET 9/24/24. 

Docket Numbers: RP24–1064–000. 

Applicants: Texas Eastern 

Transmission, L.P. 

Description: 4(d) Rate Filing: 

Negotiated Rates—Nextera 911957 and 

911890 eff 10–1–24 to be effective 10/ 

1/2024. 

Filed Date: 9/12/24. 

Accession Number: 20240912–5043. 

Comment Date: 5 p.m. ET 9/24/24. 

Any person desiring to intervene, to 

protest, or to answer a complaint in any 

of the above proceedings must file in 

accordance with Rules 211, 214, or 206 

of the Commission’s Regulations (18 

CFR 385.211, 385.214, or 385.206) on or 

before 5:00 p.m. Eastern time on the 

specified comment date. Protests may be 

considered, but intervention is 

necessary to become a party to the 

proceeding. 

The filings are accessible in the 

Commission’s eLibrary system (https:// 


lotter on DSK11XQN23PROD with NOTICES1