The legislation represents about $1 billion of tax and appropriation benefits per page.
Here are 10 of the surprising, little known opportunities for businesses buried within this massive legislation:
- Extension of bonus depreciation. The federal stimulus package extends last year’s 50-percent write-off of the cost of depreciable property for capital expenditures. Wisconsin businesses can extend this temporary benefit for capital expenditure incurred in 2009.
- New Market Tax Credits. Available New Markets Tax Credits are increased to $5 billion for 2009 and 2010. Wisconsin developers, who have the opportunity to receive allocations for qualified projects, will enjoy an economic boost to projects during the current challenging economy.
- Creation of renewable energy grants. In recognition of the recent constriction in the market for production and investment tax credits, Congress is allowing for-profit taxpayers that place in service a wide variety of renewable energy facilities to receive a grant from the Treasury Department in lieu of claiming a production or investment tax credit for those facilities. The grant will be equal to a percentage of the taxpayer’s basis in depreciable tangible personal and real property (not including buildings) that is used as an integral part of the facility. This grant opportunity should serve to provide a significant financial boost to qualified renewable energy projects in Wisconsin.
- Creation of credit for investment in advanced energy property. Congress authorized $2.3 billion in tax credits for certain advanced energy property. The credit will be equal to 30 percent of a taxpayer’s basis in certain depreciable tangible personal or real property (excluding buildings) related to any project that re-equips, expands or establishes a manufacturing facility for the production related to various identified renewable energy resources. This represents an exciting opportunity for Wisconsin suppliers of component parts for renewable energy products.
- Increase in the amount of energy conservation bonds from $2.4 billion to $3.2 billion. This increase in a financing source should serve to mitigate the current restrictive lending practices that apply to qualified energy projects.
- Election to take investment tax credit in lieu of production tax credit for qualified renewable energy facilities. This election allows an owner of qualified facilities with a tax credit equal to 30 percent of the owner’s basis in the qualified property instead of the 2.1 cents or 1 cent of credit for each kilowatt of energy produced from such qualified projects. This 30-percent tax credit will serve to enhance the financial benefits accruing to investors in qualified renewable energy projects in Wisconsin.
- Energy efficiency and conservation block grants. About $3.2 billion is available for energy efficiency and conservation block grants for states, eligible local governments and Indian tribes. Wisconsin businesses involved in energy conservation products and services should “follow the money” to Wisconsin cities that qualify for such grants.
- Removal of certain caps on credits for residential energy efficient property. The federal law eliminates the per-taxpayer caps on the credit for qualified expenditures on solar water heating small wind and geothermal heat pump energy properties. Businesses in Wisconsin that service the energy efficiency area will enjoy an increased demand for their products and services.
- Innovative technology loan guarantee program. About $6 billion is available from the Department of Energy for the cost of guaranteeing loans for proven renewable technologies as authorized under the Federal Energy Policies Act.
- Weatherization assistance programs. About $5 billion is available for weatherization assistance programs used to assist low-income families to reduce their energy costs by sending funds to the state for these purposes. This provision represents another source of revenue for Wisconsin businesses that can retool quickly to meet this energy efficiency demand.
These are just some of the little known economic opportunities for Wisconsin businesses and investors buried in this massive federal stimulus package. There are three basic rules for Wisconsin businesses and investors who want to take advantage of the surprising opportunities created by this federal legislation: (1) Follow the money (tax and spending benefits); (2) follow the people (state/local governments) that follow the money; (3) and follow the people (contractors) that follow the people that follow the money.