Green Deal Tax credit CO2 injections

Forum|Forum|2 years ago
August 28, 2023
2 replies
10 views

Something new for me.

I have a tax customer that has received a large sum of money for CO2 injections into their property. This was reported to them on form 1099-Misc box 1 Rents. Is there anything that can offset this? Is there some sort of tax credit I am not finding?

ProSeries Professional

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BobKamman

Level 15

Long article about this, but not about the tax consequences, at

https://www.eenews.net/articles/why-injecting-co2-underground-is-a-legal-morass/

The carbon dioxide can mix with brine deep underground and produce carbonic acid, which can cause problems years from now. So there should be some allowance for depletion or depreciation, but there isn't. Maybe Congress will catch up with this issue in another decade or so.

J

judys3Author

Level 6

We've talked and wondered if there would be. When the pipeline came thru the landowners were able to take % for property damage

BobKamman

Level 15

Wasn't the pipeline just an easement? That would reduce basis? Maybe you could call this an easement, also. Or maybe that's what should have been done when the deal was signed.

BobKamman

Level 15

Code Section 45Q allows a credit for the company that captures the CO2, and that credit apparently can be passed through to the person that allows the injection. But your client would know if that was part of the deal.

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