Inflation Reduction Act

How The Inflation Reduction Act Incentivizes the Production and Use of Clean Fuels

The newly enacted Inflation Reduction Act (IRA), among other things, is designed to encourage the production and use of green and clean fuels to reduce greenhouse gases from the transport sector. There are tax credit programs for aviation fuel, biofuels, and hydrogen aimed at accelerating the development of clean transport.

There are tremendous opportunities in this sector, especially for Alabama businesses. Speak with a knowledgeable Alabama business attorney today to learn more about how Inflation Reduction Act incentives can help you.

Clean Hydrogen Incentives

There are several provisions in the Inflation Reduction Act aimed at increasing the use of clean hydrogen. There is a new tax credit for producing clean hydrogen, which is considered to be a promising low-carbon fuel. In particular, clean hydrogen is expected to power trucks and ships instead of diesel.

The credit is between 20 – 100% depending on the reductions achieved in lifecycle greenhouse gas from the clean hydrogen. New regulations are authorized by the IRA for determining lifecycle greenhouse gas emissions. They will also be verifying the production and sale of clean hydrogen, which will undoubtedly set in a ripple effect across multiple industries.

The applicable percentage is multiplied by $0.60 times the base rate. Taxpayers that meet the prevailing wage requirements while constructing the clean hydrogen project get a bonus rate of $3.00. This is applicable for each year of the 10-year credit program. They should also satisfy apprenticeship requirements during the construction period.

The IRA has also extended the alternative fuel refueling property tax credit for encouraging the greater deployment of hydrogen refueling facilities and clean fuel refueling infrastructure. The credit expands for alternative fuel refueling infrastructure, which is at least 85% hydrogen.

Base credit of 6% and bonus credit of 30% is applicable on expenses up to $100,000. This is for every refueling pump installed.

Biodiesel and Biofuel Incentives Get Extended

Several sections of the Internal Revenue Code have been amended by the Internal Revenue Code for incentivizing biodiesel and other alternative fuels used in the commercial trucking and transportation sector. The Inflation Reduction Act has specifically extended the deadline for existing alternative fuel, biodiesel, and second-generation biofuel tax credits to December 31, 2024.

Credits for Sustainable Aviation Fuel

New sustainable aviation fuel credit has been established by the IRA for reducing greenhouse gases. This fuel credit involves multiplying $1.25 plus an applicable supplementary amount with the number of sustainable aviation fuel gallons.

The supplementary amount applicable is $0.01 for each percentage point of reduction in lifecycle greenhouse gas emission with respect to the fuel exceeding 50%. The supplementary amount cannot be greater than $0.50.

The credits are only applicable to mixtures of kerosene and sustainable aviation fuel that are produced in the United States and are directly transferred to the aircraft’s fuel tank stationed in the US.

Aviation fuel is sustainable when it meets certain ASTM International Standard requirements. It should not be derived from coprocessing petroleum, palm fatty acid distillates, and feedstock.

Sustainable aviation fuel needs to be certified with a reduction percentage of at least 50% in lifecycle greenhouse gas emissions. This percentage means the lifecycle greenhouse gas emission percentage reduction is achieved by clean fuel instead of petroleum-based jet fuel.

The producer or importer needs to be registered with the Secretary of the Treasury. They are also required to provide certification with applicable requirements. The aviation fuel credit as per 26 U.S.C. § 38 is incorporated into the general business credit and as per 26 U.S.C. § 6426 into alcohol fuel, biodiesel, and alternative fuel mixtures credit.

Credit for Clean Fuel Production

New technology-neutral ‘clean fuel production credit’ is established by the IRA for clean fuels produced in the United States and sold between December 31, 2024, and January 1, 2028. Eligible clean fuels should have carbon dioxide equivalents of less than 50 kilograms per million British thermal units (BTU). Lifecycle carbon emissions of the clean fuel determine the credit levels for the production of each gallon or gallon equivalent.

The applicable amount is 20 cents for fuel produced at qualified facilities. A bonus rate of $1.00 is applicable for taxpayers satisfying apprenticeship requirements and meeting prevailing wage requirements. There is also a special rate for sustainable aviation fuel. Taxpaying entities have been given the opportunity to obtain credits by the IRA for various alternative and sustainable fuel types.

This is aimed at addressing the needs of multiple transportation modes while making alternative fuels readily available in the market. The limitations attached to the credits make it important that you carefully review the terms of individual credit programs. It is recommended that you consult with an experienced and knowledgeable business attorney to obtain a deeper insight into the available opportunities.

Get the Right Legal Advice from a Skilled Alabama Business Attorney Today

There is an increasing shift towards cleaner fuel and energy with the government making it easier for businesses to enter and play the markets. The qualified business attorneys at the BHM Law Group are here to explain the fine points of the Inflation Reduction Act and how it may apply to your business. To schedule your free initial consultation, give us a call at 205-994-0902 or write to us online.

 

business succession planning in Birmingham, Alabama

The Fundamentals of Business Succession Planning

Unlike an individual, a business is an entity that can continue to thrive even after the founding members that established the business are no longer there. This is possible with well-considered and legally sound business succession planning. Having a solid succession plan well in advance can help in maximizing the value of your business when the right time comes. Closely held businesses should consider the following fundamentals for their succession plan.

Key Elements in Business Succession Planning

You should never plan by crisis. Several businesses have been forced to sell at a low price or simply shut down shop because they never planned for the contingent event that their business may end someday. Planning for the death, incapacity, and sickness of the primary owner is necessary. You need to plan in advance if you want to reap the benefits of your business.

You need to decide the long-term goals for your business. Do you want to retain the business in your family or sell it to a competitor? Do you want investors or are you planning on never selling it? These scenarios can help you organize your goals and business. You will be able to attract the most likely successor this way.

Most owners of closely held businesses want to pass the ownership within the family. In most cases, this is not a viable option. 70% of family businesses fail by the time the business lands in the hands of the third generation.

You can reduce the risks with a proper advance plan if you want family succession. The two major steps of facilitating maximum estate planning effectiveness are providing for all family members to be treated equitably and providing an adequate retirement income for the owner.

The best option in most cases is to sell the business. Maximizing the business value is paramount if you select this option. You should bring your business to the right condition if you want to sell at a maximum price. You should also find an optimal time to make the sale. This may vary depending on inflation, interest rates, and economic outlook. It can take tremendous organization and years to maximize the value of a business.

Plan for Uncertain Federal Estate Tax

There is a long-standing joke that the only certainty regarding estate tax is that it is uncertain. Rules change with each change in the White House and Congress. In addition, states impose their estate taxes as well. You need to carefully monitor the political, economic, and legal climate. Your family may not be left with any other option than to sell the business to meet the estate tax cash call if you don’t plan for estate liquidity properly.

Coordinating Estate and Financial Plans

You may not have enough cash for funding your objectives if your estate and financial plans are not carefully coordinated. The estate plan should provide liquidity for business debts and estate taxes while meeting all people-planning objectives. You can fund such money concerns through life insurance if owned in the proper manner, type, and amount.

Enter a Business Buy-Sell Agreement

A buy-sell agreement is a lifetime contract that provides for the transfer of all or a portion of business interests if one or more events occur. These trigger events are defined in the contract as well. Common triggering events are death, disability, and retirement of the business owner. Interest in the form of a business entity can be transferred through this type of agreement.

Benefits of Business Succession Planning

A business succession plan, in simple words, is an estate plan for the business. It contains written agreements detailing what happens when an owner becomes incapacitated, leaves the company, or dies. The business succession plan accounts for estate and tax planning consequences for the departing owner.

This type of planning is important for closely held family businesses where the vision and guidance of founders determine the success of a business. Such businesses generally cannot survive or succeed without a plan. The most important benefit is the peace of mind it brings. You can be sure that your life’s work will continue even when you are no longer in charge.

Speak With a Business Law Attorney in Alabama Today

Business succession planning is not only vital but also necessary. The qualified and experienced attorneys at the BHM Law Group can help you draft a business succession plan and draw up a buy-sell agreement after determining the end goals. We are happy to provide you with a free initial case evaluation. Call us at (205) 994-0902 or complete this online contact form.

business conflict lawyers in Birmingham

Ways to Resolve Business Partner Disputes

If a business partnership conflict is persistent or serious, it is best to hire a business attorney with expertise in handling partnership disputes. Here are a few proven ways that can help you handle partnership disagreements and disputes.

Never Rush to Judgments

Every decision may seem large to owners and operators of a small business. They may seem deeply personal as well. In relation to this, when a partner disagrees with you, it can be easy to shift into battle mode. You should find the patience to take a deep breath and consider what your partner is saying. This will play a major role in whether you will resolve the argument quickly and painlessly or not.

You should remember the larger picture. You entered into a partnership because you both had the same vision for your business. You each brought your individual strengths to the table. You should try and value your business partner as a whole and take a fresh look at their viewpoint. This may help you agree with them or at least come to a compromise.

Consider an Active Listening Session

This dispute resolution tactic has shown successful results in business disputes. Both parties are supposed to sit and listen to the other’s opinion and position without reacting or speaking. There is usually a set period of time, such as 3 – 5 minutes. Active listening sessions offer remarkable results for cooling tempers and allowing each side to develop fresh insight into the other’s position.

Winning matters less in business conflicts as compared to how both partners feel once the conflict is resolved. The partnership can be poisoned if either side feels resentful or marginalized. You can ease ongoing tensions and ensure that each side feels heard by practicing active listening.

Seek Professional Advice from a Partnership Disputes Lawyer

If you are unable to resolve the business partnership dispute on your own, it is time to get help from a knowledgeable and experienced partnership dispute attorney or mediation expert. The legal professional you choose will help you focus on the facts and keep the emotions out of the equation.

The attorney will try to negotiate a compromise between you and the other parties. Negotiation is about finding a solution that both business partners can live with. It is not about winning any arguments since the disagreement is probably too deep for that. A skilled mediator or attorney will help you see what is in the best interests of your business rather than make the dispute a matter of ego and one-upmanship.

Consult an Attorney If You Are Considering Partnership Dissolution

If you think the dispute is nearing an ugly outcome and you cannot resolve your differences, you would definitely need an attorney with experience in handling partnership dissolutions. It is vital that you get legal help sooner than later. A good business attorney will be able to help you understand your obligations and rights. They will also help you get a fairer picture of the rights and obligations of your partner.

For instance, it may be imprudent to terminate the partnership or oust your partner from the business. You may want to consider following a protocol listed in the agreement to go into mediation or other things. When things are not smoothing over after all efforts, the partners can consider selling their share in the business. You may end up with significant litigation and liability costs if you terminate a partnership when the agreement forbids it.

You should find an alternative solution to stopping your partner if they are poaching customers, stealing assets, or damaging the goodwill of the business among other things. You may want to get a court action, injunction, or a temporary restraining order in these cases. A proven attorney will be able to guide you through the process. An injunction may prove to be a worthwhile investment for stopping your partner in their tracks and protecting your business interests.

You shouldn’t take matters into your own hands. This may create additional difficulties and problems for you. The right way to go about a dispute is to take the necessary steps for preventing the business from getting destroyed. An attorney can help you understand the pros and cons of all available legal options. Having an accomplished attorney on your side will make it less likely for you to have a successful dispute resolution.

Speak With a Seasoned Business Disputes Attorney Today

Experienced business attorneys can help with partnership disputes in a wide array of ways. The team at BHM Law Group can advise you on your legal standing and suggest the most effective strategies for dispute resolution. We can represent you in negotiations with the other party. Schedule a free consultation with our lawyers today. Call us at (205) 994-0902 or contact us online.