To be eligible for the Treasury 1603 grant program, companies must "begin construction" on their projects by December 31, 2011. Beginning of construction can be demonstrated by either incurring at least 5% of eligible project costs ("5% test") or beginning "significant physical work" in a plan of continuous construction. Many companies currently are working to satisfy the 5% test by year-end. However, some companies and advisors have wrestled with the effect of ownership changes on how the 5% test can be applied.
Earlier this week, Treasury updated its frequently asked questions document on beginning of construction to address issues surrounding this requirement. New Q&As 23 and 24 should provide companies with additional guidance regarding the 5% test.