# Prop. Treas. Reg. § 1.45Z-4: Special Rules. Proposed regulation, not in force. REG-121244-23, 91 FR 5160, published 2026-02-04 . Interprets 26 U.S.C. § 45Z. Par. 3. Sections 1.45Z-4 through 1.45Z-6 are added to read as follows: (a) Registered production in the United States required. No section 45Z credit is determined with respect to any transportation fuel unless the taxpayer is registered, or is treated as being registered, as a producer of clean fuel under section 4101 of the Code at the time of production and the fuel is produced in the United States, which includes any territory of the United States. See § 1.45Z-6(b) for special rules regarding registration if the taxpayer is not the producer. See § 1.4101-1 for the registration rules that apply for purposes of the section 45Z credit. (b) Anti-stacking rules —(1) In general. This paragraph (b) provides rules for determining whether an anti-stacking credit (as defined in § 1.45Z-1(b)(28)(ii)) has been allowed for a taxable year with respect to a facility. Section 45Z(d)(4)(B). (2) Determination of qualified facility —(i) In general. The determination of whether a facility is a qualified facility must be made separately for each taxable year. Whether a facility is a qualified facility for a given taxable year depends on whether the facility produced transportation fuel sold during that taxable year and whether an anti-stacking credit was allowed for that taxable year with respect to the facility. A facility may be a qualified facility in one taxable year but not in another taxable year. If a taxpayer produces transportation fuel at multiple facilities, the determination of whether the fuel was produced at a qualified facility is made separately for each facility. (ii) Section 48(a)(15) election. A section 48(a)(15) election is irrevocable, and if made, will permanently disqualify a facility from being a qualified facility for purposes of section 45Z for the taxable year of the election and all subsequent taxable years. (iii) Carbon capture equipment at a facility. In the case of any transportation fuel produced at a facility that includes carbon capture equipment for which the section 45Q credit is allowed for the taxable year, that facility is not a qualified facility, and no section 45Z credit will be determined with respect to the facility for the taxable year. (3) Examples. The following examples illustrate the application of the anti-stacking rules. For purposes of these examples, assume that X and Y are unrelated C corporations and that all other requirements for an anti-stacking credit are met. (i) Example 1. Interaction of section 45Z and section 45V credits; transportation fuel and qualified clean hydrogen produced at the same facility by persons with the same taxable year. During 2025 and 2026, X, a calendar year taxpayer, produces transportation fuel at a facility and sells the fuel in qualified sales in 2025 and 2026. X is otherwise eligible to claim the section 45Z credit with respect to the transportation fuel it produces at the facility. During 2025 and 2026, Y, a calendar year taxpayer, produces qualified clean hydrogen (as defined in section 45V(c)(2)) at the same facility. Y claims and is allowed a section 45V credit with respect to the facility for 2025, but not for 2026. No other person is allowed a section 45V credit with respect to the facility for 2025 or 2026. Because Y is allowed a section 45V credit with respect to the facility for 2025, the facility is not a qualified facility for purposes of section 45Z for 2025 and X is not eligible to claim a section 45Z credit with respect to the facility for 2025. Because no section 45V credit is allowed with respect to the facility for 2026, the facility is a qualified facility for purposes of section 45Z for 2026. Therefore, X is eligible to claim a section 45Z credit with respect to the facility for 2026. (ii) Example 2. Interaction of section 45Z and section 45V credits; transportation fuel and qualified clean hydrogen produced at the same facility by persons with different taxable years. During 2025, X, a calendar year taxpayer, produces transportation fuel at a facility and sells the fuel in a qualified sale. X is otherwise eligible to claim the section 45Z credit with respect to the facility. During 2025, Y produces qualified clean hydrogen (as defined in section 45V(c)(2)) at the same facility. Y has a taxable year of October 1 to September 30. Y claims and is allowed a section 45V credit with respect to the facility for its taxable year of October 1, 2024, to September 30, 2025, but not for its taxable year of October 1, 2025, to September 30, 2026. No other person is allowed a section 45V credit with respect to the facility for any portion of 2025. The facility is not a qualified facility for purposes of section 45Z for the period in 2025 for which Y is allowed a section 45V credit (that is, January 1 through September 30, 2025). However, the facility is a qualified facility for purposes of section 45Z for the period in 2025 for which no section 45V credit is allowed with respect to the facility (that is, October 1 through December 31, 2025). Therefore, X is eligible to claim a section 45Z credit with respect to the facility for 2025, but only for the period during which the facility is a qualified facility (that is, October 1 through December 31, 2025). (iii) Example 3. Interaction of section 45Z credit and section 48(a)(15) election. During 2025, X, a calendar year taxpayer, produces transportation fuel at a facility and sells the fuel in a qualified sale. During 2025, X also produces qualified clean hydrogen (as defined in section 45V(c)(2)) at the same facility, which is a specified clean hydrogen production facility (as defined in section 48(a)(15)(C)). X is otherwise eligible to claim the section 45Z credit and to make a section 48(a)(15) election with respect to the facility. For 2025, X makes an election under section 48(a)(15) to treat the facility as energy property for purposes of the energy credit under section 48. X claims and is allowed the section 48 credit. Because the transportation fuel and the qualified clean hydrogen are produced at the same facility, and X is allowed a section 48 credit attributable to a section 48(a)(15) election with respect to the facility for 2025, the facility is not a qualified facility for purposes of section 45Z for 2025. Because the section 48(a)(15) election is irrevocable, the facility also will not be a qualified facility for purposes of section 45Z for any subsequent taxable year. Therefore, X is not eligible to claim the section 45Z credit with respect to the facility for 2025 or for any subsequent taxable year. (iv) Example 4. Interaction of section 45Z and section 45Q credits; transportation fuel produced at a facility that includes carbon capture equipment. During 2025 and 2026, X, a calendar year taxpayer, produces transportation fuel at a facility and sells the fuel in a qualified sale. X is otherwise eligible to claim the section 45Z credit with respect to the facility. The facility includes carbon capture equipment (within the meaning of section 45Q). Y, a calendar year taxpayer, owns and uses the carbon capture equipment at the facility to capture carbon oxide. During 2025, Y utilizes or disposes of the carbon oxide in a manner that qualifies for the section 45Q credit. Y claims and is allowed a section 45Q credit with respect to the facility for 2025, but not for 2026. No other person is allowed a section 45Q credit with respect to the facility for 2025 or 2026. Because Y is allowed a section 45Q credit with respect to the facility for 2025, the facility is not a qualified facility for purposes of section 45Z for 2025, and X is not eligible to claim a section 45Z credit with respect to the facility for 2025. Because no section 45Q credit is allowed with respect to the facility for 2026, the facility is a qualified facility for purposes of section 45Z for 2026. Therefore, X is eligible to claim a section 45Z credit with respect to the facility for 2026. (c) Anti-abuse rules. The rules of section 45Z and the section 45Z regulations must be applied in a manner consistent with the purposes of section 45Z and the section 45Z regulations (and the regulations in this chapter under sections 6417 and 6418 related to the section 45Z credit). These purposes include incentivizing the domestic production and use of clean transportation fuel and ensuring that taxpayers do not circumvent the feedstock origin and anti-stacking rules. Therefore, no section 45Z credit is determined if a taxpayer's primary purpose in producing and selling a transportation fuel is to obtain the benefit of the section 45Z credit in a manner that is wasteful, such as discarding, disposing of, or destroying the transportation fuel without putting it to a productive use. Whether the production and sale of transportation fuel is consistent with the purposes of section 45Z and the section 45Z regulations (and the regulations in this chapter under sections 6417 and 6418 related to the section 45Z credit) is based on all facts and circumstances. (d) Production attributable to the taxpayer —(1) In general. Except as provided in paragraph (e)(2) of this section, in the case of a facility in which more than one person has an ownership interest (and the arrangement is not classified as a partnership for Federal tax purposes), production from the facility is allocated among those persons in proportion to their respective ownership interests in the gross sales from the facility. Each owner's respective allocable share of the section 45Z credit is based on each owner's allocable share of production, determined pursuant to section 45Z and the section 45Z regulations. See section 45Z(f)(2). (2) Example. X, Y, and Z are all calendar year taxpayers, and each owns an interest in Facility, which is a qualified facility. X has a 45 percent ownership interest in Facility, Y has a 35 percent ownership interest in Facility, and Z has a 20 percent ownership interest in Facility. Gross sales from Facility are allocated among X, Y, and Z in proportion to their ownership interests. During 2025, Facility produced 10 million gallons of transportation fuel. X, Y, and Z will each determine the amount of their section 45Z credit for 2025 based on their allocable share of the 10 million gallons of transportation fuel produced at Facility during 2025. Thus, X will determine the amount of its section 45Z credit based on 4.5 million gallons, Y will determine the amount of its section 45Z credit based on 3.5 million gallons, and Z will determine the amount of its section 45Z credit based on 2 million gallons. (3) Section 761(a) election. If a facility is owned through an unincorporated organization that has made a valid election under section 761(a) of the Code, each member's undivided ownership interest in the facility will be treated as a separate facility owned by the member. (e) No requirement of facility ownership —(1) In general. A taxpayer is not required to own the qualified facility at which the taxpayer produces transportation fuel in order for a section 45Z credit to be determined with respect to that fuel. (2) Application of production attribution rules if taxpayer does not own facility. If a taxpayer produces transportation fuel at a facility owned by another person, production of that fuel will be attributed to the taxpayer unless otherwise specified in the Code or in the section 45Z regulations. In the case of a production arrangement under which multiple taxpayers produce transportation fuel at a facility that is not owned by all those taxpayers, production of the transportation fuel will be allocated among the taxpayers in proportion to their respective interests in the gross sales from that fuel, as determined under the applicable contract or other legal arrangement with respect to the fuel. (f) Foreign feedstock and prohibited foreign entity restrictions —(1) Foreign feedstock restrictions. Transportation fuel that is produced after December 31, 2025, must be exclusively derived from a feedstock that was produced or grown in the United States, Mexico, or Canada. See section 45Z(f)(1)(A)(iii). (2) Prohibited foreign entity restrictions —(i) Specified foreign entity. No section 45Z credit is determined for any taxable year of a taxpayer beginning after July 4, 2025, if the taxpayer is a specified foreign entity (as defined in section 7701(a)(51)(B) of the Code). See section 45Z(f)(8)(A). (ii) Other prohibited foreign entity. No section 45Z credit is determined for any taxable year of a taxpayer beginning after July 4, 2027, if the taxpayer is a foreign-influenced entity (as defined section 7701(a)(51)(D) of the Code, without regard to section 7701(a)(51)(D)(i)(II)). See section 45Z(f)(8)(B). (g) Recordkeeping and substantiation —(1) In general. A taxpayer claiming a section 45Z credit must maintain records sufficient to establish the taxpayer's eligibility for the section 45Z credit and the amount of the credit claimed on the return. At a minimum, those records must include records: (i) Establishing that each fuel produced is a transportation fuel; (ii) Establishing any relevant information relating to the primary feedstock(s) used to produce each such fuel; (iii) Establishing that each fuel meets any additional specifications for the type of fuel described in § 1.45Z-1(b)(24) or (30); (iv) Substantiating how the emissions rate for each fuel was determined (including, if applicable, the specific type(s) and category(ies) under the applicable emissions rate table); (v) Relating to any fuel testing obtained by the taxpayer; (vi) Establishing that each facility used to produce fuel is a qualified facility; (vii) Establishing the date each facility was placed in service; (viii) Establishing that each fuel was sold in a qualified sale; (ix) Establishing any certification from an unrelated person and substantiating the information therein; and (x) Used for or related to any petition for a provisional emissions rate (PER), including raw data. (2) Safe harbor for substantiation of emissions rate. A taxpayer may substantiate the emissions rate for a transportation fuel which is not sustainable aviation fuel (non-SAF transportation fuel) that was determined using the 45ZCF-GREET model by obtaining certification with respect to that fuel in substantially the same form and manner described in § 1.45Z-5 for certifying an emissions rate for SAF transportation fuel determined using the 45ZCF-GREET model. A taxpayer must provide the qualified certifier with all information necessary to provide the certification, as described in § 1.45Z-5. The Secretary may provide other methods through which a taxpayer may substantiate the emissions rate for a non-SAF transportation fuel. The Secretary will prescribe any such methods in guidance published in the Internal Revenue Bulletin or in IRS forms, instructions, or publications. See §§ 601.601 and 601.602 of this chapter. (3) Safe harbor for substantiation of qualified sale— (i) In general. A taxpayer may substantiate a qualified sale of transportation fuel by obtaining from the purchaser a certificate in substantially the same form as described in paragraph (g)(3)(ii) of this section. If the certificate relates to a single purchase, the taxpayer must obtain the certificate from the purchaser prior to or at the time of sale. If the certificate relates to purchases made over a period of time, the taxpayer must obtain the certificate from the purchaser prior to or at the same time as the first of the sales to which the certificate relates. A taxpayer receiving a certificate from a purchaser must have no reason to believe that any information in the certificate regarding the use of the transportation fuel is false. The Secretary of the Treasury or the Secretary's delegate (Secretary) may provide other methods through which a taxpayer may substantiate a qualified sale. The Secretary will prescribe any such methods in guidance published in the Internal Revenue Bulletin or in IRS forms, instructions, or publications. See §§ 601.601 and 601.602 of this chapter. (ii) Qualified sale model certificate — Certificate for Qualified Sale of Transportation Fuel (To support a taxpayer's claim under section 45Z of the Internal Revenue Code.)