Most developers assume their safe harbor covers FEOC. It covers one of three tests, and the exposure runs a full ten years. A single gap disqualifies the entire credit, with no shortfall payment to buy it back.
All three must be met and documented. Clearing one does nothing for the other two.
Each FEOC test has to be both met and documented. A safe harbor covers only one of those six.
A FEOC failure can disqualify the credit, stall financing or trigger recapture. The cost depends on where it happens.
Miss a FEOC test and the entire credit is disqualified. There is no reduction and no penalty to pay it down. The full value is lost.
Doing the work is not enough. Tax equity and construction debt will not close without documentation of ownership, sourcing and contractual control.
Compliance does not end at filing. A prohibited payment or a project change in the recapture period can claw back credits already claimed.
One workflow that monitors the full recapture window and builds audit-ready documentation as it goes, so a project's exposure is clear and provable.
Fail any one and the credit is gone. NexusIQ covers ownership and effective control from day one, and the material assistance cost ratio when it attaches.
Equity, debt and voting structures screened and monitored through recapture.
Contractual, licensing and IP control risks flagged, with a report ready for tax opinions.
The Material Assistance Cost Ratio (MACR) calculated from the bill of materials.
Enter your construction date and we'll show the clean energy tax credit requirements that attach, including which FEOC tests are in play.
Questions on FEOC, or want a readiness review across your portfolio? Empact turns what applies into an audit-ready record your tax equity and lenders can stand behind.
Informational only and not legal advice. Confirm requirements with your tax counsel.