FEOC Compliance Requirements Calculator

FEOC Value at Risk Calculator: What a Failed Determination Puts at Stake

Enter your project details and we'll show the clean energy tax credit requirements that attach based on when you began construction, including which Foreign Entity of Concern (FEOC) tests are in play.

Your project

Beginning of construction (BOC date)

Technology

Size (MW)

Tax credit type

Qualified investment / credit basis

Qualified investment in the facility (the credit basis).

Prevailing wage & apprenticeship (PWA)

Domestic content bonus

Energy community bonus

Low-income communities adder (48E(h))

Your requirements

Tax credit

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Prevailing Wage & Apprenticeship

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Beginning of construction

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Estimated Credit

ITC estimate based on your inputs

Credit Rate

—

Credit Value

—

Estimated Tax Credit Value at Risk

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estimated credit value at stake

A failed applicable FEOC determination can put the entire credit at risk. Unlike PWA, FEOC generally provides no statutory cure after the fact. Based on your BOC date, these tests apply:

Ownership

Equity, debt, and voting rights traced to a prohibited foreign entity.

Effective Control

Contractual, licensing, or IP arrangements that confer control.

Material Assistance

Share of components and materials, measured as the MACR.

PTC value estimate coming soon

FEOC compliance

All three tests carry equal weight

Ownership

Equity, debt, and voting rights traced to a prohibited foreign entity.

Effective Control

Contractual, licensing, or IP arrangements that confer control.

Material Assistance

Share of components and materials, measured as the MACR.

Results are driven by your beginning-of-construction date against the current statutory thresholds:

Key FEOC and BOC Compliance Dates

Date	What It Means
January 1, 2025	Section 48E and 45Y replace Section 48 and 45 as the governing clean electricity credits. QF-level PWA compliance required for projects at 1 MW and above.
July 4, 2025	OBBBA enacted. FEOC Ownership and Effective Control restrictions apply to taxable years beginning after this date – January 1, 2026 for calendar-year taxpayers.
September 2, 2025	Per IRS Notice 2025-42, the 5% safe harbor is eliminated for wind and solar BOC purposes. Physical Work Test becomes the sole method to establish BOC for solar and wind facilities.
January 1, 2026	FEOC Material Assistance (MACR) requirement applies to facilities beginning construction after this date. MACR threshold: 40% non-FEOC share of total direct costs, rising 5 percentage points per year through 2030.
July 5, 2026	BOC deadline for solar and wind to preserve credit eligibility. Facilities beginning construction after this date must be placed in service by December 31, 2027.
December 31, 2027	Placed-in-service deadline for solar and wind facilities beginning construction after July 5, 2026. After this date, no Section 48E or 45Y credit is available for applicable solar and wind facilities.

How this calculator works: Results are determined by your beginning-of-construction (BOC) date against current statutory thresholds under the OBBBA and IRS Notice 2025-42. Ownership and Effective Control tests apply to taxable years beginning after July 4, 2025. Material Assistance (MACR) applies to facilities beginning construction after December 31, 2025. BOC dates are evaluated against the Physical Work Test standard for solar and wind per Notice 2025-42. All determinations assume a calendar tax year. This calculator is a scoping tool – Empact confirms every determination against your actual project facts.

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Frequently Asked Questions

What is a Foreign Entity of Concern (FEOC) under Section 48E and 45Y?

Under the OBBBA, a Foreign Entity of Concern is any "Prohibited Foreign Entity" (PFE) – either a Specified Foreign Entity (SFE) or a Foreign-Influenced Entity (FIE). SFEs are entities owned by, controlled by, or subject to the jurisdiction of a covered nation: China, Russia, North Korea, or Iran. FIEs are domestic entities over which an SFE exercises influence through ownership, debt, officer appointment, or contractual arrangements. A single FEOC violation – in ownership, effective control, or material assistance – voids the Section 48E or 45Y credit entirely. There is no cure.

What are the three FEOC tests under Section 48E?

The OBBBA imposes three distinct tests. Ownership: no Prohibited Foreign Entity may hold equity, debt, or voting rights in the project entity. Effective Control: no contract, license, or arrangement may give a PFE control over a qualified facility's operations or output. Material Assistance (MACR): the share of manufactured product and component costs traceable to non-FEOC suppliers must clear a rising annual threshold – 40% in 2026, increasing by 5 percentage points per year through 2030 for Section 48E and 45Y qualified facilities.

When do FEOC restrictions take effect for Section 48E and 45Y?

Ownership and Effective Control restrictions apply to taxable years beginning after July 4, 2025 – for calendar-year taxpayers, that is January 1, 2026. Material Assistance restrictions apply to facilities beginning construction after December 31, 2025. Projects that began construction before January 1, 2026 are generally not subject to the MACR threshold, but remain subject to Ownership and Effective Control requirements.

Does FEOC apply to projects that began construction before 2026?

Projects that began construction before January 1, 2026 are exempt from the Material Assistance (MACR) requirement. However, Ownership and Effective Control restrictions apply to all taxable years beginning after July 4, 2025, regardless of when construction began. A project that broke ground in 2024 or 2025 is still subject to FEOC Ownership and Effective Control review for credits claimed in 2026 and beyond.

What is the FEOC Material Assistance Cost Ratio (MACR)?

The MACR is the measure used to determine whether a project's component sourcing clears the FEOC material assistance threshold. It is calculated as the percentage of total direct costs of manufactured products and components incorporated into a qualified facility that are attributable to non-FEOC suppliers. For Section 48E and 45Y qualified facilities, the minimum non-FEOC threshold is 40% for facilities beginning construction in 2026, rising by 5 percentage points per year through 2030. A facility that falls below the applicable threshold is ineligible for the credit.

What happens if a project fails a FEOC test?

A FEOC violation voids the Section 48E or 45Y credit entirely – there is no cure mechanism, unlike the correction pathway available for PWA failures. For Section 48E, there is also a 10-year recapture period: if a payment is made to an SFE that exercises effective control over a placed-in-service project, the IRS can recapture 100% of previously claimed credits for up to 10 years post placed-in-service. Suppliers who provide false FEOC certifications are subject to a separate IRS penalty of up to 10% of any resulting underpayment or $100,000, whichever is greater.

What is the Physical Work Test and why does it matter for FEOC?

The Physical Work Test is the standard for establishing Beginning of Construction (BOC) for solar and wind facilities under IRS Notice 2025-42, effective September 2, 2025. It requires meaningful physical construction activities tied directly to the energy property to have commenced – not just preliminary design or site preparation. BOC date determines which FEOC tests apply: facilities beginning construction before January 1, 2026 are exempt from the MACR requirement. Establishing a defensible BOC date with contemporaneous documentation is critical.

How does Empact manage FEOC compliance?

Empact maps every Qualified Facility's bill of materials against FEOC safe harbor tables, tracks all three tests – Ownership, Effective Control, and MACR – in NexusIQ™, and delivers a compliance substantiation memo structured for law firm tax opinions. For projects approaching the MACR threshold, Empact identifies exposure at the component level and documents the supplier certification chain required to withstand IRS scrutiny.

Frequently Asked Questions

How is the estimated credit value calculated?

Placeholder answer. The estimate multiplies your qualified investment (credit basis) by the applicable credit rate: a base rate of 6%, or 30% when prevailing wage and apprenticeship requirements are met or the project is under 1 MW, plus any domestic content, energy community, and low-income community adders.

What does "value at risk" mean in this calculator?

Placeholder answer. Value at risk is the estimated credit value that a failed applicable FEOC determination can put at stake. Unlike PWA, FEOC generally provides no statutory cure after the fact, so the full credit amount is shown.

Does the estimate cover the PTC as well as the ITC?

Placeholder answer. The current version estimates ITC value under Section 48E. A PTC value estimate for Section 45Y is coming soon.

Can the bonus adders be combined?

Placeholder answer. Domestic content, energy community, and low-income community adders can stack on top of the base rate when a project qualifies for each of them. Eligibility depends on project specifics and current Treasury guidance.

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This calculator scopes what applies. Empact's team turns it into an audit-ready compliance record your tax equity and lenders can stand behind.

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This is a preliminary guide to scope your requirements, not legal or tax advice. Empact confirms every determination against your actual project.

Illustrative estimate for sales conversations covering Sections 48E and 45Y. Rates, adders and FEOC applicability depend on project specifics and current Treasury guidance. Confirm with your tax advisor before relying on it.