If you were hoping the IRS would spend mid-August doing what the rest of us dostaring at the weather app and pretending iced coffee is a personalitysorry. The stretch from August 12 through August 20, 2025 delivered a surprisingly wide mix of guidance: clean energy credit “beginning of construction” rules got sharper teeth, pension discount rates marched on, prescribed federal rates landed for September, and international tax nerds got fresh reading material on inbound reorganizations and dual consolidated losses.
This roundup walks through the key items released during the period, what they mean in plain English, and where the practical tripwires tend to show up. It’s written for tax pros and business folks who don’t want to learn the Internal Revenue Code the hard way (i.e., during an audit).
At a Glance: What Changed (and Who Should Care)
- Notice 2025-42: New “beginning of construction” rules for certain wind and solar facilities tied to clean electricity credits under Sections 45Y and 48Enow with less safe harbor and more “show your work.”
- Notice 2025-43: Updated corporate bond yield curve and segment rates used for pension and annuity calculations (Sections 417(e)(3) and 430(h)(2)), plus related Treasury rate guidance.
- Revenue Ruling 2025-17: Prescribed rates for September 2025 (AFRs, Section 7520 rate, Section 382 rates, and LIHTC percentages).
- Notice 2025-45: Treasury/IRS intent to propose rules modifying how FIRPTA-related provisions apply to certain inbound F reorganizations and clarifying stock disposition rules around “potential F reorganizations.”
- Notice 2025-44: Treasury/IRS intent to propose removing certain DCL-related rules, extend Pillar Two transition relief, and request commentsbecause nothing says “fun” like international loss limitation frameworks.
- Written Determinations: The weekly release of PLRs/CCAs/TAMs continueduseful for pattern-spotting, but not precedent.
Notice 2025-42: Clean Electricity Credits and a Stricter “Beginning of Construction” Game
The headline: the IRS issued guidance on when construction is considered to have begun for certain wind and solar facilities for purposes of determining whether those facilities fall under credit termination provisions affecting the clean electricity production credit (Section 45Y) and clean electricity investment credit (Section 48E).
Why this notice matters
Tax credits tied to large infrastructure projects often turn on a deceptively simple question: “When did you start?” Developers, investors, and lenders care because eligibility can hinge on the “beginning of construction” date. Notice 2025-42 is a reminder that the government reads “beginning” more like a documentary than a vibe.
The big shift: Physical Work Test is the main path
Notice 2025-42 emphasizes that, for these purposes, taxpayers generally must rely on a Physical Work Test to show construction began before the applicable deadline. In other words: “We bought stuff” is less persuasive than “We actually started building meaningful stuff.”
The notice explains that construction begins when physical work of a significant nature begins. Importantly, it’s a facts-and-circumstances test focused on the nature of the work, not hitting a specific cost percentage. Both on-site work and certain off-site manufacturing work may count, including work performed under a binding written contract.
Safe harbors narrowed (with a carveout for small-ish solar)
If you’ve worked in energy credits, you’ve probably heard of the “Five Percent Safe Harbor.” Notice 2025-42 largely shuts the door on that approach hereexcept for a special carveout for low output solar facilities. Under the notice, a low output solar facility generally means an applicable solar facility with a maximum net output not greater than 1.5 MW (AC), with aggregation rules designed to keep people from slicing one project into twelve “tiny” projects and calling it a day.
Continuity still matters (and the clock is real)
Starting is not enoughyou also have to keep going. The notice ties the Physical Work Test to a Continuity Requirement and provides a Continuity Safe Harbor that generally treats continuity as satisfied if the facility is placed in service by the end of the fourth calendar year after the year construction began.
Practical takeaway: if you’re planning financing, procurement, and construction schedules, you’re not just managing the engineering timelineyou’re managing the tax timeline. “We had supply chain issues” may help explain delays, but it doesn’t automatically fix a statutory deadline.
Real-world example: what “beginning” might look like
Imagine a wind developer signs a binding contract with meaningful damages for breach, then the contractor begins off-site fabrication of major components specifically for the project (not generic inventory) in 2025. Under the notice’s approach, that off-site work can be relevant evidence that construction has begunassuming it’s physical work of a significant nature and the project maintains continuity.
Now imagine the same developer instead places refundable deposits and “reserves a manufacturing slot,” but no significant physical work actually begins. That may be good project management, but it’s not necessarily “beginning construction” under the IRS’s framing.
Notice 2025-43: Pension Funding and the Numbers Behind the Curtain
Notice 2025-43 updates the corporate bond monthly yield curve, the spot segment rates used under Section 417(e)(3), and the 24-month average segment rates used under Section 430(h)(2). For retirement plan sponsors, these rates aren’t triviathey affect minimum funding calculations, lump-sum values, and the overall cost of promises made to employees.
Key detail from the notice
The notice states that the spot first, second, and third segment rates for July 2025 are 4.38%, 5.41%, and 6.13%, respectively. That’s the kind of sentence that looks boring until you realize it can move seven figures in funding needs.
Why plan sponsors should care
Higher discount rates generally reduce the present value of future liabilities (all else equal). Lower discount rates do the opposite. So even a modest shift can change the contributions a company needs to makeor how expensive a lump-sum payout becomes.
A practical way to explain this to non-tax colleagues: the IRS is basically publishing the “price of time” for certain benefit calculations. When the price changes, the bill for long-term obligations changes too.
Revenue Ruling 2025-17: September Rates for Loans, Estates, Credits, and More
Revenue Ruling 2025-17 provides a package of prescribed federal rates for September 2025. These rates show up across the tax code: below-market loans (Section 7872), debt instruments issued for property (Section 1274), certain corporate limitation computations (Section 382), valuation work in estate planning (Section 7520), and low-income housing credit calculations (Section 42), among others.
Selected headline numbers (because people ask, and then ask again)
- Short-term AFR (annual): 4.00%
- Mid-term AFR (annual): 4.04%
- Long-term AFR (annual): 4.83%
- Section 7520 rate for September 2025: 4.80%
- Section 42 “70% present value” LIHTC percentage: 8.03% (with statutory constraints for certain buildings)
Example: family loans and the “below-market” problem
Suppose a parent wants to lend money to an adult child for a home purchase. If the loan interest is below the applicable AFR, Section 7872 can impute interest, potentially creating taxable gift elements or interest income that nobody planned on. Using the published AFR as the interest rate benchmark is often the cleanest way to avoid accidental tax drama.
Example: estate planning valuations and the 7520 rate
The Section 7520 rate is a core assumption used in valuing certain annuities, life interests, and remainder interests. When the rate changes, the math behind GRATs, charitable remainder trusts, and other planning tools shifts. Translation: September’s 4.80% doesn’t just sit in a tableit quietly influences real planning decisions.
Notice 2025-45: FIRPTA, US Real Property Interests, and Inbound F Reorganizations
Notice 2025-45 announces Treasury and the IRS intend to issue proposed regulations under Sections 897(d) and (e) that modify certain existing rules (including temporary regulations) for transactions involving the transfer of United States real property interests (USRPIs). It also signals proposed changes to rules related to inbound asset reorganizations under Section 368(a)(1)(F), including a defined subset described as a “covered inbound F reorganization.”
What’s the policy tension here?
FIRPTA (Section 897) is designed to ensure foreign persons are taxed on gains connected to U.S. real property. Reorganizations, meanwhile, often aim for nonrecognition treatment when certain requirements are met. When a foreign corporation “moves” into a domestic structure through an inbound reorganization and USRPIs are involved, Treasury/IRS want the rules to be clear about when gain must be recognized and what reporting and ownership thresholds apply.
Applicability and reliance
The notice states that forthcoming proposed regulations will apply to certain distributions, transfers, or exchanges occurring on or after August 19, 2025, and it provides conditions under which taxpayers may rely on parts of the notice prior to publication of proposed rules.
Call for comments (translation: the IRS is still building this)
Treasury and the IRS requested comments on the rules described in the notice, with a stated submission deadline of October 20, 2025. If your organization deals with inbound restructurings, this is the moment to involve both tax planning and compliance teamsbecause the “final” rules often reflect who showed up early with thoughtful input.
Notice 2025-44: Dual Consolidated Loss Rules, “Disregarded Payment Loss,” and Pillar Two Transition Relief
Notice 2025-44 addresses the dual consolidated loss (DCL) rules under Section 1503(d)rules that limit the ability to use the same economic loss to reduce taxable income in more than one jurisdiction or more than one “place” inside a group. The notice announces intent to issue proposed regulations that would:
- Remove certain disregarded payment loss rules under the DCL framework;
- Remove certain recent modifications to the DCL deemed ordering rule; and
- Extend transition relief related to how DCL rules interact with Pillar Two (GloBE Model Rules) taxes.
Why taxpayers should pay attention even if they don’t “do international tax”
Cross-border rules have a habit of showing up unexpectedly: a foreign branch, a hybrid entity, a restructuring, or even a change in how foreign minimum taxes are computed can bring DCL considerations into play. If your organization has global operations, DCL rules can influence whether a U.S. loss is usable today, later, or… never (the tax equivalent of leaving leftovers in the fridge until they become a science project).
Reliance and comment deadline
The notice states taxpayers may rely on certain sections until proposed regulations are published in the Federal Register, and it requests comments on specific issues (including potential revisions to “all or nothing” concepts and how disregarded items should be treated), with a deadline of October 21, 2025.
Written Determinations: The Weekly Friday Drop (Useful, But Not Precedent)
Alongside the headline guidance, the IRS continued its weekly publication of written determinationsdocuments the IRS must make available for public inspection under Section 6110. These include items such as Private Letter Rulings (PLRs), Technical Advice Memoranda (TAMs), and Chief Counsel Advice (CCAs).
Two important truths can coexist: (1) written determinations can be incredibly useful for understanding how the IRS thinks about an issue, and (2) they generally cannot be used or cited as precedent. So yes, read them for insightsand no, don’t treat them like a Supreme Court opinion carved into marble.
Practical Checklist: What to Do Next
If you develop, finance, or invest in wind/solar projects
- Map project milestones to “beginning of construction” criteria (physical work evidence, binding contracts, continuity planning).
- Review whether any projects could qualify for low output solar rulesand whether aggregation rules could change that conclusion.
- Build documentation habits now (photos, invoices tied to specific components, work orders, manufacturing progress, contractor attestations).
If you sponsor retirement plans or advise plan sponsors
- Update models for funding targets and lump-sum calculations using the current yield curve and segment rates.
- Coordinate with actuaries and benefits teams so rate changes don’t surprise cash flow planning.
- Document elections (segment rates vs. yield curve approaches) and keep governance records tidy.
If you handle international structures, inbound reorganizations, or cross-border losses
- Identify transactions that could be impacted by the inbound F reorg guidance and USRPI rules.
- Review DCL positions and Pillar Two interactionsespecially if transition relief timelines matter to forecasts.
- Consider whether submitting comments is worthwhile (and get the right stakeholders involved early).
Experiences From the Aug 12–20 IRS Guidance Window (Extra )
There’s a particular kind of emotional whiplash that happens when IRS guidance drops in the middle of the month. It’s not quite panic, not quite excitementmore like the tax version of hearing your phone buzz at 11:47 p.m. and thinking, “This is either a meme or a problem.” During the August 12–20 window, the guidance mix created exactly that feeling: clean energy developers got a stricter rulebook, retirement plan people got their usual rate updates, and international tax teams received the equivalent of a new season of a show that only they watch.
In practice, the first experience most teams have is triage. Someone asks, “Does this apply to us?” and you start scanning for the magic words: effective dates, applicability dates, reliance sections, and those little definitions that quietly decide whether your client is “in” or “out.” (If you’ve never spent 20 minutes debating whether a facility is “low output” because of aggregation rules, congratulations on your peaceful life.)
The next experience is translation. Executives rarely want a lecture on the Physical Work Test, but they do want to know whether a project is financeable, whether tax equity will hesitate, and what documentation will satisfy due diligence. So the conversation becomes: “We need evidence of meaningful physical work, not just spend,” and “We need a continuity plan that won’t collapse the moment a shipment gets delayed.” This is where tax and operations meet in the most relatable way possible: everybody loves a timeline until a timeline becomes a legal standard.
Meanwhile, on the employee benefits side, the experience is often quiet urgency. Updated segment rates don’t make headlines, but they can make budgets wobble. Teams work with actuaries to rerun calculations, then explain to finance why a benefit liability looks different even though nothing “changed” in the plan design. That conversation usually ends with a polite nod and a private thought like, “Yes, the rate changed. No, I didn’t choose it. Also no, I cannot negotiate with math.”
For international tax folks, Notices 2025-44 and 2025-45 bring the experience of living in a world where a single defined term can change the outcome of a restructuring. You read about “covered inbound F reorganizations,” “USRPIs,” and comment deadlines, and you can almost hear the internal calendar invite being created: “Draft stakeholder memo,” “Meet with legal,” “Decide whether to comment,” “Update transaction checklist.” It’s not glamorous, but it’s how complicated rules become workableor at least survivable.
If there’s a shared takeaway from this particular week of guidance, it’s that compliance is rarely a one-time act. It’s a habit: tracking guidance, documenting facts, modeling effects, and communicating clearly. The IRS writes in a dialect that rewards preparation. And while nobody wakes up hoping to spend their day with Notices and Revenue Rulings, the teams that do it well tend to avoid the most expensive kind of surprise: the one you discover after you’ve already signed the deal.
Conclusion
The IRS guidance released from August 12 through August 20, 2025, was a reminder that tax policy and practical administration move together: energy credits hinge on real-world construction facts, retirement plan obligations respond to rate mechanics, and international tax continues to evolve through targeted notices and comment-driven rulemaking.
If any of these areas touch your organization, the best next step is simple: align your documentation and planning to the newest rules nowbefore the deadline, before the transaction, and definitely before someone says, “Wait… are we sure this qualifies?”
Educational content only; not legal or tax advice.
