IRS REVOKES PREVIOUS PLR REGARDING PURCHASE PRICE ALLOCATION

Friday, December 7, 2012 - 8:00am

The Internal Revenue Service (IRS) today issued Private Letter Ruling (PLR) 201249013, which revokes PLR 201214007 from January 2012 that excluded power purchase agreements (PPAs) from the purchase price allocation on wind transactions. The IRS previously concluded that where the taxpayer acquired wind energy facilities subject to facility-specific PPAs, no portion of the facilities’ purchase price would be allocated to the PPAs and the purchase price would instead be included in the adjusted basis of the facilities. However, according to PLR 201249013, that position is not in accord with the IRS’s current views; as such, the portion of the purchase price paid by the taxpayer that is attributable to the PPAs is to be allocated to the PPAs and not to the wind energy facilities. The ruling was directed to the taxpayer who requested it and may not be used or cited as precedent, according to the IRS.

If you have questions about these PLRs and what they could mean for your renewable energy project, please contact Stephen Tracy at (415) 356-8000 or [email protected], or Tony Grappone at (617) 330-1920 or [email protected].