Private Letter Ruling Determines Taxpayer’s Solar Energy Facility Not Public Utility Property

Monday, February 7, 2022 - 1:30pm

The Internal Revenue Service (IRS) published a private letter ruling last week that a solar energy facility owned by a taxpayer is not a public utility property and the taxpayer is not subject to the normalization rules of Internal Revenue Code (IRC) Section 168(i)(9) or former Section 46(f). IRC Section 168(i)(9) governs the normalization method of accounting for any public utility property, and IRC Section 46(f) stipulates the amount of credits. PLR 202205002 determined the taxpayer’s property is ineligible because the electricity it generates is not sold at rates determined on a rate-of-return basis, but instead at market-based wholesale rates. PLRs are directed only to the taxpayer requesting them and may not be used or cited as precedents.

Learn more about the finer points of renewable energy tax credits at the Novogradac 2022 Spring Renewable Energy and Environmental Tax Credits Conference from May 19-20 at the Ritz-Carlton in Denver.