The Internal Revenue Service (IRS) recently revolved a previous Private Letter Ruling (PLR) 201214007 which indicated that power purchase agreements (PPAs) are excluded from the purchase price allocation on wind transactions. In the previous ruling, the IRS concluded that if the taxpayer acquires wind energy facility that is subject to a PPA, no portion of the facility’s purchase price need be allocated to the PPA and can instead be included in the adjusted basis of the facility. According to the agency’s most recent PLR, PLR 201249013, the agency’s position in PLR 201214007 is not consistent with previous IRS rulings. This is similar to the view expressed by IRS in administering the Section 1603 grant program and in certain situations, could have an adverse effect on the amount of energy credit or 1603 grant available for the facility.
Click here to read PLR 201249013.
Click here to read PLR 201214007.
