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IRS ruling on PPA allows higher tax incentives on acquisition of wind farms

USA
19 Apr 2012

The IRS issued a new technical update on a purchase price allocation for wind energy facilities with power purchase agreements in place for each wind facility. The IRS ruled that the purchaser did not have to allocate any of the bulk purchase price to the PPA and thus the buyer got a bigger tax basis in the wind energy facility for investment tax credit purposes and for accelerated depreciation purposes. Very favorable ruling. A foreign buyer would have the same ability to allocate purchase price to the wind facility versus the PPA and get these favorable tax benefits.

Taxand's Take

Taxand's Take Author