IRS Rules That Facility-Specific PPAs for Wind Farms Are Part of Facility Cost Basis

April 2012

Overview

On April 6, 2012, the Internal Revenue Service released a private letter ruling, PLR 201214007, in which it determined that facility-specific power purchase agreements ("PPAs") for wind energy facilities are not treated as depreciable assets separate from the facilities themselves. Any value created by such a PPA is includable in the adjusted depreciable basis of the facility to which it is related.

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