CCA 200316001: Advice on early-year capital cost reduction payments is redacted

Plain-English summary

Chief Counsel responded to a request about payments that reduce the capital cost of a vehicle. The memorandum says a published safe harbor lets taxpayers exclude those payments from income and vehicle basis for tax years ending on or after December 31, 2001. The taxpayer sought the same treatment for earlier years. The released memorandum says it addresses litigation and settlement concerns, but that analysis is not included in the public text, so its specific advice cannot be determined from this release.

Ruling snapshot

• Question: How should capital cost reduction payments be treated for years before the published safe harbor applied?
• Outcome: Advice given, but the substantive analysis is absent from the public release.
• Key authorities: Rev. Proc. 2002-36; IRC § 6110(k)(3).

Full text (IRS public release)

Office of Chief Counsel
Internal Revenue Service memorandum
Number: 200316001
Release Date: 4/18/2003
POSTF-103081-02/CC:ITA:B3
UIL: 9999.98-00

date: December 16, 2002
to: Associate Area Counsel - Laguna Niguel (CC:LM:CTM:LN)

from: Christopher Kane, Branch Chief, CC:ITA:3

subject: , POSTF-103081-02

This memorandum responds to your request for assistance in the above case.
In accordance with § 6110(k)(3) of the Internal Revenue Code, this memorandum should not be cited as precedent.

You requested advice regarding the appropriate treatment of capital cost
reduction payments (CCR payments) by
(the
taxpayer). Rev. Proc. 2002-36, 2002-21 I.R.B. 993, provides taxpayers with a safe harbor method of accounting for CCR payments (the CCR method) for taxable years ending on or after December 31, 2001. The CCR method allows a taxpayer to exclude CCR payments from income and from the basis of the related vehicle. The taxpayer wishes to use the CCR method for taxable years ending before December 31, 2001. This memorandum addresses strategic concerns and hazards associated with the resolution of this issue for taxable years not covered by Rev. Proc. 2002-36.
2

This writing may contain privileged information. Any unauthorized disclosure of this writing may have an adverse effect on privileges, such as the attorney client privilege. If disclosure becomes necessary, please contact this office for our views.

  Please call           at                 if you have any further questions.