Ezel / IRS Rulings / 200707012

PLR 200707012: Wind facility denied bond allocation after overall limit is exhausted

Number
200707012
Outcome
Denied
Document type
Private Letter Ruling
IRS subject
Clean Renewable Energy Bonds
Topics
Income and deductions
Code sections
§ 54
Ruling dated
November 13, 2006
Publicly released
February 16, 2007
Source
View Official PDF

Apply this to your situation

This page covers one taxpayer's ruling, issued in 2007, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2007
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

An applicant requested Clean Renewable Energy Bond authority for a wind facility. IRC § 54 imposed an $800 million overall allocation limit, with a separate $500 million limit for governmental borrowers. Notice 2005-98 prioritized projects requesting smaller allocations. The IRS denied this project because allocations to qualified projects requesting smaller amounts had exhausted the overall limit.

Ruling snapshot

  • Question: Could the wind facility receive CREB authority after the overall allocation limit was exhausted?
  • Outcome: Denied because smaller requests had exhausted the total allocation limit.
  • Key authorities: IRC § 54(f)(1) and (2); Notice 2005-98, § 6.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200707012
Third Party Communication: None
Release Date: 2/16/2007
Date of Communication: Not Applicable
Index Number: 54.00-00
Person To Contact:

- -----------------------, ID No. 50-16936

                                               Telephone Number:

----------------------------- ---------------------

                                               Refer Reply To:

                                               CC:TEGE:EOEG:TEB

                                               PRESP-142462-06
                                               Date: November 13, 2006

     -

Dear ---------------------

This letter is in response to your application for an allocation of authority to issue ---------
------------------in Clean Renewable Energy Bonds (CREBs) under section 54 of the Internal Revenue Code (the “Code”).

Section 54(f)(1) of the Code imposes a Limitation of $800,000,000 on the amount of CREBs which may be issued to finance qualified projects (the “Limitation”). Section 54(f)(2) provides that the Limitation is to be allocated by the Secretary of Treasury in such manner as the Secretary deems appropriate except that no more than
$500,000,000 of the Limitation may be allocated to finance qualified projects of qualified borrowers which are governmental bodies.

Section 6 of Notice 2005-98, 2005-52 I.R.B. 1211, provides that the Limitation will be allocated among qualified projects for which a share of such Limitation has been requested beginning with the project(s) requesting the smallest share (in dollar amount) and continuing with the project(s) requesting the next-smallest share until the total Limitation has been exhausted. However, in the event that $500,000,000 has been allocated to qualified projects of qualified borrowers that are governmental bodies, the remaining shares of the Limitation will be allocated, under the methodology described in the previous sentence, only to qualified projects of qualified borrowers that are not governmental bodies. For purposes of allocating the Limitation among projects, all qualified projects located at the same site and owned by the same qualified borrower are treated as a single project and each project is treated as requesting a single allocation.

An allocation of shares of the Limitation cannot be made with respect to the project owned by the borrower listed in Appendix A because the Limitation has been exhausted
PRESP-142462-06
2

by allocation of shares to finance qualified projects owned by qualified borrowers requesting a smaller share of the Limitation.

We appreciate your submission of the application for our consideration and encourage you to continue to pursue your plans for constructing a clean renewable energy project.

Sincerely,
Assistant Chief Counsel, (Exempt
Organizations/Employment Tax/Government
Entities)
(Tax Exempt & Government Entities)

By: Timothy L. Jones
Senior Counsel
Tax-Exempt Bonds Branch
PRESP-142462-06
3

APPENDIX A 

Borrower Name                  Project Type    Project Location                   Amount

Requested
1 ------------------------------ Wind facility -------------------------------- ----------------
-----------------
--------------------------------
--------------------------------
-----------------------

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