Ezel / IRS Rulings / 200707122

PLR 200707122: Ninety-three solar projects receive bond allocations and one is denied

Number
200707122
Outcome
Mixed outcome
Document type
Private Letter Ruling
IRS subject
Clean Renewable Energy Bonds
Topics
Income and deductions
Code sections
§ 45, § 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 issuer sought Clean Renewable Energy Bond authority for solar energy projects. The IRS approved allocations for the 93 projects in Appendix A under IRC § 54. It denied the governmental project in Appendix B because smaller requests had already exhausted the $500 million governmental allocation limit. The approved bonds had to be designated for the listed projects and issued by December 31, 2007. The applicable bond and reimbursement requirements still applied, and the allocation did not establish eligibility for the separate renewable electricity production credit under § 45.

Ruling snapshot

  • Question: Would the solar projects receive Clean Renewable Energy Bond allocations?
  • Outcome: Mixed: 93 Appendix A projects received allocations; one Appendix B governmental project was denied at the allocation cap.
  • Key authorities: IRC § 54(f)(1), (f)(2), and (d)(2)(C); Notices 2005-98 and 2006-7.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200707122
Third Party Communication: None
Release Date: 2/16/2007
Date of Communication: Not Applicable
Index Number: 54.00-00
Person To Contact:

- -----------------------, ID No. -------------

                                                           Telephone Number:

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

                                                           Refer Reply To:

                                                           CC:TEGE:EOEG:TEB

                                                           PRESP-149283-06

                                                           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).

Pursuant to section 54(f)(2) of the Internal Revenue Code (the Code) and Notice 2005- 98, 2005-52 I.R.B. 1211, and after review of your application submitted on April 26, 2006, including supplements thereto, we have determined that the projects described in Appendix A attached hereto are qualified for purposes of section 54 and will be owned by one or more qualified borrowers. We allocate authority to -----------------------------------
--------------------------------------- (the Issuer), a qualified issuer under section 54, to issue up to $--------------- of Clean Renewable Energy Bonds (CREBs). Bonds issued pursuant to this allocation must be designated by the Issuer as bonds for purposes of section 54 for the projects described in Appendix A up to the amount allocated for each project described in Appendix A.

Bonds so designated must be issued on or before December 31, 2007. Please be aware that in order for bonds to be CREBs, the applicable requirements of the Code, including without limitation section 54, Notice 2005-98, and Notice 2006-7, 2006-10 I.R.B. 559, must be met. Please note that CREB proceeds may be used to reimburse capital expenditures paid by qualified borrowers for qualified projects only if the provisions of section 54(d)(2)(C) are met.

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
PRESP-149283-06
2

$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 B because such borrower is a governmental body and $500,000,000 has already been allocated to applications requesting a smaller share of the Limitation to finance qualified projects owned by qualified borrowers that are governmental bodies.

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

If you have any questions with respect to this allocation, please contact ---------------------

---------or -----------------------------of the Office of Division Counsel/Associate Chief Counsel Tax-Exempt and Government Entities on ---------------------(not a toll-free call).

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

For purposes of the renewable electricity production credit under section 45 of the Code, no inference may be drawn from this allocation that any project listed in the appendices attached hereto is a qualified facility or that electricity to be produced at such project(s) is electricity from a qualified energy resource at a qualified facility within the meaning of section 45.

This determination is directed only to the applicant named above. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

A copy of this letter must be attached to any Form 8038-G, Information Return for Tax- Exempt Governmental Obligations, filed for bonds issued pursuant to this allocation.
PRESP-149283-06
3

The allocation contained in this letter is based upon information and representations submitted by the applicant for the CREB allocation and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the application for an allocation, it is subject to verification on examination.

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-149283-06
4

APPENDIX A 

 Borrower Name                   Project    Project Location                           Amount

Type
Allocated
1 ----------------------------- Solar ------------------------------------------ ----------- ----------------------------- energy -----------------------------------------
-------------------
facility
2 ----------------------------- Solar ------------------------------------------ ----------- ----------------------------- energy ------------------------------------------
-------------------
facility ----------------------------------------

3 ----------------------------- Solar ------------------------------------------ ----------- ----------------------------- energy -----------------------------------------
-------------------
facility
4 ----------------------------- Solar ------------------------------------------ ----------- ----------------------------- energy ------------------------------------------
-------------------
facility --------

5 ----------------------------- Solar ------------------------------------------ ----------- ----------------------------- energy ------------------------------------------
-------------------
facility ------------------------------------------
------

6 ----------------------------- Solar ------------------------------------------ ----------- ----------------------------- energy ------------------------------------------
-------------------
facility -----------

7 ----------------------------- Solar ------------------------------------------ ------------- ----------------------------- energy ------------------------------------------
-------------------
facility ------------------

8 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------------------------------------
-------------------
facility
9 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -
-------------------
facility
10 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------------------
-------------------
facility
11 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------------------------
-------------------
facility
PRESP-149283-06
5

12 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------------------------------
-------------------
facility ------------------

13 ----------------------------- Solar -------------------------------------- -------------
----------------------------- energy
-------------------
facility
14 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------
-------------------
facility
15 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ----------------------------
-------------------
facility
16 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------
-------------------
facility
17 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -
-------------------
facility
18 ----------------------------- Solar ----------------------------------------- -------------
----------------------------- energy
-------------------
facility
19 ----------------------------- Solar ----------------------------------------- -------------
----------------------------- energy
-------------------
facility
20 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy
-------------------
facility
21 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------
-------------------
facility
22 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------
-------------------
facility

23 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ---------
-------------------
facility
24 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------------------------------
-------------------
facility ------------
PRESP-149283-06
6

25 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -------
-------------------
facility
26 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy
-------------------
facility
27 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --
-------------------
facility
28 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -
-------------------
facility
29 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------------
-------------------
facility
30 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ----------------
-------------------
facility
31 ----------------------------- Solar ----------------------------------------- -------------
----------------------------- energy
-------------------
facility
32 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----
-------------------
facility
33 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------------------
-------------------
facility
34 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -------------------
-------------------
facility
35 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ---------
-------------------
facility
36 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------
-------------------
facility
37 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------------
-------------------
facility
38 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy -----
--------------------
facility
PRESP-149283-06
7

39 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------------
--------------------
facility
40 ----------------------------- Solar --------------------------------- ---------------
----------------------------- energy
--------------------
facility
41 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------------------------------------
--------------------
facility ----------

42 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------------------------------------
--------------------
facility ----

43 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ----------
--------------------
facility
44 ----------------------------- Solar -------------------------------- ---------------
----------------------------- energy
--------------------
facility
45 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy --
--------------------
facility
46 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------
--------------------
facility
47 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------------------------------------
--------------------
facility -------

48 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy --------
--------------------
facility
49 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------------
--------------------
facility
50 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy --------------------
--------------------
facility
51 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -------
-------------------
facility
PRESP-149283-06
8

52 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ---------------
-------------------
facility
53 ----------------------------- Solar ----------------------------------------- -------------
----------------------------- energy
-------------------
facility
54 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------------------
-------------------
facility
55 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ----------
-------------------
facility
56 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------------------------------------
-------------------
facility
57 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ---------------
-------------------
facility
58 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------
-------------------
facility
59 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------------------
-------------------
facility
60 ----------------------------- Solar ----------------------------------------- -------------
----------------------------- energy
-------------------
facility
61 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----
-------------------
facility
62 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------
-------------------
facility
63 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ---------
-------------------
facility
64 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------------------------------
-------------------
facility ------

65 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ----------
-------------------
facility
PRESP-149283-06
9

66 ----------------------------- Solar --------------------------------- -------------
----------------------------- energy
-------------------
facility
67 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------
-------------------
facility
68 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------
-------------------
facility
69 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -----------
-------------------
facility
70 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ----------
-------------------
facility
71 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ---------
-------------------
facility
72 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ----------------
-------------------
facility
73 ----------------------------- Solar ------------------------------------ -------------
----------------------------- energy
-------------------
facility
74 ----------------------------- Solar ------------------------------------- -------------
----------------------------- energy
-------------------
facility
75 ----------------------------- Solar ------------------------------------- -------------
----------------------------- energy
-------------------
facility
76 ----------------------------- Solar ---------------------------------- -------------
----------------------------- energy
-------------------
facility
77 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -------
-------------------
facility
78 ----------------------------- Solar ----------------------------------------- -------------
----------------------------- energy
-------------------
facility
79 ----------------------------- Solar ------------------------------------- -------------
----------------------------- energy
-------------------
facility
PRESP-149283-06
10

80 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------
-------------------
facility
81 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -------------
-------------------
facility
82 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy -
-------------------
facility
83 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --
-------------------
facility
84 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------
-------------------
facility
85 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy --------------
-------------------
facility
86 ----------------------------- Solar ------------------------------------------ -------------
----------------------------- energy ------------------------------------------
-------------------
facility ------------------------------------------
--

87 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------------------
--------------------- facility
88 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ------------
--------------------- facility
89 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ----
--------------------- facility
90 ----------------------------- Solar ---------------------------------------- ---------------
----------------------------- energy
--------------------- facility
91 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ----------------------
--------------------- facility
92 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy --------
--------------------- facility
93 ----------------------------- Solar ------------------------------------------ ---------------
----------------------------- energy ----------
---------------
facility
PRESP-149283-06
11

TOTAL
----------------

APPENDIX B 

Borrower Name                       Project Type              Project Location                   Amount

Requested
1 --------------------------------- Solar energy -------------------------------- ---------------
--------------------------------- facility -----------------------
-------------------

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

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