PLR: Electric cooperative’s arrangement is management contract, not a lease

Electric cooperative is management contract, not lease

The IRS has publicly released a private letter ruling* as requested by a rural electric power cooperative, concluding that an arrangement by the cooperative to transition from its transmission arrangement, under an integrated system, to a regional transmission organization system represents a management contract for federal income tax purposes. PLR 201525007 (release date June 19, 2015, and dated March 10, 2015)

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PLR 201525007 [PDF 68 KB] concludes that based on the facts presented in the application, the arrangement represents a management contract and not a lease.

*Private letter rulings are taxpayer-specific rulings furnished by the IRS National Office in response to requests made by taxpayers and can only be relied upon by the taxpayer to whom issued. It is important to note that, pursuant to section 6110(k)(3), such items cannot be used or cited as precedent. Nonetheless, such rulings can provide useful information about how the IRS may view certain issues.

 

For more information, contact KPMG’s National Director of Cooperative Tax Services:

David Antoni | +1 (267) 256-1627 | dantoni@kpmg.com

Or Associate National Director of KPMG’s Cooperative Tax Services

Brett Huston | +1 (916) 554-1654 | bhuston@kpmg.com

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