IRS Issues Two Key PLRs
Oct 16, 2009
On October 16, 2009, the Internal Revenue Service (IRS) released Private Letter Ruling (PLR) 200942037 and PLR 200942002.
PLR 200942037 decides whether the activities of a university hospital qualified as the activities of the university itself, which as a “qualified educational organization” may issue tax exempt bonds to finance the university’s exempt activities under a rifle-shot provision in the Tax Reform Act of 1986.
Under the facts and circumstances presented, PLR 200942037 ruled that since the university controls the hospital corporation within the meaning of § 1.150-1(e)(1) of the Internal Revenue Regulations, the university could properly treat the hospital corporation’s activities as those of the university, per § 1.141-1(d), for the purpose of issuing tax exempt bonds.
PLR 200942037
PLR 200942002 decides whether an electric utility that serves a two-county area and that outflows electricity from its system to elsewhere, as required by federal and state law, will affect the qualification of its facilities' status under Sectoin 142(a)(8) as facilities that have not been designed differently, sized larger, built sooner, or constructed in a more costly fashion than is reasonable required for the sole purpose of serving the utility’s service area.
Under the facts and circumstances presented, the PLR decided that the outflows will not affect the utility’s bonds, with conditions, holding that “both Federal and State regulatory mandated sales of excess electricity outside the Service Area should be excepted from the Annual Net Importer Test" applied to the utility by the IRS.
PLR 200942002