Florida Power & Light bought 48% interests in two windpower projects in 1989 and 1990 and leased back the projects to the seller. The utility claimed it could treat 94% of the purchase price in one project — and 91% in the other — as basis in equipment qualifying for investment tax credits and 5-year ACRS depreciation. The IRS is arguing that some of the increment that FP&L paid for the assets above what they cost to construct is “intangible property” not qualifying for these tax benefits. The case is now before the US Tax Court.

Keith Martin