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Exelon quarrel with IRS could threaten tax-free exchange deals
http://www.reuters.com/article/2014/01/28/usa-exelon-irs-idUSL2N0KX1J120140128
Exelon quarrel with IRS could threaten tax-free exchange deals
BY PATRICK TEMPLE-WEST
WASHINGTON Tue Jan 28
Jan 28 (Reuters) - Energy group Exelon Corp is fighting the U.S. Internal Revenue Service in court over a $517 million tax bill in a case that tax lawyers said could lead to new restrictions on businesses' ability to do tax-free property exchange deals.
Such exchanges are common legal strategies for avoiding capital gains tax. Thousands are carried out annually, though the Exelon deal at issue was unusually large.
<snip>
'LIKE-KIND' DEALS
Exelon is defending two tax-free property exchanges worth more than $1 billion combined. They were carried out by one of its units in 1999, according to a Tax Court filing.
<snip>
The case traces back to 1999 when an Exelon subsidiary sold some of its fossil fuel power plants to comply with new regulations. With the sale proceeds, the subsidiary acquired three power plants in Georgia and Texas in what the company said it structured as a tax-free exchange.
The Exelon subsidiary then leased the Georgia and Texas properties back to the local governments that operated them. The governments paid advance rent to the Exelon unit totaling more than $1 billion, according to court filings.
<snip>
Exelon quarrel with IRS could threaten tax-free exchange deals
BY PATRICK TEMPLE-WEST
WASHINGTON Tue Jan 28
Jan 28 (Reuters) - Energy group Exelon Corp is fighting the U.S. Internal Revenue Service in court over a $517 million tax bill in a case that tax lawyers said could lead to new restrictions on businesses' ability to do tax-free property exchange deals.
Such exchanges are common legal strategies for avoiding capital gains tax. Thousands are carried out annually, though the Exelon deal at issue was unusually large.
<snip>
'LIKE-KIND' DEALS
Exelon is defending two tax-free property exchanges worth more than $1 billion combined. They were carried out by one of its units in 1999, according to a Tax Court filing.
<snip>
The case traces back to 1999 when an Exelon subsidiary sold some of its fossil fuel power plants to comply with new regulations. With the sale proceeds, the subsidiary acquired three power plants in Georgia and Texas in what the company said it structured as a tax-free exchange.
The Exelon subsidiary then leased the Georgia and Texas properties back to the local governments that operated them. The governments paid advance rent to the Exelon unit totaling more than $1 billion, according to court filings.
<snip>
via http://www.nucpros.com/content/exelon-quarrel-irs-could-threaten-tax-free-exchange-deals