Here is a link to my letter to the editor of Tax Notes that corrects statements in an article by Lee Sheppard, a noted tax journalist, that provided that the renewables industry was prepared to trade tax credits for legislatively expanding the definition of “qualified” income for purposes of the master limited partnership rules to include income from renewable energy projects.
If a publicly traded partnership (known as “master limited partnership” (MLP)) has at least 90 percent of its income from “qualified” sources, then it is eligible to avoid the corporate level income tax typically imposed on U.S. publicly traded entities. I.R.C. § 7704. Bills have been introduced in Congress to amend the definition of “qualified” income to include income from renewable energy projects. The proposed legislation is discussed in blog posts of [Aug. 1], [Apr. 9] and [Mar. 12]. The letter to the editor quotes statements from leaders in the renewable energy industry that make it clear that although the industry would like the expansion of the MLP rules, the industry is not prepared to trade tax credits in order to obtain such an expansion.
The letter also corrects misstatements in the article about the tax and the GAAP treatment of leasing transactions.