1302005 Informal Interpretation

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Verne. B. Michael
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Mike,
Wed nesday, Fe bruary 13, 2013 4:47 PM
Verne, B. Michael
Tax Equ i ty financing transactions
Left you a message, but perhaps email is bet ter.
I have some questions about "tax equity" financing transactions.
In these tra nsactions, inv estors provide an upfront cash amount to green energy projects (such as wind or solar
insta llat ion s), in return for membership interests which entitle the investor to various payments over negotiated periods
of t im e. The payments include tax credits, which the federal government has sanct ioned to t rans fer from energy
companies to inv esto r s (since the energy companies usually do not have a high enough tax burden to take advantage of
these tax credits, all owing them to be transferred to investors who do have higher tax burdens and thus would benefit
from the tax cr edits is designed to encourage investment in the se energy i nitiat ives).
Does t he PNO treat these tax equi ty t ran sactions any different ly than other transactions involving acquisitions of
in teres t s in non-co rporate entities?
If not , I assume th at (1) the same test applies in determining whe t he r a filing is requ ired (whether the tax equity i nvestor
is receiv in g contro l of the non-corporate ent ity), and (2) tax credits are not included as "profi t s" un de r the defi n it ion of
control of a n on - corporate entity.
Also, if these tra nsactions do not involve membership interests, would the tax credits the investor is receiving in return
for its i nv estme nt be considered "assets" under the HSR ru les? I wou ld t hin k not, but wanted to check.
Thanks.
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1

Nothing reportable here. The formation of the non-corporate entity
would be exempt under §802.4. Tax credits are assets, but we
treat them as cash equivalents.