Tangible Basis of Property: Who Decides?
Attorneys James Dawson, Alexander Olama and Chad Vanderhoef co-authored an article published in Pratt's Energy Law Report discussing a recent case before the U.S. Court of Appeals for the Federal Circuit addressing whether the amount of a developer's fee claimed by appellees should be included in the tangible basis of property. The case, California Ridge Wind Energy LLC, et al. v. United States, concerned the American Recovery and Reinvestment Act of 2009 Section 1603, which provides cash grants for "specified energy properties" that act as substitutes for investment tax credits. Specifically at issue was the amount in development fees used to calculate the tangible basis of property, which in turn is used to calculate the tax basis for claiming said credits and grants. The Federal Circuit upheld a previous ruling finding the development fees to be a sham and ordered the appellees to repay the government based on its counterclaim that the tangible basis had been overinflated. The authors summarize this case and discuss its implications.