recommended reading

Tax Free Smart Grid Grants

ARCHIVES

By Dawn Lim March 12, 2010

recent posts

Federal grants under the Smart Grid Investment Grant program will not be taxed, the Treasury and Energy Department announced on Wednesday.

This means that the Internal revenue Service will provide a safe harbor for corporations receiving grants under the $3.4 billion federal stimulus program, which funds projects that aid the modernization of the energy grid.

Smart Grid capabilities would update a system that is facing stress with the nation's increasing energy needs and cut down on energy waste through the use of sophisticated meters and sensors that monitor and control electrical consumption.

"By clarifying the tax treatment of Smart Grid Investment Grants, we are ensuring that their full impact is felt in the communities where these investments are being made," Treasury Assistant Secretary for Management Dan Tangherlini said.

The Demand Response and Smart Grid Coalition, a trade group for the smart grid industry whose members include Lockheed Martin Corp. and LG Electronics USA, hailed the news.

But there's no such thing as a free ride. According to the fine print, "Section 362(c)(2) of the Code requires a basis reduction in a corporation's property when the corporation receives money from a nonshareholder as a contribution to its capital."

In other words, corporations have to reduce the tax basis of their property as a condition for receiving these tax breaks.

"The result is a reduction in tax benefits such as depreciation over the life of the property and higher taxable gain (or reduced losses) on its eventual disposition," explained attorney James Atkinson, who was also previously Associate Chief Counsel for income tax and accounting at the IRS.

The intended incentive may be blunted, and the news is not as favorable as perhaps many in the industry had hoped, he said.

JOIN THE DISCUSSION

Close [ x ] More from Nextgov
 
 

Thank you for subscribing to newsletters from Nextgov.com.
We think these reports might interest you:

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download

When you download a report, your information may be shared with the underwriters of that document.