Tax Court: Scottish Power Defeats the IRS

According to a report in Bloomberg Businessweek, ScottishPower PLC defeated a bid from the Internal Revenue Service in U.S. Tax Court to disallow more than $932 million in interest deductions.

Tax Court

The 38-page decisions details the ruling from tax court that stock provided by ScottishPower to one of its units upon the acquisition of a publicly held US utility was not a capital contribution, but a loan under federal tax law.

NA General Partnership and Subsidiaries, the unit in question, made $932 million in payments on $4 billion worth of notes that it issued in exchange for the partnership’s receipt of all outstanding stock in PacifiCorp & Subsidiaries to ScottishPower.

ScottishPower began the acquisition process for PacifiCorp in 1998. The power supplier—which was a power supplier to California, Washington, Oregon and Utah—was acquired in 1999.

The court’s ruling that the loan notes are deductible as interest constitutes a loss for the IRS.


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