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Enron Mail |
Please take a look at the attached and give me a call. Thanks.
-----Original Message----- From: "Johnson, Christopher P." <CPJohnson@brobeck.com<@ENRON Sent: Mon 7/2/2001 5:30 PM To: Brownfeld, Gail; Mcclellan, George Cc: Markel, Gregory A. Subject: New Intelligence re IRS and "Capacity" Gail and George: Please see attached, which I just received from Keith Martin. CPJ Christopher P. Johnson Brobeck, Phleger & Harrison, LLP 1633 Broadway New York, New York 10019 (212) 237-2558 (212) 586-7878 cpjohnson@brobeck.com -----Original Message----- From: Martin, Keith [ <mailto:kmartin@chadbourne.com<] Sent: Monday, July 02, 2001 6:18 PM To: 'gmarkel@brobeck.com'; 'cpjohnson@brobeck.com' Subject: There were more developments the past few days in the syncoal area that might interest you. As you know, the IRS plans to write the "capacity" of each syncoal plant into any private letters rulings it issues in the future. Plant owners will be held to production at this level. I spoke to Joe Makurath this morning about a rumor that he plans to hold one project that is seeking a ruling to a "capacity" of 198,000 tons a year. Makurath is the IRS branch chief for section 29 rulings. The "rumor" was actually a report by a tax lawyer for Detroit Edison that the IRS looked at actual output at his client's plant in 1998 and derived the "capacity" of the plant from this output. The tax lawyer complained, but was told he could "lump it." Makurath said the following: 1. He has made no final decision about how to determine capacity. 2. The IRS has issued only one ruling since the rulings window reopened in April. That was a ruling to someone who already had a ruling, but who had merely changed the entity that owns the project. The new ruling does not specify the capacity of the project. That's because there was no change in process from when the earlier ruling was issued. He regards a change in feedstock as a change in process. 3. The "capacity" will be the capacity of the facility when it went into service in June 1998. 4. He is still feeling his way on how to determine the capacity when the facility went into service. Actual output is merely an "interesting fact." Capacity is not the same thing as output. Some people made representations about capacity at the time. It would be "strange" if a facility that people thought was capable of producing "100 units in June 1998 is now able to produce 1,000 units." That might call into question whether the facility was in service in June 1998 because it was just starting to ramp up. (An old revenue ruling holds that a power plant was in service when it was producing at 17% of capacity and ramping up steadily from there.) There was another rumor today that the IRS has backed off somewhat in the Detroit Edison case. The taxpayer is hoping it can get a capacity of two times nameplate. The coalition of syncoal owners is gearing back up to lobby Congress for help. Keith ************************************************************ This e-mail, and any attachments thereto, is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited. If you have received this e-mail in error, please notify me by replying to this message and permanently delete the original and any copy of this e-mail and any printout thereof. For additional information about Chadbourne & Parke LLP and Chadbourne & Parke, a multinational partnership, including a list of attorneys, please see our website at <http://www.chadbourne.com<; ======================================================= This email message is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message. To reply to our email administrator directly, send an email to postmaster@brobeck.com BROBECK PHLEGER & HARRISON LLP <http://www.brobeck.com<;
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