Court of Federal Claims to Treasury: “Basis Equals Purchase Price”
2 November 2016
Mayer Brown Legal Update
On October 31, 2016, the US Court of Federal Claims decided that Halloween was the perfect day to release its opinion in Alta v. United States, and the plaintiffs no doubt are enjoying this treat. They had brought suit against the Treasury for the alleged underpayment of over $206 million in grants under a section of the American Recovery and Reinvestment Tax Act of 2009 that provides the owners of certain renewable energy projects with a grant equal to 30 percent of the specified energy property’s basis. Emphasizing that “[b]asis, as defined in the IRC, is the cost of property to its owner,” the court found that the plaintiffs were entitled to grants from the Treasury in the full amount applied for. This Legal Update summarizes the salient points from the court’s opinion in this case, which at its heart is about foundational principles of tax basis calculations and is a victory for the US renewable energy industry.