|
Exelon Corp. will take a charge of approximately $270 million in the first quarter of 2013 over fears that a tax dispute with the Internal Revenue Service may not be decided in its favor.
The dispute has to do with $1.2 billion in gains Commonwealth Edison deferred in 1999 when it sold its coal-fired power plants Illinois.
The IRS is claiming that ComEd used a financial arrangement called sale-in, lease-out (SILO) in which a tax-exempt entity sells an asset to a private company and leases the asset back, a tax shelter mechanism the IRS decided in 2005 is abusive. Exelon is arguing that the transaction did not follow such an arrangement.
Settlement talks have been unsuccessful and the company has said it expects to go to court over the matter. Until now, in filings with the Securities and Exchange Commission, Exelon told investors that it believed it was unlikely to lose the case and was not setting aside money for that possibility.
However, on Jan. 9 a U.S. Court of Appeals judge ruled against New York-based Consolidated Edison Co. in a similar case. Exelon said Thursday it can no longer ignore the possibility of failure and will take the charge while it continues to fight the IRS.
The charge represents the full amount of interest (after tax) and incremental state tax that would be charged to Exelon if it is unsuccessful in its litigation. About $185 million of the expense will be borne by ComEd and note passed on to ratepayers.
The potential expense to Exelon if it fails is much larger. Exclusive of penalties, the company could owe as much as $860 million.
jwernau@tribune.com | Twitter @littlewern
Exelon to take $270M charge in tax dispute
This article
Exelon to take $270M charge in tax dispute
can be opened in url
http://swellingnews.blogspot.com/2013/02/exelon-to-take-270m-charge-in-tax.html
Exelon to take $270M charge in tax dispute
