Energy & Clean Technology Alert - Court: Tax Equity Partnerships Promote Congressional Intent


Tax credit investors received a big boost from the U.S. Tax Court in Historic Boardwalk Hall LLC v. Commissioner, 136 TC No. 1 (January 3, 2011). The court upheld a partnership structured to generate historic rehabilitation tax credits for a corporate investor notwithstanding the investor’s limited risks and clear tax motivation. Where Congress enacts tax credits consciously to spur investment in unprofitable project areas, taxpayers act appropriately in pursuing transactions that make business sense only on an after-tax basis. The case has positive implications for renewable energy sector investors looking to avail themselves of production tax credits, investment tax credits, accelerated depreciation deductions, and other tax incentives.

Renovating Boardwalk Hall In the late 1990s, New Jersey Sports and Exposition Authority (NJSEA) was preparing a multi-million dollar renovation of Boardwalk Hall in Atlantic City. Built in 1929, the 250,000 square foot facility has hosted the Beatles, the 1964 Democratic National Convention, WrestleMania, and most famously, the Miss America Pageant. Even better, Boardwalk Hall is a “certified historic structure” whose rehabilitation expenses are eligible for a 20% tax credit under Section 47 of the Internal Revenue Code.

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