Excluding utility rebates from gross income

Rebates are often used by utilities to encourage their customers to purchase more efficient heating or cooling equipment or other energy-saving devices. The National Energy Conservation Act of 1978 encouraged taxpayers to purchase energy-saving appliances by excluding the receipt of utility rebates...

Full description

Saved in:
Bibliographic Details
Published in:The CPA journal (1975) 1992-12, Vol.62 (12), p.58
Main Authors: Bird, Bruce M, Platau, Steven M, Etheredge, Sid
Format: Article
Language:English
Subjects:
Customers
Electric utilities
Energy conservation
Incentives
Income tax
Laws, regulations and rules
Market penetration
Public utilities
Rates
Rebates
Rev. Rul. 91-36
Revenue procedures & rulings
Tax exempt
Taxable income
Taxation
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Rebates are often used by utilities to encourage their customers to purchase more efficient heating or cooling equipment or other energy-saving devices. The National Energy Conservation Act of 1978 encouraged taxpayers to purchase energy-saving appliances by excluding the receipt of utility rebates from gross income. When this provision expired in 1989, however, much uncertainty existed concerning the taxability of most utility rebate programs. In PLR 8924002, the IRS addressed the taxability of cash rebates received by customers from electric utilities. In this case, the amount of the rebate to the customer was based upon the amount of reduction in electrical consumption, not upon the purchase price of the equipment. The electric cooperative was neither a manufacturer nor a dealer of the equipment. The IRS ruled that customers purchasing energy-saving appliances under this arrangement must include in their gross income the cash incentives received from the utility. In Rev. Rul. 91-36, the IRS addressed the issue of non-cash incentives received by customers. The Service ruled that where customers receiving incentive rebates in the form of rate reductions or nonrefundable credits reducing their electric bills, such incentives are nontaxable.
ISSN:0732-8435