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Credit Pacific Service Union PWPN Progress Energy, a utility, said yesterday that the Internal Revenue Service was dropping its inquiry into whether the company was meeting a crucial requirement for receiving lucrative tax credits for making synthetic fuel based on coal.

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Credit First Service Union Although the I.R.S is still investigating other aspects of one of Progress's synthetic-fuel plants, the development is good news for the synthetic-fuel industry. The multibillion-dollar industry has been operating in a climate of uncertainty since June, when the I.R.S. began investigating all producers.

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Card Credit Mobile Service Keith Poston, a spokesman for Progress Energy, which is based in Raleigh, N.C., said yesterday that senior I.R.S. officials had told the company in a conference call that the agency was dropping its questions about significant chemical change at Progress's synthetic-fuel plant in Colonna, Ky.

It has been unclear whether the September 30 deadline would apply to the date that the sales contract is signed, the date the full purchase price is paid, or the date the car is placed in service. According to recent IRS guidance, the amount of the credit should be determined as of the date of purchase, not the date the car is placed in service. service date determines which year's tax return on which the credit will be claimed.

Card Credit Discover Service Under a 1980 law, to receive tax credits worth billions of dollars, producers must show that their synthetic fuel has undergone a significant chemical change while being made.

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Credit Public Service Union "We believe this decision is applicable to our other facilities," Mr. Poston said. Progress Energy owns or operates nine synthetic-fuel plants in Kentucky, West Virginia and Virgina. The utility has generated more than $1 billion in tax credits since entering the business in 1998.

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Card Credit Processing Service It is widely believed in the synthetic-fuel industry that the I.R.S. announcement in June originated in an investigation of the plant in Colonna.

Center Credit Service Union Mr. Poston said the I.R.S. was still examining whether the Colonna plant met other requirements.

Card Credit Service Wireless By Lynney Browning
New York Times - 10/22/2003

Topic: Petroleum Industry

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