HomePrivate letter rulings (PLRs) continue to state that the timing difference associated with cost of removal is unprotected – are you tracking this appropriately?
Multiple PLRs have ruled that taxpayers’ electric and gas cost of removal related to net deferred tax assets and liabilities is not protected by normalization rules. PowerPlan’s income tax solutions are designed to handle varying treatments of COR and our team is prepared to help with any needed configuration or data reconstruction.
Learn how PowerPlan can help you track your cost of removal
Contact UsAmong the considerations for a change in COR process ...
Upstream Data
Book depreciation expense related to the COR component must be calculated separately from the Life component.
Data Reconstruction
If COR has previously been combined with other timing differences, a reconstruction may be needed to determine the theoretical COR ADIT balance and properly re-state the balances on existing records.
Protected Excess Deferred Taxes
COR often represents an excess debit balance, and separating it from protected amounts can cause an increase in the protected excess deferred tax liability.
Unprotected Excess Deferred Taxes
COR’s excess debit balance could offset existing unprotected excess deferred taxes that are reversing using the Reverse South Georgia (RSG) Method.
Vintaging COR
Some utilities use PowerPlan to separately track COR by bands of vintage years.
Reporting
Both standard PowerPlan reporting and Data Hub for TFA allow for flexible reporting on all of your deferred taxes.
PowerPlan has already helped dozens of regulated utilities separate the COR timing difference and associated Accumulated Deferred Taxes and Excess Deferred Taxes.
Without additional configuration, Tax Fixed Assets (TFA) and PowerTax will treat COR depreciation expense that occurs over the life of the asset as a component of book depreciation that gets allocated to both the Method and Life timing difference as well as to capitalization differences. The incurred COR amount gets applied to retirement transactions and is deductible for tax purposes. Additional standard configuration can be added to separately track the COR timing difference so that it can be properly reported.