Apr 30
Access to energy: A ‘new’ intangible asset?
Some leases and other contracts for priority access to electricity needed for new technologies may require 15-year amortization under Sec. 197.
➤ Contracts granting priority access to electricity for energy-intensive businesses like AI and data centers may be classified as Section 197 intangible assets for tax purposes. ➤ The article discusses how upfront payments for such energy access, regardless of whether structured as a lease or purchase, could be subject to 15-year amortization. ➤ Taxpayers and advisors need to carefully evaluate the substance of these arrangements to determine appropriate tax treatment and amortization schedules.