Facilities for the Furnishing of Water (I.R.C. 142(e))

General Matters:

PLR 201507002 (October 28, 2014):  Private business use of proceeds to be used for 1st water supply improvements, services allocable to improvements, and equipment allocable to 1st water supply doesn’t exceed 10 percent; and 2nd water supply improvements, including services allocable to improvements, and equipment allocable to 2nd water supply constitute facilities for furnishing of water under Code Sec. 142(a)(4) and 142(e).  The ruling illustrates how to determine whether output sold pursuant to an output contract is treated as output from a bond-financed facility.  The ruling also describes what a facility for the furnishing of water is.  Most water facilities are financed with normal governmental bonds.

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