EPA EMISSION ALLOWANCES ARE NOT GROSS INCOME.

Rev. Rul. 92-16

FACTS

Title IV of the Clean Air Act Amendments of 1990, 42 U.S.C. section 7651 et seq., establishes a program of sulfur dioxide emission allowances to be allocated annually to certain electricity generating companies ("utilities") commencing in 1995. This program will be administered by the Environmental Protection Agency.

HOLDING

The allocation of emission allowances by the Environmental Protection Agency and their receipt by a utility pursuant to 42 U.S.C. section 7651b (a) does not cause the utility to realize gross income under section 61 of the Internal Revenue Code. Accordingly, under section 1012 of the Code, a utility's basis in those emission allowances is not measured by reference to the fair market value of the allowances.

DRAFTING INFORMATION

The principal author of this revenue ruling is Gerald A. Consalvi of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Consalvi on (202) 566-3886 (not a toll-free call).