Case Study: Midstream
⬤ 01. Challenges
Successfully Excluding Intangible Assets and Achieving Tax Savings for a FERC Regulated Asset
Our client, a large midstream pipeline operator with a FERC regulated asset, faced a challenge in removing non-taxable items that were included in the Fair Cash Value of the asset.
The state allowed for the exclusion of intangible assets in the appraisal, but it required a robust case to prove that the assessed items were indeed intangible and therefore not subject to taxation.
⬤ 02. Approach
Employing an Aggressive Approach to Intangible Asset Analysis
To tackle the challenge, our approach involved conducting a thorough analysis of the historical definition of intangible assets and applying it to the specific context of the FERC regulated asset. We examined the state-provided appraisal and identified significant intangible value within it. Leveraging our decades of expertise in energy-focused appraisal services, we meticulously reviewed the valuation and compiled supporting evidence to demonstrate that the assessed items should be classified as intangible assets.
⬤ 03. Solution
Delivering a Successful Solution and Substantial Tax Savings
Our comprehensive approach and strategic negotiations resulted in a significant tax savings of over $300,000 for our client. We successfully demonstrated that the assessed items were intangible assets and should be excluded from the value of the asset for taxation purposes. This achievement was reflected in the proposed to final value for the tax year, showcasing the effectiveness of our approach and the positive outcome for our client.
By combining aggressive analysis, our expertise in energy-focused appraisal, and leveraging our relationships with state authorities, we secured a win for our client. The substantial tax savings not only had immediate financial benefits but also established a precedent for future assessments of FERC regulated assets, ensuring accurate and fair taxation in line with the state’s regulations.