This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

U.S. Supreme Court Rules Unanimously For PPL In Foreign Tax Case

ALLENTOWN, Pa., May 20, 2013 /PRNewswire/ -- By a unanimous 9-0 decision, the U.S. Supreme Court overturned a federal appeals court ruling on Monday (5/20) that had denied PPL Corporation's claim of a credit against its U.S. income taxes for a "windfall tax" paid to the government of the United Kingdom.

In the decision, the Supreme Court ruled that "the economic substance of the U.K. windfall tax is that of a U.S. income tax ... therefore the tax is creditable.

"We agree with PPL and conclude that the predominant character of the windfall tax is that of an excess profits tax, a category of income tax in the U.S. sense," the court wrote in its opinion.

"The U.S. tax code allows companies to claim a credit for payment of foreign taxes that are similar in substance to U.S. income taxes. We have held throughout the process that because the U.K. windfall tax was based on income, it should therefore be creditable against our U.S. income taxes. We are pleased not only that the Supreme Court agreed, but that the agreement was unanimous," said Robert J. Grey, PPL executive vice president, general counsel and secretary.

The opinion was written for the court by Justice Clarence Thomas, with a concurring opinion filed by Justice Sonia Sotomayor.

The U.K. government imposed the one-time windfall tax in 1997 on 32 companies that the government had privatized between 1984 and 1996, including the electric utility company currently known as Western Power Distribution. PPL purchased a share of WPD in 1996 and is now the sole owner. WPD currently serves 7.8 million customers in central and southwest England and south Wales.

The Internal Revenue Service challenged PPL's claim of a tax credit for the U.K. windfall tax. After an extensive trial process, the U.S. Tax Court agreed with PPL's position in September 2010. The IRS appealed that decision to the U.S. Court of Appeals for the Third Circuit in Philadelphia, which reversed the Tax Court's decision in December 2011.

Six months later, the U.S. Court of Appeals for the Fifth Circuit in New Orleans affirmed the Tax Court's decision in an identical case involving another U.S.-based company that was subject to the U.K. windfall tax. Based on the conflicting appellate court decisions, PPL sought review by the Supreme Court, which accepted the case and heard oral arguments in February.

Based on the Supreme Court decision, PPL expects to record a tax benefit in the second quarter of 2013 of about $40 million, most of which will be treated as a special item.

PPL Corporation (NYSE: PPL), with annual revenue of more than $12 billion, is one of the largest companies in the U.S. utility sector. The PPL family of companies delivers electricity and natural gas to about 10 million customers in the United States and the United Kingdom, owns more than 18,000 megawatts of generating capacity in the United States and sells energy in key U.S. markets. More information is available at www.pplweb.com.

 

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs