Examining Partnerships and Substance in a Coal Production Tax Credit Dispute

Counsel for Fidelity Investments engaged Brattle to provide consulting and testifying services in Cross Refined Coal LLC v Commissioner, a dispute with the IRS over the firm’s allocation of $330 million in refined coal production tax credits. Our experts applied a Monte Carlo analysis to quantify the risk distribution for the partnership and individual partners and demonstrated the significant risks borne by the taxpayer. A Brattle Principal testified, and a team of consultants worked closely with Fidelity and their counsel for two years to build the economic and financial evidence, including the emissions rate reductions from the use of refined coal and the economic principles underlying the federal tax credit program. The court issued a bench opinion – a rare event for large corporate tax disputes – ruling in favor of the taxpayers, including Fidelity Investments.