The Internal Revenue Service recently issued Private Letter Ruling 201214007 which concluded that in the acquisition by the taxpayer of a wind energy facility accompanied by a facility specific power purchase agreement the taxpayer was not required to allocate any portion of the purchase price to the power purchase agreement. The Internal Revenue Service reasoned that where a power purchase agreement is fulfilled by a specific energy facility, the power purchase agreement had no value separate from the energy facility. In the facts presented to the Internal Revenue Service the owner of the energy facility could not satisfy the power purchase agreement from any other energy source other than the specific energy facility. The effect of the Private Letter Ruling is to permit an increase in the tax basis of the facility which results in an increase in the renewal energy investment tax credit and the basis of the energy facility for purposes of depreciation.