- 10 - test. It did not receive the FEECA receipts in trust. A trust requires that (1) a person (2) take title to property (3) pursuant to an explicit directive (4) to preserve or protect the property. See Johnson v. Commissioner, 108 T.C. 448, 476 (1997); sec. 301.7701-4(a), Proced. & Admin. Regs. Here, the purported settlors, namely People's customers, never intended to create a trust or even knew they were funding the FEECA programs. People's received the FEECA receipts from its customers as payments for gas, and the customers, at the time of payment, did not know that any part of the payments was for other than their gas use. In fact, PSC rules explicitly barred People's from telling its customers that a portion of each payment was funding the FEECA programs. Nor did People's satisfy the second prong of the Seven-Up test, which requires that it expend the funds without profit, gain, or benefit. The subsidies paid by People's benefited it significantly in that they encouraged utility users to purchase gas appliances from People's. The effect of the FEECA programs was that they served to shift the cost of these subsidies from People's to its rateholders. The FEECA programs also increased People's rate base, number of customers, and sales. We turn to the second issue; namely, whether People's must capitalize the FEECA expenditures. Respondent answers this question in the affirmative as to all the disputed expenditures.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011