Public Utilities Commission ( PUC ) Denies Partnership An Offset For Income Tax Purposes.

A company formed as a partnership which operates oil pipelines challenged ratesetting orders of the Public Utilities Commission [PUC]. The PUC decided the company is not entitled to an offset for income tax purposes. The company argued the PUC erroneously denied it a federal income tax allowance because it is a limited partnership instead of a corporation. The PUC’s practice is to calculate income tax allowances on a stand-alone basis, without reference to corporate relationships such as holding companies, affiliates or subsidiaries. The appellate court, on a writ of review of a decision by the PUC, pointed out the PUC is not an ordinary administrative agency, but a constitutional body with far-reaching powers, duties and functions. It also stated: “The Internal Revenue Code (IRC) treats corporations and partnerships differently for tax purposes.” The company’s petition was denied. SFPP, L.P. v. Public Utilities Commission (Chevron Products Company)  (Cal. App. Fourth Dist., Div. 3; July 1, 2013) 217 Cal.App.4th 784.