Yesterday, the Energy and Treasury Departments jointly issued guidance regarding the federal income tax treatment of Smart Grid Investment Grant payments received pursuant to the American Recovery and Reinvestment Act (ARRA).

The guidance, which was issued as Revenue Procedure 2010-20, generally provides that a corporation receiving a specified grant will not recognize taxable income upon receipt of the grant, but will be required to reduce the tax basis of its assets by the amount of the grant.

Stoel Rives issued a law alert today regarding this guidance, further exploring what the guidance addresses, and notably, does not address.