US Senate Finance Committee Chairman s Mark of the Tax Cuts and Jobs Act: Energy sector implications

Transcription

1 14 November 2017 Global Tax Alert US Senate Finance Committee Chairman s Mark of the Tax Cuts and Jobs Act: Energy sector implications EY Global Tax Alert Library Access both online and pdf versions of all EY Global Tax Alerts. Copy into your web browser: Executive summary On 9 November 2017, United States (US) Senate Finance Committee Chairman Orrin Hatch unveiled the Senate version of the Tax Cuts and Jobs Act, a comprehensive tax reform proposal (the Chairman s Mark). The Chairman s Mark comes a week after the House Ways and Means Committee s initial release of a comprehensive US tax reform bill (the House Bill, which was passed by the Ways and Means Committee on 9 November The Chairman s Mark adheres to the same basic tax overhaul framework as the House Bill, but includes significant differences in the design of provisions and their timing. If enacted, the Chairman s Mark would affect, to varying degrees, domestic and multinational energy companies. Similar to the House Bill, the Chairman s Mark aims to foster domestic energy development and production by encouraging the energy sector, which is very capital-intensive, to invest significantly in the US. Also similar to the House Bill, certain provisions of the Chairman s Mark would require further analysis. As the Chairman s Mark is more in the nature of a section-by-section proposal, further analysis is required once corresponding and supporting legislative text is released. The Chairman s Mark would, if enacted, permanently reduce the statutory corporate tax rate to 20%, although the rate reduction would apply to tax years beginning after December 31, Although the House Bill contained a

2 2 Global Tax Alert similar corporate rate reduction, the House Bill s corporate tax rate provisions would apply to tax years beginning after 31 December In addition, while the Chairman s Mark contains temporary expensing provisions, the repeal of the alternative minimum tax (AMT) and certain other pro-business provisions, it would also eliminate many current business tax benefits. Further (and similar to the provisions in the House Bill), the US tax system would move to a territorial system of taxing foreign earnings with anti-base erosion provisions targeting both US-based and foreign-based multinational companies. The Chairman s Mark, however, includes different approaches than those included in the House Bill on preventing base erosion. Many energy sector companies will have to model the effects of the business provisions of the Chairman s Mark to understand the net effect. Similarly, energy sector companies ought to analyze the differences and similarities between the Chairman s Mark and the House Bill. Aggressive across-the-board tax cuts, including the reduction of the corporate rate to 20%, the repeal of the AMT and various other provisions are beneficial. Certain limitations on taxpayers ability to utilize net operating losses (NOLs) and the repeal of the Section 199 deduction for domestic production activities, however, may be detrimental to certain energy companies. Another balancing act is the discomfiting reduction in the deductibility of net interest, with the limited exemption for certain regulated public utility entities and others, at least for the debt associated with their regulated public operations (also in the House Bill). Detailed discussion General business provisions that may affect energy companies While the effect of provisions in the Chairman s Mark ought to be analyzed on a company-by-company basis, as well as a sector-by-sector basis, many provisions of the Chairman s Mark have general applicability to many energy sector companies. Corporate Many provisions in the Chairman s Mark would affect corporations, including, but not limited to, the following: 20% corporate tax rate The rate would be effective for tax years beginning after 31 December Dividends received deduction (DRD) The amount of deduction allowable against dividends received from a domestic corporation would be reduced to correlate with the reduction in the corporate rate. Specifically, the deduction for dividends received from other than certain small businesses or those treated as qualifying dividends would decrease from 70% to 50%. Dividends from 20%-owned corporations would decrease from 80% to 65% for the DRD. Repeal of corporate AMT The corporate AMT would be repealed for tax years beginning after Taxpayers could claim a refund of 50% of any remaining AMT credits (to the extent the credits exceed regular tax for the year) in tax years beginning before Expensing Bonus depreciation would increase from 50% to 100% for qualified property placed in service after 27 September The increased allowance would remain until A transition rule would allow for an election to apply 50% expensing for one year. An exception to the expensing rule would apply to regulated public utilities. Interest limitations Multiple interest limitations are proposed: Section 163(j) would be replaced with a provision that would disallow net business interest expense deductions that exceed 30% of adjusted taxable income (ATI). For partnerships, the limitation would apply at the partnership level. The targeted interest business interest income and expense is defined similarly in the House Bill, in which interest paid or accrued on indebtedness and interest received would need to be properly allocable to a trade or business. Certain activities that would be excluded from being a trade or business as in the House Bill include performing services as an employee, a real property trade or business, and certain activities of regulated utilities. Activity related to floor plan financing contained in the House Bill is not identified in the Chairman s Mark. An exception from interest limitations would be provided for certain small businesses. ATI would be defined differently from current Section 163(j). The current rule does not reduce taxable income for certain items (like depreciation, amortization and depletion), but those items would be taken into account under the new provision resulting in a lower amount by which to measure the 30% threshold. The new provision also computes ATI without regard to any nontrade or business income, gain, deduction or loss, the 17.4% deduction for pass-through income, and any NOL deduction.

3 Global Tax Alert 3 A worldwide limitation on interest deductibility would be targeted at US interest deductions that are seen as eroding the US tax base. The limitation would be based on a comparison of the debt that could be incurred if the US group had a debt-equity ratio in proportion to the worldwide group s debt-equity ratio. The resulting amount of debt that should be in the United States (based on the proportionate ratios) is grossed-up by 110% to determine the amount of the US debt that is in excess of the proper amount this excess would be the excess domestic indebtedness. The excess domestic indebtedness would be divided by all actual domestic debt and multiplied by the net interest expense. Thus, the more the actual US leverage exceeds the leverage that should be in the US group, the more the numerator increases and the allowable percentage of interest deductions decreases. As with the House Bill, when both the Section 163(j) and worldwide interest limitations apply, the one that results in the lower limitation on interest deductions would take precedence. Any disallowed interest would be carried forward indefinitely (as opposed to five years in the House bill) and subject to both Sections 381 and 382. NOLs For losses arising in tax years beginning after 2017, the NOL deduction would be limited to 90% of taxable income. The carryback provisions would be repealed (except for certain farming losses). An indefinite carryforward would be allowed; however, the Chairman s Mark does not address whether NOL carryforwards would be increased by an interest factor as proposed in the House Bill. Like-kind exchanges Like-kind exchanges would be limited to those involving real property only. Transactions involving like-kind exchanges currently underway would be allowed to complete the like-kind exchange; otherwise, the limitation would be effective for exchanges completed after Section 199 The domestic production deduction would be repealed for tax years after 2018 (a one-year delay from the House Bill s proposal to repeal Section 199 starting in tax years after 2017). Pass-through Major proposals in the Chairman s Mark affecting passthrough income include, but are not limited to, the following: 17.4% deduction on certain pass-through income Unlike the 25% rate for certain pass-through income in the House Bill, the Chairman s Mark provides individuals with a 17.4% deduction on certain pass-through income. At the top rate of 38.5% (and assuming that the taxpayer s sole income source is domestic qualified business income (QBI)), the effective tax rate on domestic QBI would be 31.8% under the Chairman s Mark. Sales of partnership interests by foreign partners The Chairman s Mark would effectively reverse the decision in Grecian Magnesite Mining, Industrial & Shipping Co., SA vs. Comm r, 149 T.C. No. 3 (Jul. 13, 2017), and re-establish, by statute, a provision similar to the holding in Revenue Ruling In Revenue Ruling 91-32, gain or loss from the sale of a partnership interest by a foreign partner was treated as effectively connected income (ECI) taxable in the United States, if the gain or loss from the sale of the underlying assets held by the partnership would otherwise be treated as assets used in or held for use in the conduct of a US trade or business in which the activities of the trade or business were a material factor. Further, the Chairman s Mark would require the purchaser of a partnership interest to withhold 10% of the amount realized on the sale or exchange of the partnership interest, unless certain conditions are met. The Chairman s Mark also contains rules on mandatory basis adjustments for sales of partnership interests with built-in losses, partner loss limitations to include charitable contributions and foreign taxes, and rules on loss limitations applicable to individuals. International The Chairman s Mark includes major proposals for the international tax system, such as: (a) implementing a territorial tax system; (b) imposing a transition tax on accumulated foreign earnings; and (c) imposing anti-base erosion rules. Highlights include: 100% exemption for foreign source-dividends The Chairman s Mark, similar to the House Bill, would exempt 100% of the foreign-source portion of dividends received by a US corporation from a foreign corporation in which the US corporation owns at least a 10% stake. There are a few major differences between the two provisions: (1) the Chairman s Mark would require a more-than-one-year holding period in the stock of the foreign corporation, whereas the House Bill would require only a six-month holding period; (2) the Chairman s Mark would not allow an exemption for any dividend received by a US shareholder from a controlled foreign corporation (CFC) if the dividend were deductible by the foreign corporation when computing its taxes; and (3) the effective date for the Chairman s Mark is the tax year of foreign corporations beginning after 31 December 2017, whereas, the House Bill would apply to distributions made after 31 December 2017.

4 4 Global Tax Alert Special rules for the sale of foreign corporations The Chairman s Mark would apply the dividend exemption to gain from the sale of foreign stock, to the extent of the foreign corporation s earnings and profits, among other changes. Transition tax on tax-deferred foreign earnings A one-time transition tax would apply to a US 10% shareholder s pro rata share of the foreign corporation s post-1986 tax-deferred earnings, at the rate of either 10% (for accumulated earnings held in cash, cash equivalents or certain other short-term assets) or 5% (for accumulated earnings invested in illiquid assets (e.g., property, plant and equipment)). The House Bill would apply rates of 14% and 7%, respectively. A foreign corporation s post-1986 tax-deferred earnings would be the earnings as of 9 November 2017, limited to the earnings accumulated after the shareholder s acquisition of the foreign corporation from a foreign shareholder. Similar to the House Bill, the Chairman s Mark would allow an affected US shareholder with a 10%-or-greater stake in a foreign corporation with a post-1986 accumulated deficit to offset the deficit against tax-deferred earnings of other foreign corporations. The US shareholder could elect to pay the transition tax over eight years or less. The Chairman s Mark also has a new anti-inversion provision. The anti-inversion provision would require the US corporation to pay the full 35% rate on the deferred foreign earnings (less the tax it already paid), if the US corporation inverted within 10 years after enactment. No foreign tax credits would be available to offset the tax in this instance. Anti-base erosion rules Income from the sale of goods and services abroad would be effectively taxed at only 12.5%, whereas under the House Bill, those same sales would be taxed at 20%. The Chairman s Mark would, however, impose a tax on a US shareholder s aggregate net CFC income at a rate that, presumably, would be similar to the rate on the incentives for US companies (i.e., less than or equal to 12.5%). Net CFC income is gross income in excess of extraordinary returns from tangible assets, excluding ECI, subpart F income, high-taxed income, dividends from related parties, and foreign oil and gas extraction income. Further, under the Chairman s Mark, US companies would be allowed to repatriate their intangible property tax-free (there was no such provision in the House Bill). Subpart F modification comparable to the House Bill, the Chairman s Mark makes the following modifications: (a) repeal of foreign base company oil related income (FBCORI) as subpart F income; (b) repeal of the inclusion based on withdrawal of previously excluded subpart F income from a qualified investment in foreign base company shipping operations; and (c) addition of an inflation adjustment to the de minimis exception for foreign base company income. Modification of stock attribution rules for CFC status the Chairman s Mark would change the stock attribution rules, similar to the House Bill. Repeal of the 30-day CFC rules CFC status would be obtained as soon as the ownership requirements were met and subject to the subpart F base erosion rules. Look-through rule for related CFCs made permanent the Chairman s Mark would make the applicable rules permanent for tax years of foreign corporations beginning after Repeal of tax on investment in US property the Chairman s Mark would modify current law that taxes as dividends investments made by certain foreign corporations in US property. Foreign tax credit changes Similar to the House Bill, indirect foreign tax credits would only be available for subpart F income. No credits would be allowed for any dividends associated with exempt dividends. Foreign tax credits would be used on a current-year basis and could not be carried forward or back. Energy sector specific implications Although the Chairman s Mark contains many provisions that have broad applicability to energy sector companies, it is silent on many energy tax provisions. Given the robust support in the Senate for technologies like nuclear energy and biodiesel fuels, it is possible that senators may yet be planning to process an energy tax package, either later in the Senate tax reform process, or perhaps in another end-of-the-year tax legislative vehicle altogether. Mining and metals The majority of mining and metals companies may be very pleased with what has been released in the Chairman s Mark. Similar to the House Bill, the Chairman s Mark provides for the repeal of the AMT, along with a mechanism to refund a company s balance of AMT credits over the next several years. Under the Chairman s Mark, the ability to claim percentage depletion for mining activities is preserved, which, combined with the repeal of the AMT, would provide increased benefits for many mining and metals companies. Because of historic AMT adjustments related to percentage depletion and development costs, many mining and metals sector companies have been consistently subject to AMT

5 Global Tax Alert 5 and have large balances of AMT credits representing these prior-year AMT payments. The repeal of the AMT would not only be a significant simplification for mining and metals companies, but would also enable them to more completely benefit from tax preferences created to encourage mining activities through the accelerated expensing of development costs and percentage depletion that are retained under the Chairman s Mark. In a slight modification of the House proposal, the Chairman s Mark provides for a one-year acceleration of AMT credit refunds, with 100% of the credits being refundable by 2021 instead of 2022, as provided in the House Bill. The mining and metals sector is particularly capital-intensive, with long payback periods for new capital projects. In this landscape (and similar to the House Bill), expanding the asset-expensing provisions for 100% of qualified property, while extending the term through 2022 to allow for the effect on actual capital decisions, would be very beneficial and we would expect this to drive capital investment in the sector. On the other hand, limiting interest deductions to 30% of adjusted taxable income could significantly and adversely affect the after-tax cost of capital for investment decisions that could have been made several years ago. Unlike the House Bill, under the Chairman s Mark, depreciation, amortization and depletion are included for purposes of calculating the available interest expense deduction. Thus, companies that have depreciation, amortization, and depletion, as many, if not all, mining and metals companies do, would have a lower interest expense deduction under the Chairman s Mark, as compared to the House Bill. For many mining and metals companies, this limit on interest deductibility would be the largest negative impact of the Chairman s Mark, as is the case under the House Bill. While all the proposed international provisions would affect the mining and metals sector, no provisions appear to expressly single out the sector. Oil and gas Similar to the mining and metals sector, oil and gas companies, on balance, may react somewhat favorably to the business provisions in the Chairman s Mark. Perhaps most importantly for the oil and gas sector, and similar to the House Bill, several of its highest priorities - maintaining the deductibility of intangible drilling costs, its eligibility to take percentage depletion, the ability to recovery certain geological and geophysical costs, and the designation of certain natural resource-related activities as generating qualifying income under the publicly traded partnership rules (PTP) were not addressed in the Chairman s Mark. Under the Chairman s Mark, the 20% corporate tax rate would generally apply to corporate oil and gas companies, albeit delayed a year as compared to the House Bill. As many individuals invest in US oil and gas assets through partnerships, it is worth noting that the pass-through rate as described in the Chairman s Mark may end up being a higher rate, as compared to the House Bill. For investors in PTPs and other natural resource partnerships, individuals holding such interests may be subject to a higher rate of tax under the Chairman s Mark than under the House Bill. As the oil and gas sector is also very capital-intensive, and often takes many years to recoup necessary investments, expanding the 100% expensing provisions for five years ought to have a large effect on the deployment of capital and development of new projects. The oil and gas sector has a history of reinvestment and developing large-scale operations that can provide both economic growth and employment; the 100% expensing provisions (albeit temporary) would appear to further that purpose. Unlike the House Bill, however, the Chairman s Mark would not modify the original use rules related to bonus depreciation. Absent relaxation of the original use rule (as the Chairman s Mark would not modify current law), oil and gas companies are not likely to view the Chairman s Mark as favorably as the House Bill, in this respect. Additionally, and also unlike the House Bill, the Chairman s Mark does not appear to have a transitional rule allowing an oil and gas taxpayer to elect out of the temporary 100% expensing provisions and back into the general depreciation regime under Section 168. Another potential benefit to oil and gas companies is the proposed repeal of AMT, coupled with the ability to obtain refunds of prior-period AMT credits. Given the nature of drilling programs and capital spending in the sector, many oil and gas companies have been in an AMT position and have carryover AMT credits. Eliminating the economic and administrative burden of the AMT, while allowing prior AMT credits to be potentially refunded, ought to be received positively by affected taxpayers. As previously noted, the oil and gas sector has historically re-deployed capital into new projects, and the repeal of the AMT and the credit provisions appear to further that purpose and ought to allow new, significant investments to be made.

6 6 Global Tax Alert On the other hand, the new provisions related to interest may be detrimental to oil and gas companies. The limitation on the deductibility of interest (which would generally not apply to regulated utilities, regulated gas pipelines and certain other regulated assets) could negatively affect the after-tax cost of capital for investment decisions; however, such an effect ought to be modeled in connection with the 100% expensing, repeal of AMT, and other provisions to appropriately determine the true impact. Unlike the House Bill, under the Chairman s Mark, depreciation, amortization and depletion are included for purposes of calculating the available interest expense deduction. Thus, companies that have depreciation, amortization and depletion, as many, if not all, oil and gas companies do, would have a lower interest expense deduction under the Chairman s Mark, as compared to the House Bill. Similarly, the elimination of the Section 199 deduction for certain domestic production activities may negatively affect certain oil and gas companies, particularly those in the downstream space. Unlike the House Bill, however, the Chairman s Mark would repeal Section 199 effective for tax years beginning after 31 December Also potentially unfavorable to oil and gas companies, the Chairman s Mark may eliminate the carryback of specified liability losses, a provision that has been beneficial to an industry with large NOLs in bonus depreciation years. Additionally, a number of provisions that would be repealed under the House Bill (i.e., the enhanced oil recovery tax credit (Section 43) and the credit for producing oil and gas from marginal wells (Section 45I)) were not addressed by the Chairman s Mark. The international tax section of the Chairman s Mark proposes to repeal the FBCORI rules. This proposal, which was also included in the House Bill, would be effective for tax years of foreign corporations beginning after 31 December 2017, and for tax years of US shareholders in which or with which such tax years of foreign subsidiaries end. Unlike the House Bill, however, the Chairman s Mark does not appear to address the issue of foreign oil and gas recapture in the context of repatriation. The other international tax changes contained in the Chairman s Mark appear to apply equally to all companies in all industries, such as the cap on domestic interest expense utilizing a worldwide interest expense cap formula, the mandatory repatriation tax (although the rates in the Chairman s Mark differ slightly from those contained in the House Bill), the new category of subpart F income for global intangible low-taxed income and the tax on base erosion payments, among others. Unlike the House Bill, however, the Chairman s Mark does not contain exceptions for actively traded commodities in determining a multinational oil and gas company s overall income inclusion. Such provisions ought to be analyzed on a company-by-company basis. Multinational oil and gas companies ought to quickly quantify the effect of these proposed rules on global operations and global payments. Finally, to the dismay of certain non-us investors, the Foreign Investment in Real Property Tax Rules do not appear to be altered under the Chairman s Mark (similar to not being addressed under the House Bill). Lastly, the Chairman s Mark appears to retain qualifying like-kind exchange treatment for certain investments in oil and gas reserves (as the like-kind exchange rules would be modified to only apply to real property, and operating and non-operating interests in oil and gas reserves ought to be considered real property for this purpose). The Chairman s Mark also contains a provision related to the sale of a partnership interest (which would effectively look-through the partnership to determine source) that could negatively affect investments in US oil and gas. Power and utilities With billions of dollars invested in assets each year by the power and utilities industry, immediate expensing, deductibility of interest and the treatment of excess deferred taxes are of prominent concern to the industry. Unlike other industries, the debt-to-equity mix of regulated power and utility companies is approved and monitored by a federal or state regulatory body, as is the investment in regulated capital. The Chairman s Mark contains a number of provisions directly addressing power and utility companies in these areas. Under the immediate expensing provisions, the Chairman s Mark excludes from the definition of qualified property certain public utility property predominantly used in the trade or business of the regulated utility. This is an important and surprising distinction from the House Bill. The legislative text of the House Bill does not contain the use of the term predominantly used in but provides an exemption for property used in a regulated utility. Clarity will certainly be needed. Exempting regulated utilities from the immediate expensing rule thereby presumably forces the use of the modified accelerated cost recovery system or an elective straight-line depreciation (under the alternative depreciation system). Most utility companies have historically used bonus depreciation

7 Global Tax Alert 7 and have a significant amount of federal NOLs. Similar to the House, NOLs arising after 31 December 2017, would only be available to be carried forward, albeit with an indefinite life. Unfavorable to power and utility companies, the Chairman s Mark (similar to the House Bill) would eliminate the 10-year carryback of specified liability losses, a provision that has benefitted an industry with significant environmental clean-up expenses. Of great interest to the industry is the treatment of net interest expense. An industry that is already regulated on its debt-to-equity ratio, the placement of debt at a holding company level is prevalent. Unlike the House Bill, which appears to provide for a potential deduction of interest on debt at a holding company level, which is allocable to a regulated public utility, the Chairman s Mark does not contain similar language. The industry will have to closely watch the text of the Senate bill when published. Another provision that was expressly provided for in the House Bill, but with equal depth in the Chairman s Mark, is the effect of the reduction in the overall tax rate on deferred taxes. The reduction in the tax rate would result in power and utility companies having excess accumulated deferred tax balances that would need to be passed on to customers in accordance with current normalization rules. Further clarification and legislative text is needed about the method in which to pass the benefit of the lower tax rate and reduction in deferred tax liabilities to customers over the remaining regulatory life of the utility property. Unlike the House Bill, the Chairman s Mark would not revise the treatment of contributions to capital, requiring all amounts to be included in the utility s income. Few power and utility companies have international operations, but those with CFCs with non-previously taxed unremitted earnings and profits would incur the one-time tax on tax-deferred earnings of 10% and 5%, on liquid and illiquid assets, respectively. This marks a change in tax rates from the House Bill. The worldwide interest limitation provisions are distressing to inbound corporate investors in US regulated utilities with debt at a US holding company level. Under the Chairman s Mark, the disallowance of interest expense would be based on a comparison of debt that could be incurred if the US group had a debt-equity ratio in proportion to the worldwide group s debt-equity ratio. This prevention of base erosion provision would require all US members of the worldwide affiliated group to be treated as one member when determining whether the group has excess domestic debt. The Chairman s Mark does not provide an exemption of regulated utility debt when calculating the overall US debt limitation. Some consolidated groups may be surprised to find a large disallowance of interest at the holding company level. Renewable and alternative energy Unlike the House Bill, the Chairman s Mark does not address provisions related to renewable energy. Under the Chairman s Mark, none of the House Bill proposals to eliminate the production tax credit inflation adjustments, to revisit the rules defining when construction begins, or to terminate the permanent 10% investment tax credit available for geothermal and solar technologies, were addressed. Additionally, and unlike the House Bill, the Chairman s Mark would not extend the incentives for the so-called orphan renewable electricity technologies (fiber-optic solar property, fuel cells, micro turbines, combined heat and power systems, thermal energy property and small wind systems). Likewise, the Chairman s Mark fails to address the Section 25D residential energy efficiency credit (qualified geothermal heat pump property, qualified small wind property and qualified fuel cell power plants). Like the House Bill, the Chairman s Mark does not extend a number of other temporary tax incentives for renewable energy, including expired credits for the production of hydropower, biomass and waste to energy processes. Similarly, the Chairman s Mark is silent on the fate of expired incentives for biodiesel, renewable diesel, second generation biofuels, alternative fuels, and alternative fuel mixtures. Even the very popular nuclear production incentives proposal, featured in the House Bill, was omitted from the Chairman s Mark. Next Steps The Senate Finance Committee will mark up its plan beginning on 13 November and Chairman Hatch said he hopes to report the legislation by the end of that week. A list of filed amendments and a Chairman s Modification may be issued before then. Changes are likewise possible during the Committee Process.

8 8 Global Tax Alert Implications While the potential effects of the Tax Cuts and Jobs Act will vary across the domestic energy sector on a company-bycompany basis, at first glance, the Chairman s Mark could drive economic growth and foster energy development. The energy sector is very capital-intensive, and has a history of re-deploying capital and earnings into new projects, driving economic activity and employment. The Chairman s Mark appears to support and encourage companies to continue investing significantly in the United States. That being said, a number of provisions, including those related to interest expense limitations, those affecting inbound energy investments, and those related to the taxation of foreign income and foreign persons, will require further analysis.

9 Global Tax Alert 9 For additional information with respect to this Alert, please contact the following: Ernst & Young LLP, Americas Energy Tax Practice, Houston Greg Matlock Ernst & Young LLP, Mining and Metals Thomas Minor, Americas Mining and Metals Tax Leader - National Tax Mike Morris, National Tax greg.matlock@ey.com thomas.minor@ey.com michael.morris@ey.com Ernst & Young LLP, Oil and Gas, Houston Steve Landry, Americas Oil and Gas Tax Leader - National Tax stephen.landry@ey.com Richard Overton, Americas International Tax Energy Leader - National Tax richard.overton@ey.com Ernst & Young LLP, Power and Utilities and Renewables Ginny Norton, Americas Power and Utilities Tax Leader - Northeast Kimberly Johnston, National Tax Brian Murphy, National Tax Mike Bernier, National Tax Mike Reno, National Tax Ernst & Young LLP, Washington Council Ernst & Young Tim Urban ginny.norton@ey.com kimberly.johnston@ey.com brian.r.murphy@ey.com michael.bernier@ey.com michael.reno@ey.com timothy.urban@ey.com International Tax Services Global ITS, Alex Postma, Tokyo ITS Director, Americas, Jeffrey Michalak, Detroit ITS Markets Leader, Americas, Stephen O Neil, New York Ernst & Young LLP, National Director of ITS Technical Services, Jose Murillo, Washington ITS Regional Contacts, Ernst & Young LLP (US) Northeast Johnny Lindroos, McLean, VA Financial Services Chris J Housman, New York Central Mark Mukhtar, Detroit Southeast Scott Shell, Charlotte, NC Southwest Amy Ritchie, Houston West Sadler Nelson, San Jose, CA Canada Ernst & Young LLP (Canada) Albert Anelli, Montreal

10 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved. EYG no Gbl NY ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com