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IRS LETTER REGARDING FEDERAL TAX PRINCIPLES CONCERNING TAX EXEMPT...

IRS Letter Regarding Federal Tax Principles Concerning Tax Exempt Organizations Applicable to the FCC's Proposed Broadcast Incentive Auction, July 14, 2015

Mr. Howard Symons
Vice-Chair of the Incentive Auction Task Force
Federal Communications Commission
445 12th Street, SW
Washington, DC 20554
 
Reference: Federal Tax Principles Concerning Tax Exempt Organizations Applicable to the FCC's Proposed Broadcast Incentive Auction

Dear Mr. Symons:

This letter supplements the July 3, 2014, letter to the Federal Communications Commission (“FCC”) providing general information concerning how federal income tax laws could be expected to apply to participants in the FCC’s Incentive Auction. Specifically, this letter responds to your request for information concerning how federal income tax laws could be expected to apply to tax exempt participants in the FCC’s Incentive Auction.

As we understand the facts, the FCC is planning to expand the amount of UHF spectrum available for wireless broadband uses. The FCC will conduct a “reverse auction” to allow television broadcasters to voluntarily relinquish UHF or VHF spectrum usage rights. The FCC will then conduct a “forward auction” of UHF spectrum in the form of licenses suitable for providing mobile broadband services.

In addition, the FCC plans a reorganization (“repacking”) of the broadcast television spectrum. Under repacking, the FCC will involuntarily reassign the channels of some broadcasters that do not participate in the reverse auction or whose reverse auction bids are not accepted. Broadcasters that are reassigned will incur costs to acquire new equipment or modify existing equipment for use on the new channel. The FCC is authorized to reimburse broadcasters for reasonably incurred costs for relocating to the new channel, up to a maximum aggregate amount of $1.75 billion.

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