The Internal Revenue Service has ruled that an investor-owned utility can demolish bond-financed pollution control facilities without jeopardizing the tax-exempt status of the bonds or its interest deductions related to the debt.

Demolition of the facilities would mean they would no longer be used except as scrap materials for recycling, which would have zero value, net of decommissioning costs, the IRS said in a private-letter ruling released last week. The letter ruling did not identify the parties or bonds.

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