Federal Register / Vol. 75, No. 242 / Friday, December 17, 2010 / Proposed Rules 78939 

Unsafe Condition 

(d) This AD results from reports of fatigue 

cracks in the airfoil of the power turbine 

blade. We are issuing this AD to prevent 

fracture of the power turbine blade airfoil, 

which could result in sudden loss of engine 

power and prevent continued safe flight or 

safe landing. 

Compliance 

(e) You are responsible for having the 

actions required by this AD performed within 

the compliance times specified unless the 

actions have already been done. 

(f) For engines with power turbine rotors, 

P/Ns 4–141–290–11, –12, –13, and –14, 

marked with ‘‘ORI T41881,’’ on the aft hub in 

the vicinity of the P/N, no further action is 

required. 

Removing Power Turbine Rotors From 

LTS101–600A–2, –3, –3A, and LTS101– 

700D–2 Turboshaft Engines and LTP101– 

600A–1A and LTP101–700A–1A Turboprop 

Engines 

(g) For LTS101–600A–2, –3, –3A, and 

LTS101–700D–2 turboshaft engines and 

LTP101–600A–1A and LTP101–700A–1A 

turboprop engines, remove power turbine 

rotors, P/Ns 4–141–290–01, –02, –03, –05, 

–06, –11, –12, –13, –14, or –16, using the 

cycles specified in Table 1 of this AD: 

TABLE 1—DRAWDOWN CYCLES FOR LTS101–600A–2, –3, –3A, AND LTS101–700D–2 TURBOSHAFT ENGINES AND

LTP101–600A–1A AND LTP101–700A–1A TURBOPROP ENGINES

If power turbine rotor time on the effective date of this AD is * * * Then remove the power turbine rotor from the engine * * * 

(1) Fewer than 5,000 cycles-since-new (CSN) ........................................ Between 5,000 and 5,500 CSN. 

(2) 5,000 to 7,899 CSN ............................................................................ Within 500 cycles-in-service (CIS) after the effective date of this AD or 

before exceeding 8,000 CSN, whichever occurs first. 

(3) 7,900 to 9,999 CSN ............................................................................ Within 100 CIS after the effective date of this AD or before exceeding 

10,050 CSN, whichever occurs first. 

(4) 10,000 or more CSN ........................................................................... Within 50 CIS after the effective date of this AD. 

Removing Power Turbine Rotors From 

LTS101–650B–1, –650C–3,—650C–3A, 

–750B–1, –2, –750C–1, and –850B–2 Engines 

(h) Remove power turbine rotors, P/Ns 

4–141–290–01, –02 –03, –05, –06, –11, –12, 

–13, –14, or –16, using the cycles specified 

in Table 2 of this AD: 

TABLE 2—DRAWDOWN CYCLES FOR LTS101–650B–1, –650C–3,–650C–3A, –750B–1, –2, –750C–1, AND –850B–2 

ENGINES

If power turbine rotor time on the effective date of this AD is * * * Then remove the power turbine rotor from the engine * * * 

(1) Fewer than 5,500 CSN ....................................................................... Between 5,000 and 7,200 CSN. 

(2) 5,500 to 7,999 CSN ............................................................................ Within 1,700 CIS after the effective date of this AD or before exceeding 

8,950 CSN, whichever occurs first. 

(3) 8,000 to 9,999 CSN ............................................................................ Within 950 CIS after the effective date of this AD or before exceeding 

10,400 CSN, whichever occurs first. 

(4) 10,000 or more CSN ........................................................................... Within 400 CIS after the effective date of this AD. 

Alternative Methods of Compliance 

(i) The Manager, Los Angles Aircraft 

Certification Office, has the authority to 

approve alternative methods of compliance 

for this AD if requested using the procedures 

found in 14 CFR 39.19. 

Related Information 

(j) Contact Robert Baitoo, Aerospace 

Engineer, Los Angeles Aircraft Certification 

Office, FAA, Transport Airplane Directorate, 

3960 Paramount Blvd., Lakewood, CA 

90712–4137; e-mail: robert.baitoo@faa.gov; 

telephone (562) 627–5245; fax (562) 627– 

5210, for more information about this AD. 

(k) Honeywell International Inc. Service 

Bulletins LT 101–71–00–0252 and LTS101– 

71–00–0253, pertain to the subject of this AD. 

Contact Honeywell International Inc., P.O. 

Box 52181, Phoenix, AZ 85072–2181; 

telephone (800) 601–3099 (U.S.A.) or (602) 

365–3099 (International); or go to: https:// 

portal.honeywell.com/wps/portal/aero, for a 

copy of this service information. 

Issued in Burlington, Massachusetts, on 

December 13, 2010. 

Thomas A. Boudreau, 

Acting Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. 2010–31782 Filed 12–16–10; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

20 CFR Part 641 

RIN 1205–AB60 

Senior Community Service 

Employment Program; Notice of 

Proposed Rulemaking, Additional 

Indicator on Volunteer Work; 

Correction 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Proposed rule; correction. 

SUMMARY: This document corrects an 

expiration date cited in the Notice of 

Proposed Rulemaking (NPRM) of the 

Senior Community Service Employment 

Program (SCSEP), Additional Indicator 

on Volunteer Work that was published 

on November 23, 2010. The NPRM 

updates the SCSEP regulations to add an 

indicator to measure the number of 

exiting participants who enter volunteer 

work. The relevant Office of 

Management and Budget (OMB) Control 

Number for SCSEP’s approved 

information collection is 1205–0040. 

The NPRM stated that the expiration 

date for 1205–0040 was October 31, 

2010. However, that date is incorrect. 

The information collection is now 

pending with OMB, as the Department 

has requested a 3-year extension on the 

expiration of the approval date for it. 

Therefore 1205–0040 remains current 

on a month-by-month basis until OMB 

acts on the current information 


srobinson on DSKHWCL6B1PROD with PROPOSALS
78940 Federal Register / Vol. 75, No. 242 / Friday, December 17, 2010 / Proposed Rules 

collection extension request. For more 

information on this request, see http:// 

www.reginfo.gov. 

DATES: This correction is effective 

December 17, 2010. 

FOR FURTHER INFORMATION CONTACT: For 

information on this correction, contact 

Thomas M. Dowd, Administrator, Office 

of Policy Development and Research, 

Employment and Training 

Administration, U.S. Department of 

Labor, 200 Constitution Avenue, NW., 

Room N–5641, Washington, DC 20210. 

Telephone: (202) 693–3700 (this is not 

a toll-free number). Individuals with 

hearing or speech impairments may 

access the telephone via TTY by calling 

the toll-free Federal Information Relay 

Service at 1–800–877–8339. 

SUPPLEMENTARY INFORMATION: 

Correction 

In proposed rule FR Doc. 2010–29424 

(75 FR 71514), beginning on page 71514 

in the issue of November 23, 2010, make 

the following correction in the 

SUPPLEMENTARY INFORMATION section. On 

page 71517, in the 2nd column, in the 

8th line, delete the sentence: ‘‘The 

approval expires October 31, 2010.’’ 

Replace that sentence with ‘‘The 

approval for 1205–0040 remains current 

on a month-by-month basis until OMB 

acts on the currently pending 

information collection extension 

request. For more information on this 

request, see http://www.reginfo.gov.’’ 

Signed in Washington, DC, this 13th day of 

December 2010. 

Jane Oates, 

Assistant Secretary, Employment and 

Training Administration, Labor. 

[FR Doc. 2010–31680 Filed 12–16–10; 8:45 am] 

BILLING CODE 4510–FN–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–149335–08; RIN 1545–BI57] 

Sales-Based Royalties and Vendor 

Allowances 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations relating to the 

capitalization and allocation of royalties 

that are incurred only upon the sale of 

property produced or property acquired 

for resale (sales-based royalties). This 

document also contains proposed 

regulations on adjusting the cost of 

merchandise inventory for an 

allowance, discount, or price rebate 

based on merchandise sales (sales-based 

vendor allowances). The regulations 

modify the simplified production 

method and the simplified resale 

method of allocating capitalized costs 

between ending inventory and cost of 

goods sold. The regulations affect 

taxpayers that incur capitalizable salesbased royalties and earn sales-based 

vendor allowances. 

DATES: Written or electronic comments 

and a request for a public hearing must 

be received by March 17, 2011. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–149335–08), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to: CC:PA:LPD:PR (REG–149335– 

08), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC. Alternatively, 

taxpayers may submit comments 

electronically via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov (IRS REG–149335– 

08). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

John Roman Faron, (202) 622–4930 (not 

a toll-free number); concerning 

submission of comments or a request for 

a public hearing, Richard Hurst at 

Richard.A.Hurst@irscounsel.treas.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

amendments to 26 CFR part 1 relating 

to the allocation under section 263A of 

the Internal Revenue Code (Code) of 

certain sales-based royalties. Salesbased royalties are royalty costs that 

become due only upon the sale of 

property. Thus, the fact of the liability 

arises, and the royalty is incurred 

within the meaning of section 461, only 

upon sale. 

This document also contains 

proposed amendments to 26 CFR part 1 

relating to the determination of cost of 

goods in inventory under section 471 

when a taxpayer receives a sales-based 

vendor allowance. Sales-based vendor 

allowances are allowances, discounts, or 

price rebates that a reseller receives, 

earns, or otherwise becomes entitled to 

based on the resale of a vendor’s 

merchandise to a third party. 

Capitalization and Allocation of SalesBased Royalties Under Section 263A 

Section 263A requires taxpayers to 

capitalize the direct costs and indirect 

costs that are properly allocable to 

(1) real or tangible personal property the 

taxpayer produces, and (2) real property 

or personal property described in 

section 1221(a)(1) that the taxpayer 

acquires for resale. Taxpayers must 

allocate costs required to be capitalized 

under section 263A to property 

produced or acquired for resale during 

the taxable year using a cost allocation 

method described in the regulations. A 

taxpayer generally determines whether 

the cost of goods is included in cost of 

goods sold or in ending inventory using 

a cost flow assumption (for example, 

first-in, first-out or last-in, first-out). 

However, as explained later in this 

preamble, a taxpayer may use a 

simplified method to allocate costs 

required to be capitalized under section 

263A between cost of goods sold and 

ending inventory. 

Section 1.263A–1(e)(3)(i) defines 

indirect costs as all costs other than 

direct material costs and direct labor 

costs (in the case of property produced) 

or acquisition costs (in the case of 

property acquired for resale). Indirect 

costs are properly allocable to property 

produced or acquired for resale when 

the costs directly benefit or are incurred 

by reason of the performance of 

production or resale activities. 

Section 1.263A–1(e)(3)(ii) provides a 

non-exclusive list of indirect costs that 

must be capitalized to the extent they 

are properly allocable to property 

produced or property acquired for 

resale. These costs include licensing 

and franchise costs incurred in securing 

the contractual right to use a trademark, 

corporate plan, manufacturing 

procedure, special recipe, or other 

similar right associated with property 

produced or property acquired for 

resale. Section 1.263A–1(e)(3)(ii)(U). 

Thus, royalty costs, including salesbased royalty costs, incurred in securing 

the contractual right to use a trademark, 

corporate plan, manufacturing 

procedure, special recipe, or other 

similar right associated with property 

produced or property acquired for 

resale, are indirect costs that are 

properly allocable to the property 

produced or acquired for resale to the 

extent the costs directly benefit or are 

incurred by reason of production or 

resale activities. See, for example, 

Plastic Engineering & Technical 

Services, Inc. v. Commissioner, TC 

Memo. 2001–324; but see Robinson 

Knife Manufacturing Company, Inc. v. 

Commissioner, No. 09–1496–ag, 2010 

WL 986532 (2d Cir. March 19, 2010). 

Section 1.263A–1(f) provides various 

‘‘facts-and-circumstances’’ cost 

allocation methods that taxpayers may 

use to allocate direct and indirect costs 


srobinson on DSKHWCL6B1PROD with PROPOSALS