Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 80697 

86Order No. 486, Regulations Implementing the 

National Environmental Policy Act, 52 FR 47897 

(Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 (1987). 

87 18 CFR 380.4. 

88See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), and 

380.4(a)(27). 

89 5 U.S.C. 601–612. 

90See Order No. 735, FERC Stats. & Regs. 

¶ 31,310 at P 111. 

reference OMB Control No. 1902–0253 

and the docket number of this order in 

your submission. 

IV. Environmental Analysis 

82. The Commission is required to 

prepare an Environmental Assessment 

or an Environmental Impact Statement 

for any action that may have a 

significant adverse effect on the human 

environment.86 The Commission has 

categorically excluded certain actions 

from these requirements as not having a 

significant effect on the human 

environment.87 The actions taken here 

fall within categorical exclusions in the 

Commission’s regulations for rules that 

are corrective; clarifying or procedural; 

for information gathering, analysis, and 

dissemination; and for sales, exchange, 

and transportation of natural gas that 

requires no construction of facilities.88

Therefore an environmental review is 

unnecessary and has not been prepared 

in this rulemaking. 

V. Regulatory Flexibility Act 

83. The Regulatory Flexibility Act of 

1980 (RFA) 89 generally requires a 

description and analysis of final rules 

that will have significant economic 

impact on a substantial number of small 

entities. The Commission is not 

required to make such analysis if 

proposed regulations would not have 

such an effect. For the reasons stated in 

Order No. 735,90 the Commission 

certifies that this Final Rule’s 

amendments to the regulations will not 

have a significant impact on a 

substantial number of small entities. 

VI. Document Availability 

84. In addition to publishing the full 

text of this document in the Federal 

Register, except for the Appendix, the 

Commission provides all interested 

persons an opportunity to view and/or 

print the contents of this document, 

including the Appendix, via the Internet 

through FERC’s Home Page (http://www.

ferc.gov) and in FERC’s Public Reference 

Room during normal business hours 

(8:30 a.m. to 5 p.m. Eastern time) at 888 

First Street, NE., Room 2A, Washington 

DC 20426. 

85. From FERC’s Home Page on the 

Internet, this information is available on 

eLibrary. The full text of this document 

is available on eLibrary in PDF and 

Microsoft Word format for viewing, 

printing, and/or downloading. To access 

this document in eLibrary, type the 

docket number excluding the last three 

digits of this document in the docket 

number field. The report and 

instructions also will be made available 

through the Commission’s Forms page, 

http://www.ferc.gov/docs-filing/forms.

asp, upon approval by OMB. 

86. User assistance is available for 

eLibrary and the FERC’s Web site during 

normal business hours from FERC 

Online Support at 202–502–6652 (toll 

free at 1–866–208–3676) or e-mail at 

ferconlinesupport@ferc.gov, or the 

Public Reference Room at (202) 502– 

8371, TTY (202) 502–8659. E-mail the 

Public Reference Room at public.

referenceroom@ferc.gov. 

VII. Effective Date 

87. These further revisions to the 

reporting regulations will be effective 

April 1, 2011, the same date as in the 

Final Rule. The quarterly report for 

transactions occurring during the period 

January 1, 2011 through March 31, 2011, 

must be filed on or before June 1, 2011. 

The Commission has determined that 

this rule is not a ‘‘major rule’’ as defined 

in section 351 of the Small Business 

Regulatory Enforcement Fairness Act of 

1996. 

List of Subjects in 18 CFR Part 284 

Continental shelf, Natural gas, 

Reporting and recordkeeping 

requirements. 

By the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

■ In consideration of the foregoing, the 

Commission amends part 284, Chapter I, 

Title 18, Code of Federal Regulations, as 

amended at 75 FR 29404 on May 26, 

2010, as follows. 

PART 284—CERTAIN SALES AND 

TRANSPORTATION OF NATURAL GAS 

UNDER THE NATURAL GAS POLICY 

ACT OF 1978 AND RELATED 

AUTHORITIES 

■ 1. The authority citation for part 284 

continues to read as follows: 

Authority: 15 U.S.C. 717–717w, 3301– 

3432; 42 U.S.C. 7101–7352; 43 U.S.C. 1331– 

1356. 

■ 2. In § 284.126, as amended at 75 FR 

29419 on May 26, 2010, paragraphs 

(b)(1)(vi), (b)(1)(viii), and (b)(2) are 

revised to read as follows: 

§ 284.126 Reporting requirements. 

* * * * * 

(b) * * * 

(1) * * * 

(vi) The duration of the contract, 

specifying the beginning and (for firm 

contracts only) ending month and year 

of the current agreement; 

* * * * * 

(viii) Annual revenues received for 

each shipper, excluding revenues from 

storage services. The report should 

separately state revenues received under 

each component, and need only be 

reported every fourth quarter. 

(2) The quarterly Form No. 549D 

report for the period January 1 through 

March 31 must be filed on or before 

June 1. The quarterly report for the 

period April 1 through June 30 must be 

filed on or before September 1. The 

quarterly report for the period July 1 

through September 30 must be filed on 

or before December 1. The quarterly 

report for the period October 1 through 

December 31 must be filed on or before 

March 1. 

* * * * * 

[FR Doc. 2010–32112 Filed 12–22–10; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 602 

[TD 9512] 

RIN 1545–BF08 

Nuclear Decommissioning Funds 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

regulations under section 468A of the 

Internal Revenue Code relating to 

deductions for contributions to trusts 

maintained for decommissioning 

nuclear power plants. These final 

regulations affect taxpayers that own an 

interest in a nuclear power plant and 

reflect recent statutory changes. The 

corresponding temporary regulations are 

removed. 

DATES: Effective Date: These regulations 

are effective on December 23, 2010. 

Applicability Dates: For dates of 

applicability, see §§ 1.468A–9, 1.468A– 

3, and 1.468A–8. 

FOR FURTHER INFORMATION CONTACT: 

Patrick S. Kirwan, (202) 622–3110 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these final regulations has 

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80698 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 

been reviewed and approved by the 

Office of Management and Budget in 

accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)) under control number 1545– 

2091. The collections of information in 

these final regulations are contained in 

§§ 1.468A–3, 1.468A–4, 1.468A–7, and 

1.468A–8. Responses to these 

collections of information are required 

to obtain a tax benefit. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the collection of information 

displays a valid OMB control number. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

Background 

On December 31, 2007, the IRS and 

Treasury Department issued a notice of 

proposed rulemaking (REG–147290–05, 

2008–10 IRB 576 [72 FR 74213]) 

regarding section 468A of the Internal 

Revenue Code of 1986 (Code). This 

proposed rulemaking consisted of a 

general updating of the prior regulations 

under section 468A and, in particular, 

reflected the changes to section 468A 

made by section 1310 of the Energy 

Policy Act of 2005 (the Energy Policy 

Act), Public Law 109–58 (119 Stat. 594). 

Written, electronic, and oral 

comments responding to the notice of 

proposed rulemaking were received. A 

public hearing was held on June 17, 

2008. After consideration of all of the 

comments received as well as those 

comments made at the hearing, these 

final regulations generally adopt the 

rules of the proposed regulations with 

certain clarifications and modifications. 

The significant comments and 

modifications are discussed in this 

preamble. 

1. Definitional Matters 

A. Definition of Nuclear 

Decommissioning Costs 

One commentator on the proposed 

regulations suggested that the definition 

of ‘‘nuclear decommissioning costs’’ be 

expanded to explicitly include two 

types of costs that have generally been 

recognized by the IRS in letter rulings 

to be included within the ambit of 

nuclear decommissioning costs. Those 

two types of costs are (1) costs to 

decommission structures, systems, and 

components from a nuclear power plant 

that continues to produce electric 

energy; and (2) costs to store spent 

nuclear fuel pending delivery to a 

permanent repository. The IRS and 

Treasury agree that changes such as 

those proposed by this commentator 

bring clarity to the final regulations. 

Accordingly, § 1.468A–1(b)(6) of the 

final regulations provides that costs for 

the final decommissioning of structures, 

systems, and components from a 

nuclear power plant that continues to 

produce electric energy and costs 

associated with facilities to store spent 

nuclear fuel pending delivery to a 

permanent repository are included 

within the definition of nuclear 

decommissioning costs. 

B. Estimated Useful Life 

Several commentators observed that 

the term ‘‘estimated useful life’’ was 

used for two different purposes in the 

proposed regulations, and that the date 

on which such estimated useful life 

would end might differ, depending on 

the purpose for which the term was 

used. Estimated useful life of a nuclear 

power plant is used to calculate the 

schedule of ruling amounts in § 1.468A– 

3(c)(1). In addition, the same term is 

used in § 1.468A–8(b)(1) and (c)(1) to 

determine the years over which a 

taxpayer may deduct a special transfer 

made under § 1.468A–8. One 

commentator suggested that the IRS add 

a provision recognizing that the term is 

used for more than one purpose and that 

the date of the end of such period may 

differ depending on the use of the term. 

The IRS and Treasury agree with this 

suggestion and have incorporated that 

change in § 1.468A–3(c)(2)(iii) of the 

final regulations. 

2. Matters Relating to Special Transfers 

and Schedules of Deduction Amounts 

A. General Comment 

One commentator suggested that the 

proposed requirement that a taxpayer 

obtain a schedule of deduction amounts 

with respect to a special transfer was 

not required by the statute and indeed 

such requirement constituted an 

impermissible overreaching by the IRS 

and Treasury. The commentator 

suggested that, in lieu of a schedule of 

deduction amounts, the final regulations 

simply provide that the IRS will rule on 

the maximum special transfer amount 

and allow the taxpayer to calculate the 

pro rata portion of that amount over the 

remaining estimated useful life of the 

nuclear power plant. The commentator 

expressed concern that the ruling from 

the IRS might provide a schedule of 

deduction amounts in excess of the 

actual appropriate deductible amounts 

or, alternatively, that the schedule 

would not allow a taxpayer to deduct 

more than a pro rata share of the amount 

that the taxpayer may choose to 

contribute, even if that amount is less 

than the maximum special transfer 

amount. The IRS and Treasury do not 

believe that these concerns justify a 

change in the regulations. Section 468A 

permits deduction of the amount of a 

special transfer and requires the 

taxpayer to obtain from the Secretary a 

new schedule of ruling amounts in 

connection with the transfer. The IRS 

and Treasury believe that the schedule 

of deduction amounts is an appropriate 

adjunct to the schedule of ruling 

amounts required in connection with 

the special transfer. Moreover, concerns 

regarding the deduction amounts 

provided in the schedule of deduction 

amounts are unwarranted. When the IRS 

issues a schedule of deduction amounts, 

that schedule allocates the requested 

special transfer amount (or the 

maximum allowable special transfer 

amount if the taxpayer has requested an 

excessive amount) over the remaining 

estimated useful life of the nuclear 

power plant. Thus, the schedule will 

not provide for deductions in excess of 

the actual appropriate deductible 

amounts. With respect to the 

commentator’s alternative concern, the 

IRS and Treasury believe that the rule 

limiting deductions to a pro rata share 

of the amount of the special transfer 

(rather than a pro rata share of the 

maximum amount that could have been 

transferred) is consistent with section 

468A(f)(2)(A), which provides that the 

deduction allowed ‘‘for any transfer’’ 

shall be allowed ratably over the 

remaining useful life. 

B. Deemed Payment Date for Special 

Transfers 

Several commentators observed that 

the proposed regulations did not specify 

the deemed payment date for special 

transfers. While taxpayers generally 

assumed that the deemed payment date 

for special transfers was the same as that 

for the contributions of ruling amounts, 

they requested that the IRS resolve the 

ambiguity. The IRS and Treasury agree 

that this possible ambiguity should be 

resolved and, therefore, clarifying 

changes are included in §§ 1.468A– 

7(b)(4) and 1.468A–8(a). 

C. Extension of Deadline for Actual 

Payment of Special Transfers 

Several commentators requested that 

the IRS and Treasury provide certain 

transitional relief for taxpayers seeking 

to make special transfers relating to 

taxable years in which taxpayers did not 

have the benefit of the clarifications 

provided in these regulations. The 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 80699 

transitional relief requested included an 

extension of the time to request a ruling 

regarding the special transfer for a 

taxable year as well as a rule allowing 

the special transfer to relate back to that 

year. The final regulations provide the 

requested transitional relief. Under 

§ 1.468A–8 (d)(1) the ruling request for 

a special transfer relating to a taxable 

year beginning in 2006, 2007, 2008, or 

2009 is timely if filed with the IRS 

within 60 days after the date of 

publication of these final regulations in 

the Federal Register. Under § 1.468A– 

8(a), a special transfer that the taxpayer 

designates as relating to such a year is 

deemed made during the year provided 

that the special transfer amount is 

transferred to the qualified fund within 

90 days after the taxpayer receives a 

ruling from the Secretary allowing such 

special transfer. 

One commentator noted that the 

proposed regulations do not address the 

case of a taxpayer that has requested a 

schedule of deduction amounts from the 

IRS but has not received the necessary 

ruling prior to the payment deadline. 

Under § 1.468A–3(g), a taxpayer that has 

requested a ruling from the IRS on a 

schedule of ruling amounts may 

contribute the ruling amount proposed 

in its ruling request in those 

circumstances. The commentator 

requested a similar rule for special 

transfers. The final regulations provide 

such a rule for special transfers in 

§ 1.468A–8(c). 

D. Special Transfers With Respect to 

Nuclear Power Plants That Have Been 

Transferred 

A commentator suggested that the 

owner of a nuclear power plant that had 

a qualifying percentage of less than 100 

percent under pre-2005 law should be 

allowed to make a special transfer so 

that the entire cost of decommissioning 

the plant can be covered by the 

qualified fund even if the current owner 

purchased the plant and was not the 

owner prior to the enactment of section 

468A. The final regulations clarify that 

when § 1.468A–6 (relating to 

nonrecognition of gain or loss on certain 

fund transfers) applies to the transfer of 

a qualified fund (or part or all of its 

assets) the transferee succeeds to the 

transferor’s qualifying percentage. If 

§ 1.468A–6 does not apply to the 

transfer and the transferee’s fund is 

treated as a completely new fund, the 

transferee cannot make a special transfer 

but the entire cost of decommissioning 

the plant can be funded by increasing 

annual deductible contributions over 

the remaining useful life of the plant 

through a schedule of ruling amounts 

that is determined without regard to the 

qualifying percentage limitation that 

applied under pre-2005 law. 

E. Special Transfer Over More Than One 

Year 

A commentator suggested that the 

regulations should allow a taxpayer 

making a special transfer over several 

years to get a single ruling for the entire 

special transfer. It has been the ruling 

policy of the IRS to provide, in a single 

ruling, multiple schedules of deduction 

amounts where a taxpayer requests 

rulings on special transfers made over 

several years. The final regulations 

incorporate this ruling policy in 

§ 1.468A–8(c)(2). 

F. Acceleration of Special Transfer 

Deduction 

Although deductions for special 

transfers are generally allowed ratably 

over the plant’s remaining useful life, a 

special rule applies if the fund is 

transferred before the end of the 

remaining useful life. In that case, the 

entire remaining deduction for the 

special transfer is allowed in the year 

the fund is transferred. This acceleration 

allows the taxpayer to close its books on 

the asset. Section 1.468A–8T(b)(3)(ii) of 

the temporary regulations provides that, 

in the case of a transfer of a qualified 

nuclear decommissioning fund to a 

related person, the transferee’s ruling 

amounts will be adjusted to the extent 

necessary to offset the benefit provided 

by the acceleration of deductions. One 

commentator suggested that the 

acceleration of the special transfer 

deduction should be viewed as on offset 

to the timing detriment the transferor 

previously incurred because it was 

unable to fully fund decommissioning 

costs under pre-2005 law. The 

commentator further suggested that 

transfers to affiliates should not be 

treated less favorably than transfers to 

non-affiliates. The IRS and Treasury 

recognize that the transferor may have 

incurred a timing detriment, but section 

468A clearly provides that this 

detriment is to be offset ratably over the 

remaining estimated useful life of the 

plant rather than all at once. While the 

statute provides for acceleration of the 

deduction when the fund is transferred, 

the IRS and Treasury continue to 

believe that such acceleration provides 

an inappropriate benefit to a taxpayer 

that directly or indirectly retains an 

interest in the plant and that failure to 

recapture the benefit in those 

circumstances would frustrate the intent 

of Congress in providing for the ratable 

deduction of the special transfer 

amount. Thus, the final regulations 

retain the limitation on the acceleration 

of the deduction for special transfers 

where the plant is transferred to an 

affiliated party. 

G. Basis of Property Contributed in a 

Special Transfer 

Taxpayers may make special transfers 

of property other than cash. Section 

468A(f)(2)(D) provides that no gain or 

loss is recognized on the transfer and 

that for transfers of appreciated property 

the amount of the deduction shall not 

exceed the adjusted basis of the 

property. The legislative history 

(footnote 16 of H. Rep. 109–45) includes 

the following discussion relating to such 

transfers: 

A taxpayer recognizes no gain or loss on 

the contribution of property to a qualified 

fund under this special rule. The qualified 

fund will take a transferred (carryover) basis 

in such property. Correspondingly, a 

taxpayer’s deduction (over the estimated life 

of the powerplant) is to be based on the 

adjusted tax basis of the property contributed 

rather than the fair market value of such 

property. 

Although the legislative history does not 

distinguish between appreciated 

property and property with a value less 

than its basis (built-in loss property), the 

statutory language makes it clear that 

the rule basing the deduction on the 

property’s adjusted tax basis applies 

only to appreciated property. 

Accordingly, the proposed regulations 

provided that the deduction for property 

contributed in a special transfer is 

limited to the lesser of fair market value 

or the transferor’s adjusted basis in the 

property. One commentator disagreed 

with this rule and recommended that 

the regulations allow a deduction equal 

to basis for contributions of built-in loss 

property. The commentator noted that 

section 362, a nonrecognition provision 

similar to section 468A, provides for a 

stepped-down basis in the hands of the 

transferee for built-in loss property. The 

commentator argued for adoption of 

rules similar to those in section 362 so 

that the transferor would get a 

deduction of its adjusted basis in the 

property and the qualified fund would 

get a ‘‘stepped-down’’ basis of the fair 

market value at the time of transfer. The 

commentator also noted the unfairness 

of limiting the deduction for built-in 

loss property to fair market value where 

the transferee is taxed at a higher rate 

than the qualified fund. 

The IRS and Treasury recognize that 

the transferor and the fund could 

achieve generally the same result as the 

commentator proposes by selling the 

loss property and contributing the 

proceeds to the qualified fund which 

could use the proceeds to repurchase 

the property. To eliminate the need for 

such transactions, the final regulations 

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80700 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 

provide that the transferor may deduct 

the adjusted basis of built-in loss 

property contributed to a fund if the 

fund elects to treat the fair market value 

of the property as its adjusted basis. 

Further, the final regulations provide 

that this election may be made and a 

deduction equal to basis will be allowed 

for built-in loss property contributed 

before December 23, 2010. In such 

cases, the election may be made and the 

deduction equal to basis may be claimed 

by filing an amended tax return. 

H. Miscellaneous Special Transfer 

Issues 

(i) One commentator noted that the 

schedule of deduction amounts is 

calculated based on the ‘‘pre-2005 

nonqualifying amount’’ and 

recommends that this be changed to the 

pre-2006 nonqualifying amount. The 

commentator correctly notes that, while 

the changes to section 468A were made 

by the Energy Policy Act of 2005, those 

changes were effective for tax years 

beginning after December 31, 2005. The 

modifier ‘‘pre-2005’’ refers to the state of 

section 468A prior to the changes made 

by the Energy Policy Act of 2005. The 

pre-2005 nonqualifying amount referred 

to in the proposed regulations was fixed 

years before and was not determined by 

reference to the effective date of the 

Energy Policy Act of 2005. Thus, the 

modifier ‘‘pre-2005 nonqualifying 

amount’’ is retained in the final 

regulations. 

(ii) Section 1.468A–3(f)(1)(iii) of the 

proposed regulations requires that a 

taxpayer request a new schedule of 

ruling amounts when requesting a 

schedule of deduction amounts. The 

revised schedule of ruling amounts 

must apply beginning with the first 

taxable year for which a deduction is 

allowed under the schedule of 

deduction amounts. One commentator 

suggested that the new schedule of 

ruling amounts should not apply until 

the following year because the special 

transfer may actually occur at any time 

during the first taxable year in which a 

deduction is allowed under the 

schedule of deduction amounts (and 

under the deemed payment rules may 

occur during the first two-and-a-half 

months of the following taxable year). 

Section 1.468A–3(f)(1)(iii) of the final 

regulations adopts this suggestion. 

(iii) Section 1.468A–8(a)(2) of the 

proposed regulations provides that the 

present value of estimated future 

decommissioning costs is determined as 

of the first day of the taxable year of the 

taxpayer in which the special transfer is 

made. One commentator noted that the 

special transfer may be made after the 

first day of the taxable year and 

suggested that the regulations permit 

determinations of present value as of an 

alternative date. The final regulations 

permit the use of an alternative date that 

is not later than the date on which the 

special transfer is made if the taxpayer 

establishes that the determination of 

present value as of such date is 

reasonable and consistent with the 

principles and provisions of § 1.468A–8. 

3. Transfers of Nuclear Power Plants 

and Their Associated Qualified Funds 

A. Ambiguity Relating to a Plant That 

has Ceased Producing Electric Energy 

The proposed regulations, at 

§ 1.468A–6(a), provide that, for 

purposes of determining the tax 

consequences of the transfer of a 

qualified fund associated with a nuclear 

power plant, a nuclear power plant 

includes a plant that previously 

qualified as a nuclear power plant but 

that has permanently ceased producing 

electric energy. One commentator notes 

that this provision apparently allows the 

tax-free transfer of a qualified fund 

associated with a plant that has 

permanently ceased producing electric 

energy if all the other requirements of 

§ 1.468A–6 are satisfied. That was the 

intended effect of the provision and it 

is retained in the final regulations. 

B. Tax-Free Transfer of a Qualified Fund 

The proposed regulations, at 

§ 1.468A–6(b)(3)(i), require that, in order 

to qualify as a tax-free transfer of a 

qualified fund, the transferee of a 

nuclear power plant and its associated 

qualified fund must acquire that portion 

of the qualified fund equal to the 

proportionate amount of the nuclear 

power plant acquired. One commentator 

expressed disagreement with this rule, 

arguing that the rule as it exists requires 

a choice between potential 

disqualification of the entire fund and 

over-funding the qualified fund. 

The commentator’s position would 

allow for the removal of assets at 

transfer when their value is high and 

perhaps leave the fund without 

sufficient assets to provide for 

decommissioning. This is contrary to 

the general rule of section 468A, which 

does not permit withdrawals from a 

qualified fund except to pay for 

decommissioning and the cost of 

administering the fund. The IRS and 

Treasury believe a primary purpose of 

section 468A is to ensure that adequate 

assets will be available to decommission 

the nuclear power plant. Given the long 

life of nuclear power plants and the 

variability of investment returns, what 

may appear to be overfunding in one 

decade may be inadequate in the next. 

Moreover, the IRS and Treasury believe 

that overfunding can be adequately 

addressed by reducing future payments 

to the qualified funds. 

4. Miscellaneous Matters 

A. Minor Changes in Wording To 

Reflect Deregulation in Certain 

Jurisdictions 

The proposed regulations, in 

§§ 1.468A–3(a)(2)(i) and 1.468A– 

3(e)(2)(vi)(H), refer to ‘‘amounts 

collected for’’ the qualified fund. One 

commentator noted that in certain 

jurisdictions that have undergone 

deregulation, amounts are no longer 

collected for the qualified funds. The 

final regulations refer, instead, to the 

‘‘assets of’’ the qualified fund. 

B. New Schedule of Ruling Amounts 

When License is Extended 

Section 1.468A–3(f)(1)(iv) of the 

proposed regulations requires that a 

taxpayer request a revised schedule of 

ruling amounts by the deemed payment 

deadline for the year in which the 

operating license for the nuclear power 

plant is extended by the Nuclear 

Regulatory Commission (NRC). One 

commentator requested that the 

deadline for requesting a revised 

schedule of ruling amounts be extended 

to the deemed payment deadline for the 

year following the year in which the 

operating license is extended by the 

NRC. The commentator argued that the 

NRC could act late in the year and give 

the taxpayer little time to prepare the 

request for the revised schedule of 

ruling amounts. The IRS and Treasury 

believe that the deadline in the 

proposed regulations provides sufficient 

time to prepare and submit a request for 

a revised schedule of ruling amounts 

and it is retained in the final 

regulations. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) and (d) of the Administrative 

Procedure Act (5 U.S.C. chapter 5) does 

not apply to these regulations. It is 

hereby certified that this regulation will 

not have a significant economic impact 

on a substantial number of small 

entities. The proposed regulations do 

not impose a collection of information 

on small entities. Accordingly, a 

regulatory flexibility analysis is not 

required. Pursuant to section 7805(f) of 

the Code, the notice of proposed 

rulemaking preceding these regulations 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 80701 

was submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on their 

impact on small business. 

Drafting Information 

The principal author of these 

regulations is Patrick S. Kirwan, Office 

of Associate Chief Counsel 

(Passthroughs and Special Industries). 

However, other personnel from the IRS 

and Treasury Department participated 

in their development. 

List of Subjects 

26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

26 CFR Part 602 

Reporting and recordkeeping 

requirements. 

Amendments to the Regulations 

■ Accordingly, 26 CFR parts 1 and 602 

are amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 is amended by adding an entry 

in numerical order to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

Section 1.468A–5 also issued under 26 

U.S.C. 468A(e)(5). * * * 

1.468A–0T through 1.468A–9T [Removed] 

■ Par. 2. Sections 1.468A–0T through 

1.468A–9T are removed. 

■ Par. 3. Sections 1.468A–0 through 

1.468A–9 are added to read as follows: 

§ 1.468A–0 Nuclear decommissioning 

costs; table of contents. 

This section lists the paragraphs 

contained in §§ 1.468A–1 through 

1.468A–9. 

§ 1.468A–1 Nuclear decommissioning 

costs; general rules. 

(a) Introduction. 

(b) Definitions. 

(c) Special rules applicable to certain 

experimental nuclear facilities. 

§ 1.468A–2 Treatment of electing taxpayer. 

(a) In general. 

(b) Limitation on payments to a 

nuclear decommissioning fund. 

(1) In general. 

(2) Excess contributions not 

deductible. 

(c) Deemed payment rules. 

(1) In general. 

(2) Cash payment by customer. 

(d) Treatment of distributions. 

(1) In general. 

(2) Exceptions to inclusion in gross 

income. 

(i) Payment of administrative costs 

and incidental expenses. 

(ii) Withdrawals of excess 

contributions. 

(iii) Actual distributions of amounts 

included in gross income as deemed 

distributions. 

(e) Deduction when economic 

performance occurs. 

§ 1.468A–3 Ruling amount. 

(a) In general. 

(b) Level funding limitation. 

(c) Funding period. 

(d) Decommissioning costs allocable 

to a fund. 

(1) General rule. 

(2) Total estimated cost of 

decommissioning. 

(3) Taxpayer’s share. 

(e) Manner of requesting schedule of 

ruling amounts. 

(1) In general. 

(2) Information required. 

(3) Administrative procedures. 

(f) Review and revision of schedule of 

ruling amounts. 

(1) Mandatory review. 

(2) Elective review. 

(3) Determination of revised schedule 

of ruling amounts. 

(g) Special rule permitting payments 

to a nuclear decommissioning fund 

before receipt of an initial or revised 

ruling amount applicable to a taxable 

year. 

§ 1.468A–4 Treatment of nuclear 

decommissioning fund. 

(a) In general. 

(b) Modified gross income. 

(c) Special rules. 

(1) Period for computation of 

modified gross income. 

(2) Gain or loss upon distribution of 

property by a fund. 

(3) Denial of credits against tax. 

(4) Other corporate taxes inapplicable. 

(d) Treatment as corporation for 

purposes of subtitle F. 

§ 1.468A–5 Nuclear decommissioning 

fund—miscellaneous provisions. 

(a) Qualification requirements. 

(1) In general. 

(2) Limitation on contributions. 

(3) Limitation on use of fund. 

(i) In general. 

(ii) Definition of administrative costs 

and expenses. 

(4) Trust provisions. 

(b) Prohibitions against self-dealing. 

(1) In general. 

(2) Self-dealing defined. 

(3) Disqualified person defined. 

(c) Disqualification of nuclear 

decommissioning fund. 

(1) In general. 

(2) Exception to disqualification. 

(i) In general. 

(ii) Excess contribution defined. 

(iii) Taxation of income attributable to 

an excess contribution. 

(3) Effect of disqualification. 

(4) Further effects of disqualification. 

(d) Termination of nuclear 

decommissioning fund upon substantial 

completion of decommissioning. 

(1) In general. 

(2) Additional rules. 

(3) Substantial completion of 

decommissioning defined. 

§ 1.468A–6 Disposition of an interest in a 

nuclear power plant. 

(a) In general. 

(b) Requirements. 

(c) Tax consequences. 

(1) The transferor and its Fund. 

(2) The transferee and its Fund. 

(3) Basis. 

(d) Determination of proportionate 

amount. 

(e) Calculation of schedule of ruling 

amounts and schedule of deduction 

amounts for dispositions described in 

this section. 

(1) Transferor. 

(i) Taxable year of disposition. 

(ii) Taxable years after the disposition. 

(2) Transferee. 

(i) Taxable year of disposition. 

(ii) Taxable years after the disposition. 

(3) Examples. 

(f) Anti-abuse provision. 

§ 1.468A–7 Manner of and time for making 

election. 

(a) In general. 

(b) Required information. 

§ 1.468A–8 Special transfers to qualified 

funds pursuant to section 468A(f). 

(a) General rule. 

(1) In general. 

(2) Pre-2005 nonqualifying amount. 

(i) In general. 

(ii) Pre-2005 nonqualifying amount of 

transferee. 

(3) Transfers in multiple years. 

(4) Deemed payment rules. 

(i) In general. 

(ii) Special rule for certain transfers. 

(b) Deduction for amounts transferred. 

(1) In general. 

(2) Amount of deduction. 

(i) General Rule. 

(ii) Election. 

(A) In general. 

(B) Manner of making election. 

(C) Election allowed for property 

transferred prior to December 23, 2010. 

(3) Denial of deduction for previously 

deducted amounts. 

(4) Transfers of qualified nuclear 

decommissioning funds. 

(5) Special rules. 

(i) Gain or loss not recognized on 

transfers to fund. 

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(ii) Taxpayer basis in fund. 

(iii) Fund basis in transferred 

property. 

(A) In general. 

(B) Basis in case of election. 

(c) Schedule of deductions required. 

(1) In general. 

(2) Transfers in multiple taxable 

years. 

(3) Transfer of partial interest in fund. 

(4) Special transfer permitted before 

receipt of schedule. 

(d) Manner of requesting schedule of 

deduction amounts. 

(1) In general. 

(2) Information required. 

(3) Statement required. 

(4) Administrative procedures. 

§ 1.468A–9 Effective/applicability date. 

§ 1.468A–1 Nuclear decommissioning 

costs; general rules. 

(a) Introduction. Section 468A 

provides an elective method for taking 

into account nuclear decommissioning 

costs for Federal income tax purposes. 

In general, an eligible taxpayer that 

elects the application of section 468A 

pursuant to the rules contained in 

§ 1.468A–7 is allowed a deduction (as 

determined under § 1.468A–2) for the 

taxable year in which the taxpayer 

makes a cash payment to a nuclear 

decommissioning fund. Taxpayers using 

an accrual method of accounting that do 

not elect the application of section 468A 

are not allowed a deduction for nuclear 

decommissioning costs prior to the 

taxable year in which economic 

performance occurs with respect to such 

costs (see section 461(h)). 

(b) Definitions. The following terms 

are defined for purposes of section 468A 

and §§ 1.468A–1 through 1.468A–9: 

(1) The term eligible taxpayer means 

any taxpayer that possesses a qualifying 

interest in a nuclear power plant 

(including a nuclear power plant that is 

under construction). 

(2) The term qualifying interest 

means— 

(i) A direct ownership interest; and 

(ii) A leasehold interest in any portion 

of a nuclear power plant if— 

(A) The holder of the leasehold 

interest is primarily liable under Federal 

or State law for decommissioning such 

portion of the nuclear power plant; and 

(B) No other person establishes a 

nuclear decommissioning fund with 

respect to such portion of the nuclear 

power plant. 

(3) The term direct ownership interest 

includes an interest held as a tenant in 

common or joint tenant, but does not 

include stock in a corporation that owns 

a nuclear power plant or an interest in 

a partnership that owns a nuclear power 

plant. Thus, in the case of a partnership 

that owns a nuclear power plant, the 

election under section 468A must be 

made by the partnership and not by the 

partners. In the case of an 

unincorporated organization described 

in § 1.761–2(a)(3) that elects under 

section 761(a) to be excluded from the 

application of subchapter K, each 

taxpayer that is a co-owner of the 

nuclear power plant is eligible to make 

a separate election under section 468A. 

(4) The terms nuclear 

decommissioning fund and qualified 

nuclear decommissioning fund mean a 

fund that satisfies the requirements of 

§ 1.468A–5. The term nonqualified fund 

means a fund that does not satisfy those 

requirements. 

(5) The term nuclear power plant 

means any nuclear power reactor that is 

used predominantly in the trade or 

business of the furnishing or sale of 

electric energy. Each unit (that is, 

nuclear reactor) located on a multi-unit 

site is a separate nuclear power plant. 

The term nuclear power plant also 

includes the portion of the common 

facilities of a multi-unit site allocable to 

a unit on that site. 

(6) The term nuclear 

decommissioning costs or 

decommissioning costs includes all 

otherwise deductible expenses to be 

incurred in connection with the 

entombment, decontamination, 

dismantlement, removal and disposal of 

the structures, systems and components 

of a nuclear power plant, whether that 

nuclear power plant will continue to 

produce electric energy or has 

permanently ceased to produce electric 

energy. Such term includes all 

otherwise deductible expenses to be 

incurred in connection with the 

preparation for decommissioning, such 

as engineering and other planning 

expenses, and all otherwise deductible 

expenses to be incurred with respect to 

the plant after the actual 

decommissioning occurs, such as 

physical security and radiation 

monitoring expenses. Such term also 

includes costs incurred in connection 

with the construction, operation, and 

ultimate decommissioning of a facility 

used solely to store, pending acceptance 

by the government for permanent 

storage or disposal, spent nuclear fuel 

generated by the nuclear power plant or 

plants located on the same site as the 

storage facility. Such term does not 

include otherwise deductible expenses 

to be incurred in connection with the 

disposal of spent nuclear fuel under the 

Nuclear Waste Policy Act of 1982 (Pub. 

L. 97–425). An expense is otherwise 

deductible for purposes of this 

paragraph (b)(6) if it would be 

deductible under chapter 1 of the 

Internal Revenue Code without regard to 

section 280B. 

(7) The term public utility commission 

means any State or political subdivision 

thereof, any agency, instrumentality or 

judicial body of the United States, or 

any judicial body, commission or other 

similar body of the District of Columbia 

or of any State or any political 

subdivision thereof that establishes or 

approves rates for the furnishing or sale 

of electric energy. 

(8) The term ratemaking proceeding 

means any proceeding before a public 

utility commission in which rates for 

the furnishing or sale of electric energy 

are established or approved. Such term 

includes a generic proceeding that 

applies to two or more taxpayers that 

are subject to the jurisdiction of a single 

public utility commission. 

(9) The term special transfer means 

any transfer of funds to a qualified 

nuclear decommissioning fund pursuant 

to § 1.468A–8. 

(c) Special rules applicable to certain 

experimental nuclear facilities. (1) The 

owner of a qualifying interest in an 

experimental nuclear facility possesses 

a qualifying interest in a nuclear power 

plant for purposes of paragraph (b) of 

this section if such person is engaged in 

the trade or business of the furnishing 

or sale of electric energy. 

(2) An owner of stock in a corporation 

that owns an experimental nuclear 

facility possesses a qualifying interest in 

a nuclear power plant for purposes of 

paragraph (b)(1) of this section if— 

(i) Such stockholder satisfies the 

conditions of paragraph (c)(1) of this 

section; and 

(ii) The corporation that directly owns 

the facility is not engaged in the trade 

or business of the furnishing or sale of 

electric energy. 

(3) For purposes of this paragraph (c), 

an experimental nuclear facility is a 

nuclear power reactor that is used 

predominantly for the purpose of 

conducting experimentation and 

research. 

§ 1.468A–2 Treatment of electing taxpayer. 

(a) In general. An eligible taxpayer 

that elects the application of section 

468A pursuant to the rules contained in 

§ 1.468A–7 (an electing taxpayer) is 

allowed a deduction for the taxable year 

in which the taxpayer makes a cash 

payment (or is deemed to make a cash 

payment as provided in paragraph (c) of 

this section) to a nuclear 

decommissioning fund and for any 

taxable year in which a deduction is 

allowed for a special transfer described 

in § 1.468A–8. The amount of the 

deduction for any taxable year equals 

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the total amount of cash payments made 

(or deemed made) by the electing 

taxpayer to a nuclear decommissioning 

fund (or nuclear decommissioning 

funds) during such taxable year under 

this section, plus any amount allowable 

as a deduction in that taxable year for 

a special transfer described in § 1.468A– 

8. The amount of a special transfer 

permitted under § 1.468A–8 is not 

treated as a cash payment for purposes 

of this paragraph (a), and a taxpayer 

making a special transfer is allowed a 

ratable deduction in each taxable year 

during the remaining useful life of the 

nuclear power plant for the special 

transfer. A payment may not be made 

(or deemed made) to a nuclear 

decommissioning fund before the first 

taxable year in which all of the 

following conditions are satisfied: 

(1) The construction of the nuclear 

power plant to which the nuclear 

decommissioning fund relates has 

commenced. 

(2) A ruling amount is applicable to 

the nuclear decommissioning fund (see 

§ 1.468A–3). 

(b) Limitation on payments to a 

nuclear decommissioning fund—(1) In 

general. For purposes of paragraph (a) of 

this section, the maximum amount of 

cash payments made (or deemed made) 

to a nuclear decommissioning fund 

under paragraph (a) of this section 

during any taxable year shall not exceed 

the ruling amount applicable to the 

nuclear decommissioning fund for such 

taxable year (as determined under 

§ 1.468A–3). 

(2) Excess contributions not 

deductible. If the amount of cash 

payments made (or deemed made) to a 

nuclear decommissioning fund during 

any taxable year exceeds the limitation 

of paragraph (b)(1) of this section, the 

excess is not deductible by the electing 

taxpayer. In addition, see paragraph (c) 

of § 1.468A–5 for rules which provide 

that the Internal Revenue Service may 

disqualify a nuclear decommissioning 

fund if the amount of cash payments 

made (or deemed made) to a nuclear 

decommissioning fund during any 

taxable year exceeds the limitation of 

paragraph (b)(1) of this section. 

(3) Special transfer disregarded. The 

amount of a special transfer permitted 

under § 1.468A–8 is not treated as a 

cash payment for purposes of this 

paragraph (b). 

(c) Deemed payment rules—(1) In 

general. The amount of any cash 

payment made by an electing taxpayer 

to a nuclear decommissioning fund on 

or before the 15th day of the third 

calendar month after the close of any 

taxable year (the deemed payment 

deadline date) shall be deemed made 

during such taxable year if the electing 

taxpayer irrevocably designates the 

amount as relating to such taxable year 

on its timely filed Federal income tax 

return for such taxable year (see 

§ 1.468A–7(b)(4)(iii) and (iv) for rules 

relating to such designation). 

(2) Cash payment by customer. The 

amount of any cash payment made by 

a customer of an electing taxpayer to a 

nuclear decommissioning fund of such 

electing taxpayer shall be deemed made 

by the electing taxpayer if the amount 

is included in the gross income of the 

electing taxpayer in the manner 

prescribed by section 88 and § 1.88–1. 

(d) Treatment of distributions—(1) In 

general. Except as otherwise provided 

in paragraph (d)(2) of this section, the 

amount of any actual or deemed 

distribution from a nuclear 

decommissioning fund shall be 

included in the gross income of the 

electing taxpayer for the taxable year in 

which the distribution occurs. The 

amount of any distribution of property 

equals the fair market value of the 

property on the date of the distribution. 

See § 1.468A–5(c) and (d) for rules 

relating to the deemed distribution of 

the assets of a nuclear decommissioning 

fund in the case of a disqualification or 

termination of the fund. A distribution 

from a nuclear decommissioning fund 

shall include an expenditure from the 

fund or the use of the fund’s assets— 

(i) To satisfy, in whole or in part, the 

liability of the electing taxpayer for 

decommissioning costs of the nuclear 

power plant to which the fund relates; 

and 

(ii) To pay administrative costs and 

other incidental expenses of the fund. 

(2) Exceptions to inclusion in gross 

income—(i) Payment of administrative 

costs and incidental expenses. The 

amount of any payment by a nuclear 

decommissioning fund for 

administrative costs or other incidental 

expenses of such fund (as defined in 

§ 1.468A–5(a)(3)(ii)) shall not be 

included in the gross income of the 

electing taxpayer unless such amount is 

paid to the electing taxpayer (in which 

case the amount of the payment is 

included in the gross income of the 

electing taxpayer under section 61). 

(ii) Withdrawals of excess 

contributions. The amount of a 

withdrawal of an excess contribution (as 

defined in § 1.468A–5(c)(2)(ii)) by an 

electing taxpayer pursuant to the rules 

of § 1.468A–5(c)(2) shall not be included 

in the gross income of the electing 

taxpayer. See paragraph (b)(2) of this 

section, which provides that the 

payment of such amount to the nuclear 

decommissioning fund is not deductible 

by the electing taxpayer. 

(iii) Actual distributions of amounts 

included in gross income as deemed 

distributions. If the amount of a deemed 

distribution is included in the gross 

income of the electing taxpayer for the 

taxable year in which the deemed 

distribution occurs, no further amount 

is required to be included in gross 

income when the amount of the deemed 

distribution is actually distributed by 

the nuclear decommissioning fund. The 

amount of a deemed distribution is 

actually distributed by a nuclear 

decommissioning fund as the first actual 

distributions are made by the nuclear 

decommissioning fund on or after the 

date of the deemed distribution. 

(e) Deduction when economic 

performance occurs. An electing 

taxpayer using an accrual method of 

accounting is allowed a deduction for 

nuclear decommissioning costs no 

earlier than the taxable year in which 

economic performance occurs with 

respect to such costs (see section 

461(h)(2)). The amount of nuclear 

decommissioning costs that is 

deductible under this paragraph (e) is 

determined without regard to section 

280B (see § 1.468A–1(b)(6)). A 

deduction is allowed under this 

paragraph (e) whether or not a 

deduction was allowed with respect to 

such costs under section 468A(a) and 

paragraph (a) of this section for an 

earlier taxable year. 

§ 1.468A–3 Ruling amount. 

(a) In general. (1) Except as otherwise 

provided in paragraph (g) of this section 

or in § 1.468A–8 (relating to deductions 

for special transfers into a nuclear 

decommissioning fund), an electing 

taxpayer is allowed a deduction under 

section 468A(a) for the taxable year in 

which the taxpayer makes a cash 

payment (or is deemed to make a cash 

payment) to a nuclear decommissioning 

fund only if the taxpayer has received 

a schedule of ruling amounts for the 

nuclear decommissioning fund that 

includes a ruling amount for such 

taxable year. Except as provided in 

paragraph (a)(4) or (5) of this section, a 

schedule of ruling amounts for a nuclear 

decommissioning fund (schedule of 

ruling amounts) is a ruling (within the 

meaning of § 601.201(a)(2) of this 

chapter) specifying the annual payments 

(ruling amounts) that, over the taxable 

years remaining in the funding period as 

of the date the schedule first applies, 

will result in a projected balance of the 

nuclear decommissioning fund as of the 

last day of the funding period equal to 

(and in no event greater than) the 

amount of decommissioning costs 

allocable to the fund. The projected 

balance of a nuclear decommissioning 

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fund as of the last day of the funding 

period shall be calculated by taking into 

account the fair market value of the 

assets of the fund as of the first day of 

the first taxable year to which the 

schedule of ruling amounts applies and 

the estimated rate of return to be earned 

by the assets of the fund after payment 

of the estimated administrative costs 

and incidental expenses to be incurred 

by the fund (as defined in § 1.468A– 

5(a)(3)(ii)), including all Federal, State 

and local income taxes to be incurred by 

the fund (the after-tax rate of return). 

See paragraph (c) of this section for a 

definition of funding period and 

paragraph (d) of this section for 

guidance with respect to the amount of 

decommissioning costs allocable to a 

fund. 

(2) Each schedule of ruling amounts 

must be consistent with the principles 

and provisions of this section and must 

be based on reasonable assumptions 

concerning— 

(i) The after-tax rate of return to be 

earned by the assets of the qualified 

nuclear decommissioning fund; 

(ii) The total estimated cost of 

decommissioning the nuclear power 

plant (see paragraph (d)(2) of this 

section); and 

(iii) The frequency of contributions to 

a nuclear decommissioning fund for a 

taxable year (for example, monthly, 

quarterly, semi-annual or annual 

contributions). 

(3) The Internal Revenue Service (IRS) 

shall provide a schedule of ruling 

amounts that is identical to the schedule 

of ruling amounts proposed by the 

taxpayer in connection with the 

taxpayer’s request for a schedule of 

ruling amounts (see paragraph 

(e)(2)(viii) of this section), but no 

schedule of ruling amounts shall be 

provided unless the taxpayer’s proposed 

schedule of ruling amounts is consistent 

with the principles and provisions of 

this section and is based on reasonable 

assumptions. If a proposed schedule of 

ruling amounts is not consistent with 

the principles and provisions of this 

section or is not based on reasonable 

assumptions, the taxpayer may propose 

an amended schedule of ruling amounts 

that is consistent with such principles 

and provisions and is based on 

reasonable assumptions. 

(4) The taxpayer bears the burden of 

demonstrating that the proposed 

schedule of ruling amounts is consistent 

with the principles and provisions of 

this section and is based on reasonable 

assumptions. If a public utility 

commission established or approved the 

currently applicable rates for the 

furnishing or sale by the taxpayer of 

electricity from the plant, the taxpayer 

can generally satisfy this burden of 

proof by demonstrating that the 

schedule of ruling amounts is calculated 

using the assumptions used by the 

public utility commission in its most 

recent order. In addition, a taxpayer that 

owns an interest in a deregulated 

nuclear plant may submit assumptions 

used by a public utility commission that 

formerly had regulatory jurisdiction 

over the plant as support for the 

assumptions used in calculating the 

taxpayer’s proposed schedule of ruling 

amounts, with the understanding that 

the assumptions used by the public 

utility commission may be given less 

weight if they are out of date or were 

developed in a proceeding for a 

different taxpayer. The use of other 

industry standards, such as the 

assumptions underlying the taxpayer’s 

most recent financial assurance filing 

with the NRC, are an alternative means 

of demonstrating that the taxpayer has 

calculated its proposed schedule of 

ruling amounts on a reasonable basis. 

Consistency with financial accounting 

statements is not sufficient, in the 

absence of other supporting evidence, to 

meet the taxpayer’s burden of proof 

under this paragraph (a)(4). 

(5) The IRS will approve, at the 

request of the taxpayer, a formula or 

method for determining a schedule of 

ruling amounts (rather than providing a 

schedule specifying a dollar amount for 

each taxable year) if the formula or 

method is consistent with the principles 

and provisions of this section and is 

based on reasonable assumptions. See 

paragraph (f)(1)(ii) of this section for a 

special rule relating to the mandatory 

review of ruling amounts that are 

determined pursuant to a formula or 

method. 

(6) The IRS may, in its discretion, 

provide a schedule of ruling amounts 

that is determined on a basis other than 

the rules of paragraphs (a) through (d) 

of this section if— 

(i) In connection with its request for 

a schedule of ruling amounts, the 

taxpayer explains the need for special 

treatment and sets forth an alternative 

basis for determining the schedule of 

ruling amounts; and 

(ii) The IRS determines that special 

treatment is consistent with the purpose 

of section 468A. 

(b) Level funding limitation. (1) 

Except as otherwise provided in 

paragraph (b)(3) of this section, the 

ruling amount specified in a schedule of 

ruling amounts for any taxable year in 

the funding period (as defined in 

paragraph (c) of this section) shall not 

be less than the ruling amount specified 

in such schedule for any earlier taxable 

year. 

(2) The ruling amount specified in a 

schedule of ruling amounts for a taxable 

year after the end of the funding period 

may be less than the ruling amount 

specified in such schedule for an earlier 

taxable year. 

(3) The ruling amount specified in a 

schedule of ruling amounts for the last 

taxable year in the funding period may 

be less than the ruling amount specified 

in such schedule for an earlier taxable 

year if, when annualized, the amount 

specified for the last taxable year is not 

less than the amount specified for such 

earlier taxable year. The amount 

specified for the last taxable year is 

annualized by— 

(i) Determining the number of days 

between the beginning of the taxable 

year and the end of the plant’s estimated 

useful life; 

(ii) Dividing the amount specified for 

the last taxable year by such number of 

days; and 

(iii) Multiplying the result by the 

number of days in the last taxable year 

(generally 365). 

(c) Funding period—(1) In general. 

For purposes of this section, the funding 

period for a nuclear decommissioning 

fund is the period that— 

(i) Begins on the first day of the first 

taxable year for which a deductible 

payment is made (or deemed made) to 

such nuclear decommissioning fund 

(see § 1.468A–2(a) for rules relating to 

the first taxable year for which a 

payment may be made (or deemed 

made) to a nuclear decommissioning 

fund); and 

(ii) Ends on the last day of the taxable 

year that includes the last day of the 

estimated useful life of the nuclear 

power plant to which the nuclear 

decommissioning fund relates. 

(2) Estimated useful life. The last day 

of the estimated useful life of a nuclear 

power plant is determined under the 

following rules: 

(i) Except as provided in paragraph 

(c)(2)(ii) of this section— 

(A) The last day of the estimated 

useful life of a nuclear power plant that 

has been included in rate base for 

ratemaking purposes in any ratemaking 

proceeding that established rates for a 

period before January 1, 2006, is the 

date used in the first such ratemaking 

proceeding as the estimated date on 

which the nuclear power plant will no 

longer be included in the taxpayer’s rate 

base for ratemaking purposes; 

(B) The last day of the estimated 

useful life of a nuclear power plant that 

is not described in paragraph (c)(2)(i)(A) 

of this section is the last day of the 

estimated useful life of the plant 

determined as of the date it is placed in 

service; 

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(C) A taxpayer with an interest in a 

plant that is not described in paragraph 

(c)(2)(i)(A) of this section may use any 

reasonable method for determining the 

last day of such estimated useful life; 

and 

(D) A reasonable method for purposes 

of paragraph (c)(2)(i)(C) of this section 

may include use of the period for which 

a public utility commission has 

included a comparable nuclear power 

plant in rate base for ratemaking 

purposes. 

(ii) If it can be established that the 

estimated useful life of the nuclear 

power plant will end on a date other 

than the date determined under 

paragraph (c)(2)(i) of this section, the 

taxpayer may use such other date as the 

last day of the estimated useful life but 

is not required to do so. If the last day 

of the estimated useful life was 

determined under paragraph (c)(2)(i)(A) 

of this section and the most recent 

ratemaking proceeding used an 

alternative date as the estimated date on 

which the nuclear power plant will no 

longer be included rate base, the most 

recent ratemaking proceeding will 

generally be treated as establishing such 

alternative date as the last day of the 

estimated useful life. 

(iii) The estimated useful life of a 

nuclear power plant determined for 

purposes of paragraph (c)(1) of this 

section may end on a different date from 

the estimated useful life of a nuclear 

power plant determined for purposes of 

§ 1.468A–8(b)(1) and (c)(1). 

(d) Decommissioning costs allocable 

to a fund. The amount of 

decommissioning costs allocable to a 

nuclear decommissioning fund is 

determined for purposes of this section 

by applying the following rules and 

definitions: 

(1) General rule. The amount of 

decommissioning costs allocable to a 

nuclear decommissioning fund is the 

taxpayer’s share of the total estimated 

cost of decommissioning the nuclear 

power plant to which the fund relates. 

(2) Total estimated cost of 

decommissioning. Under paragraph 

(a)(2) of this section, the taxpayer must 

demonstrate the reasonableness of the 

assumptions concerning the total 

estimated cost of decommissioning the 

nuclear power plant. 

(3) Taxpayer’s share. The taxpayer’s 

share of the total estimated cost of 

decommissioning a nuclear power plant 

equals the total estimated cost of 

decommissioning such nuclear power 

plant multiplied by the percentage of 

such nuclear power plant that the 

qualifying interest of the taxpayer 

represents. (See § 1.468A–1(b)(2) for 

circumstances in which a taxpayer 

possesses a qualifying interest in a 

nuclear power plant). 

(e) Manner of requesting schedule of 

ruling amounts—(1) In general. (i) In 

order to receive a ruling amount for any 

taxable year, a taxpayer must file a 

request for a schedule of ruling amounts 

that complies with the requirements of 

this paragraph (e), the applicable 

procedural rules set forth in § 601.201(e) 

of this chapter (Statement of Procedural 

Rules), and the requirements of any 

applicable revenue procedure that is in 

effect on the date the request is filed. 

(ii) A separate request for a schedule 

of ruling amounts is required for each 

nuclear decommissioning fund 

established by a taxpayer. (See 

paragraph (a) of § 1.468A–5 for rules 

relating to the number of nuclear 

decommissioning funds that a taxpayer 

can establish.) 

(iii) Except as provided by §§ 1.468A– 

5(a)(1)(iv) (relating to certain 

unincorporated organizations that may 

be taxable as corporations) and 1.468A– 

8 (relating to a special transfer under 

section 468A(f)(1)), a request for a 

schedule of ruling amounts must not 

contain a request for a ruling on any 

other issue, whether the issue involves 

section 468A or another section of the 

Internal Revenue Code. 

(iv) In the case of an affiliated group 

of corporations that join in the filing of 

a consolidated return, the common 

parent of the group may request a 

schedule of ruling amounts for each 

member of the group that possesses a 

qualifying interest in the same nuclear 

power plant by filing a single 

submission with the IRS. 

(v) The IRS will not provide or revise 

a ruling amount applicable to a taxable 

year in response to a request for a 

schedule of ruling amounts that is filed 

after the deemed payment deadline date 

(as defined in § 1.468A–2(c)(1)) for such 

taxable year. In determining the date 

when a request is filed, the principles of 

sections 7502 and 7503 shall apply. 

(vi) Except as provided in paragraph 

(e)(1)(vii) of this section, a request for a 

schedule of ruling amounts shall be 

considered filed only if such request 

complies substantially with the 

requirements of this paragraph (e). 

(vii) If a request does not comply 

substantially with the requirements of 

this paragraph (e), the IRS will notify 

the taxpayer of that fact. If the 

information or materials necessary to 

comply substantially with the 

requirements of this paragraph (e) are 

provided to the IRS within 30 days after 

this notification, the request will be 

considered filed on the date of the 

original submission. In addition, the 

request will be considered filed on the 

date of the original submission in a case 

in which the information and materials 

are provided more than 30 days after the 

notification if the IRS determines that 

the electing taxpayer made a good faith 

effort to provide the applicable 

information or materials within 30 days 

after notification and also determines 

that treating the request as filed on the 

date of the original submission is 

consistent with the purposes of section 

468A. In any other case in which the 

information or materials necessary to 

comply substantially with the 

requirements of this paragraph (e) are 

not provided within 30 days after the 

notification, the request will be 

considered filed on the date that all 

information or materials necessary to 

comply with the requirements of this 

paragraph (e) are provided. 

(2) Information required. A request for 

a schedule of ruling amounts must 

contain the following information: 

(i) The taxpayer’s name, address, and 

taxpayer identification number. 

(ii) Whether the request is for an 

initial schedule of ruling amounts, a 

mandatory review of the schedule of 

ruling amounts (see paragraph (f)(1) of 

this section), or an elective review of the 

schedule of ruling amounts (see 

paragraph (f)(2) of this section). 

(iii) The name and location of the 

nuclear power plant with respect to 

which a schedule of ruling amounts is 

requested. 

(iv) A description of the taxpayer’s 

qualifying interest in the nuclear power 

plant and the percentage of such nuclear 

power plant that the qualifying interest 

of the taxpayer represents. 

(v) Where applicable, an 

identification of each public utility 

commission that establishes or approves 

rates for the furnishing or sale by the 

taxpayer of electric energy generated by 

the nuclear power plant, and, for each 

public utility commission identified— 

(A) Whether the public utility 

commission has determined the amount 

of decommissioning costs to be 

included in the taxpayer’s cost of 

service for ratemaking purposes; 

(B) The amount of decommissioning 

costs that are to be included in the 

taxpayer’s cost of service for each 

taxable year under the current 

determination and amounts that 

otherwise are required to be included in 

the taxpayer’s income under section 88 

and the regulations thereunder; 

(C) A description of the assumptions, 

estimates and other factors used by the 

public utility commission to determine 

the amount of decommissioning costs; 

(D) A copy of such portions of any 

order or opinion of the public utility 

commission as pertain to the public 

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utility commission’s most recent 

determination of the amount of 

decommissioning costs to be included 

in cost of service; and 

(E) A copy of each engineering or cost 

study that was relied on or used by the 

public utility commission in 

determining the amount of 

decommissioning costs to be included 

in the taxpayer’s cost of service under 

the current determination. 

(vi) A description of the assumptions, 

estimates and other factors that were 

used by the taxpayer to determine the 

amount of decommissioning costs, 

including each of the following if 

applicable: 

(A) A description of the proposed 

method of decommissioning the nuclear 

power plant (for example, prompt 

removal/dismantlement, safe storage 

entombment with delayed 

dismantlement, or safe storage 

mothballing with delayed 

dismantlement). 

(B) The estimated year in which 

substantial decommissioning costs will 

first be incurred. 

(C) The estimated year in which the 

decommissioning of the nuclear power 

plant will be substantially complete (see 

§ 1.468A–5(d)(3) for a definition of 

substantial completion of 

decommissioning). 

(D) The total estimated cost of 

decommissioning expressed in current 

dollars (that is, based on price levels in 

effect at the time of the current 

determination). 

(E) The total estimated cost of 

decommissioning expressed in future 

dollars (that is, based on anticipated 

price levels when expenses are expected 

to be paid). 

(F) For each taxable year in the period 

that begins with the year specified in 

paragraph (e)(2)(vi)(B) of this section 

(the estimated year in which substantial 

decommissioning costs will first be 

incurred) and ends with the year 

specified in paragraph (e)(2)(vi)(C) of 

this section (the estimated year in which 

the decommissioning of the nuclear 

power plant will be substantially 

complete), the estimated cost of 

decommissioning expressed in future 

dollars. 

(G) A description of the methodology 

used in converting the estimated cost of 

decommissioning expressed in current 

dollars to the estimated cost of 

decommissioning expressed in future 

dollars. 

(H) The assumed after-tax rate of 

return to be earned by the assets of the 

qualified nuclear decommissioning 

fund. 

(I) A copy of each engineering or cost 

study that was relied on or used by the 

taxpayer in determining the amount of 

decommissioning costs. 

(vii) A proposed schedule of ruling 

amounts for each taxable year remaining 

in the funding period as of the date the 

schedule of ruling amounts will first 

apply. 

(viii) A description of the 

assumptions, estimates and other factors 

that were used in determining the 

proposed schedule of ruling amounts, 

including, if applicable— 

(A) The funding period (as such term 

is defined in paragraph (c) of this 

section); 

(B) The assumed after-tax rate of 

return to be earned by the assets of the 

nuclear decommissioning fund; 

(C) The fair market value of the assets 

(if any) of the nuclear decommissioning 

fund as of the first day of the first 

taxable year to which the schedule of 

ruling amounts will apply; 

(D) The amount expected to be earned 

by the assets of the nuclear 

decommissioning fund (based on the 

after-tax rate of return applicable to the 

fund) over the period that begins on the 

first day of the first taxable year to 

which the schedule of ruling amounts 

will apply and ends on the last day of 

the funding period; 

(E) The amount of decommissioning 

costs allocable to the nuclear 

decommissioning fund (as determined 

under paragraph (d) of this section); 

(F) The total estimated cost of 

decommissioning (as determined under 

paragraph (d)(2) of this section); and 

(G) The taxpayer’s share of the total 

estimated cost of decommissioning (as 

such term is defined in paragraph (d)(3) 

of this section). 

(ix) If the request is for a revised 

schedule of ruling amounts, the after-tax 

rate of return earned by the assets of the 

nuclear decommissioning fund for each 

taxable year in the period that begins 

with the date of the initial contribution 

to the fund and ends with the first day 

of the first taxable year to which the 

revised schedule of ruling amounts 

applies. 

(x) If applicable, an explanation of the 

need for a schedule of ruling amounts 

determined on a basis other than the 

rules of paragraphs (a) through (d) of 

this section and a description of an 

alternative basis for determining a 

schedule of ruling amounts (see 

paragraph (a)(5) of this section). 

(xi) A chart or table, based upon the 

assumed after-tax rate of return to be 

earned by the assets of the nuclear 

decommissioning fund, setting forth the 

years the fund will be in existence, the 

annual contribution to the fund, the 

estimated annual earnings of the fund 

and the cumulative total balance in the 

fund. 

(xii) If the request is for a revised 

schedule of ruling amounts, a copy of 

the schedule of ruling amounts that the 

revised schedule would replace. 

(xiii) If the request for a schedule of 

ruling amounts contains a request, 

pursuant to § 1.468A–5(a)(1)(iv), that the 

IRS rule whether an unincorporated 

organization through which the assets of 

the fund are invested is an association 

taxable as a corporation for Federal tax 

purposes, a copy of the legal documents 

establishing or otherwise governing the 

organization. 

(xiv) Any other information required 

by the IRS that may be necessary or 

useful in determining the schedule of 

ruling amounts. 

(3) Administrative procedures. The 

IRS may prescribe administrative 

procedures that supplement the 

provisions of paragraph (e)(1) and (2) of 

this section. In addition, the IRS may, in 

its discretion, waive the requirements of 

paragraph (e)(1) and (2) of this section 

under appropriate circumstances. 

(f) Review and revision of schedule of 

ruling amounts—(1) Mandatory review. 

(i) Any taxpayer that has obtained a 

schedule of ruling amounts pursuant to 

paragraph (e) of this section must file a 

request for a revised schedule of ruling 

amounts on or before the deemed 

payment deadline date for the 10th 

taxable year that begins after the taxable 

year in which the most recent schedule 

of ruling amounts was received. If the 

taxpayer calculated its most recent 

schedule of ruling amounts on any basis 

other than an order issued by a public 

utility commission, the taxpayer must 

file a request for a revised schedule of 

ruling amounts on or before the deemed 

payment deadline date for the 5th 

taxable year that begins after the taxable 

year in which the most recent schedule 

of ruling amounts was received. 

(ii)(A) Any taxpayer that has obtained 

a formula or method for determining a 

schedule of ruling amounts for any 

taxable year under paragraph (a)(5) of 

this section must file a request for a 

revised schedule on or before the earlier 

of the deemed payment deadline for the 

5th taxable year that begins after its 

taxable year in which the most recent 

formula or method was approved or the 

deemed payment deadline for the first 

taxable year that begins after a taxable 

year in which there is a substantial 

variation in the ruling amount 

determined under the most recent 

formula or method. There is a 

substantial variation in the ruling 

amount determined under the formula 

or method in effect for a taxable year if 

the ruling amount for the year and the 

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ruling amount for any earlier year since 

the most recent formula or method was 

approved differ by more than 50 percent 

of the smaller amount. 

(B) Any taxpayer that has determined 

its ruling amount for any taxable year 

under a formula prescribed by 

§ 1.468A–6 (which prescribes ruling 

amounts for the taxable year in which 

there is a disposition of a qualifying 

interest in a nuclear power plant) must 

file a request for a revised schedule of 

ruling amounts on or before the deemed 

payment deadline for its first taxable 

year that begins after the disposition. 

(iii) A taxpayer requesting a schedule 

of deduction amounts for a nuclear 

decommissioning fund under § 1.468A– 

8 must also request a revised schedule 

of ruling amounts for the fund. The 

revised schedule of ruling amounts 

must apply beginning with the first 

taxable year following the first year in 

which a deduction is allowed under the 

schedule of deduction amounts. 

(iv) If the operating license of the 

nuclear power plant to which a nuclear 

decommissioning fund relates is 

renewed, the taxpayer maintaining the 

fund must request a revised schedule of 

ruling amounts. The request for the 

revised schedule must be submitted on 

or before the deemed payment deadline 

for the taxable year that includes the 

date on which the operating license is 

renewed. 

(v) A request for a schedule of ruling 

amounts required by this paragraph 

(f)(1) must be made in accordance with 

the rules of paragraph (e) of this section. 

If a taxpayer does not properly file a 

request for a revised schedule of ruling 

amounts by the date provided in 

paragraph (f)(1)(i), (ii) or (iv) of this 

section (whichever is applicable), the 

taxpayer’s ruling amount for the first 

taxable year to which the revised 

schedule of ruling amounts would have 

applied and for all succeeding taxable 

years until a new schedule is obtained 

shall be zero dollars, unless, in its 

discretion, the IRS provides otherwise 

in such new schedule of ruling 

amounts. Thus, if a taxpayer is required 

to request a revised schedule of ruling 

amounts under any provision of this 

section, and each ruling amount in the 

revised schedule would equal zero 

dollars, the taxpayer may, instead of 

requesting a new schedule of ruling 

amounts, begin treating the ruling 

amounts under its most recent schedule 

as equal to zero dollars. 

(2) Elective review. Any taxpayer that 

has obtained a schedule of ruling 

amounts pursuant to paragraph (e) of 

this section can request a revised 

schedule of ruling amounts. Such a 

request must be made in accordance 

with the rules of paragraph (e) of this 

section; thus, the IRS will not provide 

a revised ruling amount applicable to a 

taxable year in response to a request for 

a schedule of ruling amounts that is 

filed after the deemed payment deadline 

date for such taxable year (see paragraph 

(e)(1)(vi) of this section). 

(3) Determination of revised schedule 

of ruling amounts. A revised schedule of 

ruling amounts for a nuclear 

decommissioning fund shall be 

determined under this section without 

regard to any schedule of ruling 

amounts for such nuclear 

decommissioning fund that was issued 

prior to such revised schedule. Thus, a 

ruling amount specified in a revised 

schedule of ruling amounts for any 

taxable year in the funding period can 

be less than one or more ruling amounts 

specified in a prior schedule of ruling 

amounts for a prior taxable year. 

(g) Special rule permitting payments 

to a nuclear decommissioning fund 

before receipt of an initial or revised 

ruling amount applicable to a taxable 

year. (1) If an electing taxpayer has filed 

a timely request for an initial or revised 

ruling amount for a taxable year 

beginning on or after January 1, 2006, 

and does not receive the ruling amount 

on or before the deemed payment 

deadline date for such taxable year, the 

taxpayer may make a payment to a 

nuclear decommissioning fund on the 

basis of the ruling amount proposed in 

the taxpayer’s request. Thus, under the 

preceding sentence, an electing taxpayer 

may make a payment to a nuclear 

decommissioning fund for such taxable 

year that does not exceed the ruling 

amount proposed by the taxpayer for 

such taxable year in a timely filed 

request for a schedule of ruling 

amounts. 

(2) If an electing taxpayer makes a 

payment to a nuclear decommissioning 

fund for any taxable year pursuant to 

paragraph (g)(1) of this section and the 

ruling amount that is provided by the 

IRS is greater than the ruling amount 

proposed by the taxpayer for such 

taxable year, the taxpayer is not allowed 

to make an additional payment to the 

fund for such taxable year after the 

deemed payment deadline date for such 

taxable year. 

(3) If the payment or transfer that an 

electing taxpayer makes to a nuclear 

decommissioning fund for any taxable 

year pursuant to paragraph (g)(1) of this 

section exceeds the ruling amount that 

is provided by the IRS for such taxable 

year, the following rules apply: 

(i) The amount of the excess is an 

excess contribution (as defined in 

§ 1.468A–5(c)(2)(ii)) for such taxable 

year. 

(ii) The amount of the excess 

contribution is not deductible (see 

§ 1.468A–2(b)(2)) and must be 

withdrawn by the taxpayer pursuant to 

the rules of § 1.468A–5(c)(2)(i). 

(iii) The taxpayer must withdraw the 

after-tax earnings on the excess 

contribution. 

(iv) If the taxpayer claimed a 

deduction for the excess contribution, 

the taxpayer should file an amended 

return for the taxable year. 

§ 1.468A–4 Treatment of nuclear 

decommissioning fund. 

(a) In general. A nuclear 

decommissioning fund is subject to tax 

on all of its modified gross income (as 

defined in paragraph (b) of this section). 

The rate of tax is 20 percent for taxable 

years beginning after December 31, 

1995. This tax is in lieu of any other tax 

that may be imposed under subtitle A of 

the Internal Revenue Code (Code) on the 

income earned by the assets of the 

nuclear decommissioning fund. 

(b) Modified gross income. For 

purposes of this section, the term 

modified gross income means gross 

income as defined under section 61 

computed with the following 

modifications: 

(1) The amount of any payment or 

special transfer to the nuclear 

decommissioning fund with respect to 

which a deduction is allowed under 

section 468A(a) or section 468A(f) is 

excluded from gross income. 

(2) A deduction is allowed for the 

amount of administrative costs and 

other incidental expenses of the nuclear 

decommissioning fund (including taxes, 

legal expenses, accounting expenses, 

actuarial expenses and trustee expenses, 

but not including decommissioning 

costs) that are otherwise deductible and 

that are paid by the nuclear 

decommissioning fund to any person 

other than the electing taxpayer. An 

expense is otherwise deductible for 

purposes of this paragraph (b)(2) if it 

would be deductible under chapter 1 of 

the Code in determining the taxable 

income of a corporation. For example, 

because Federal income taxes are not 

deductible under chapter 1 of the Code 

in determining the taxable income of a 

corporation, the tax imposed by section 

468A(e)(2) and paragraph (a) of this 

section is not deductible in determining 

the modified gross income of a nuclear 

decommissioning fund. Similarly, 

because certain expenses allocable to 

tax-exempt interest income are not 

deductible under section 265 in 

determining the taxable income of a 

corporation, such expenses are not 

deductible in determining the modified 

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80708 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 

gross income of a nuclear 

decommissioning fund. 

(3) A deduction is allowed for the 

amount of an otherwise deductible loss 

that is sustained by the nuclear 

decommissioning fund in connection 

with the sale, exchange or worthlessness 

of any investment. A loss is otherwise 

deductible for purposes of this 

paragraph (b)(3) if such loss would be 

deductible by a corporation under 

section 165(f) or (g) and sections 1211(a) 

and 1212(a). 

(4) A deduction is allowed for the 

amount of an otherwise deductible net 

operating loss of the nuclear 

decommissioning fund. For purposes of 

this paragraph (b), the net operating loss 

of a nuclear decommissioning fund for 

a taxable year is the amount by which 

the deductions allowable under 

paragraphs (b)(2) and (3) of this section 

exceed the gross income of the nuclear 

decommissioning fund computed with 

the modification described in paragraph 

(b)(1) of this section. A net operating 

loss is otherwise deductible for 

purposes of this paragraph (b)(4) if such 

a net operating loss would be deductible 

by a corporation under section 172(a). 

(c) Special rules—(1) Period for 

computation of modified gross income. 

The modified gross income of a nuclear 

decommissioning fund must be 

computed on the basis of the taxable 

year of the electing taxpayer. If an 

electing taxpayer changes its taxable 

year, each nuclear decommissioning 

fund of the electing taxpayer must 

change to the new taxable year. See 

section 442 and § 1.442–1 for rules 

relating to the change to a new taxable 

year. 

(2) Gain or loss upon distribution of 

property by a fund. A distribution of 

property by a nuclear decommissioning 

fund (whether an actual distribution or 

a deemed distribution) shall be 

considered a disposition of property by 

the nuclear decommissioning fund for 

purposes of section 1001. In 

determining the amount of gain or loss 

from such disposition, the amount 

realized by the nuclear 

decommissioning fund shall be the fair 

market value of the property on the date 

of disposition. 

(3) Denial of credits against tax. The 

tax imposed on the modified gross 

income of a nuclear decommissioning 

fund under paragraph (a) of this section 

is not to be reduced or offset by any 

credits against tax provided by part IV 

of subchapter A of chapter 1 of the Code 

other than the credit provided by 

section 31(c) for amounts withheld 

under section 3406 (back-up 

withholding). 

(4) Other corporate taxes 

inapplicable. Although the modified 

gross income of a nuclear 

decommissioning fund is subject to tax 

at the rate specified by section 

468A(e)(2) and paragraph (a) of this 

section, a nuclear decommissioning 

fund is not subject to the other taxes 

imposed on corporations under subtitle 

A of the Code. For example, a nuclear 

decommissioning fund is not subject to 

the alternative minimum tax imposed 

by section 55, the accumulated earnings 

tax imposed by section 531, the 

personal holding company tax imposed 

by section 541, and the alternative tax 

imposed on a corporation under section 

1201(a). 

(d) Treatment as corporation for 

purposes of subtitle F. For purposes of 

subtitle F of the Code and §§ 1.468A–1 

through 1.468A–9, a nuclear 

decommissioning fund is to be treated 

as if it were a corporation and the tax 

imposed by section 468A(e)(2) and 

paragraph (a) of this section is to be 

treated as a tax imposed by section 11. 

Thus, for example, the following rules 

apply: 

(1) A nuclear decommissioning fund 

must file a return with respect to the tax 

imposed by section 468A(e)(2) and 

paragraph (a) of this section for each 

taxable year (or portion thereof) that the 

fund is in existence even though no 

amount is included in the gross income 

of the fund for such taxable year. The 

return is to be made on Form 1120–ND 

in accordance with the instructions 

relating to such form. For purposes of 

this paragraph (d)(1), a nuclear 

decommissioning fund is in existence 

for the period that— 

(i) Begins on the date that the first 

deductible payment is actually made to 

such nuclear decommissioning fund; 

and 

(ii) Ends on the date of termination 

(see § 1.468A–5(d)), the date that the 

entire fund is disqualified (see 

§ 1.468A–5(c)), or the date that the 

electing taxpayer disposes of its entire 

qualifying interest in the nuclear power 

plant to which the nuclear 

decommissioning fund relates (other 

than in connection with the transfer of 

the entire fund to the person acquiring 

such interest), whichever is applicable. 

(2) For each taxable year of the 

nuclear decommissioning fund, the 

return described in paragraph (d)(1) of 

this section must be filed on or before 

the 15th day of the third month 

following the close of such taxable year 

unless the nuclear decommissioning 

fund is granted an extension of time for 

filing under section 6081. If such an 

extension is granted for any taxable 

year, the return for such taxable year 

must be filed on or before the extended 

due date for such taxable year. 

(3) A nuclear decommissioning fund 

must provide its employer identification 

number on returns, statements and other 

documents as required by the forms and 

instructions relating thereto. The 

employer identification number is 

obtained by filing a Form SS–4, 

Application for Employer Identification 

Number, in accordance with the 

instructions relating thereto. 

(4) A nuclear decommissioning fund 

must deposit all payments of tax 

imposed by section 468A(e)(2) and 

paragraph (a) of this section (including 

any payments of estimated tax) with an 

authorized government depositary in 

accordance with § 1.6302–1. 

(5) A nuclear decommissioning fund 

is subject to the addition to tax imposed 

by section 6655 in case of a failure to 

pay estimated income tax. For purposes 

of section 6655 and this section— 

(i) The tax with respect to which the 

amount of the underpayment is 

computed in the case of a nuclear 

decommissioning fund is the tax 

imposed by section 468A(e)(2) and 

paragraph (a) of this section; and 

(ii) The taxable income with respect 

to which the nuclear decommissioning 

fund’s status as a large corporation is 

measured is modified gross income (as 

defined by paragraph (b) of this section). 

§ 1.468A–5 Nuclear decommissioning fund 

qualification requirements; prohibitions 

against self-dealing; disqualification of 

nuclear decommissioning fund; termination 

of fund upon substantial completion of 

decommissioning. 

(a) Qualification requirements—(1) In 

general. (i) A nuclear decommissioning 

fund must be established and 

maintained at all times in the United 

States pursuant to an arrangement that 

qualifies as a trust under State law. 

Such trust must be established for the 

exclusive purpose of providing funds 

for the decommissioning of one or more 

nuclear power plants, but a single trust 

agreement may establish multiple funds 

for such purpose. Thus, for example— 

(A) Two or more nuclear 

decommissioning funds can be 

established and maintained pursuant to 

a single trust agreement; and 

(B) One or more funds that are to be 

used for the decommissioning of a 

nuclear power plant and that do not 

qualify as nuclear decommissioning 

funds under this paragraph (a) can be 

established and maintained pursuant to 

a trust agreement that governs one or 

more nuclear decommissioning funds. 

(ii) A separate nuclear 

decommissioning fund is required for 

each electing taxpayer and for each 

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nuclear power plant with respect to 

which an electing taxpayer possesses a 

qualifying interest. The Internal 

Revenue Service (IRS) will issue a 

separate schedule of ruling amounts 

with respect to each nuclear 

decommissioning fund, and each 

nuclear decommissioning fund must file 

a separate income tax return even if 

other nuclear decommissioning funds or 

nonqualified funds are established and 

maintained pursuant to the trust 

agreement governing such fund or the 

assets of other nuclear decommissioning 

funds or nonqualified funds are pooled 

with the assets of such fund. 

(iii) An electing taxpayer can 

maintain only one nuclear 

decommissioning fund for each nuclear 

power plant with respect to which the 

taxpayer elects the application of 

section 468A. If a nuclear power plant 

is subject to the ratemaking jurisdiction 

of two or more public utility 

commissions and any such public 

utility commission requires a separate 

fund to be maintained for the benefit of 

ratepayers whose rates are established 

or approved by the public utility 

commission, the separate funds 

maintained for such plant (whether or 

not established and maintained 

pursuant to a single trust agreement) 

shall be considered a single nuclear 

decommissioning fund for purposes of 

section 468A and §§ 1.468A–1 through 

1.468A–4, this section and §§ 1.468A–7 

through 1.468A–9. Thus, for example, 

the IRS will issue one schedule of ruling 

amounts with respect to such nuclear 

power plant, the nuclear 

decommissioning fund must file a single 

income tax return (see § 1.468A– 

4(d)(1)), and, if the IRS disqualifies the 

nuclear decommissioning fund, the 

assets of each separate fund are treated 

as distributed on the date of 

disqualification (see paragraph (c)(3) of 

this section). 

(iv) If assets of a nuclear 

decommissioning fund are (or will be) 

invested through an unincorporated 

organization, within the meaning of 

§ 301.7701–2 of this chapter, the IRS 

will rule, if requested, whether the 

organization is an association taxable as 

a corporation for Federal tax purposes. 

A request for this ruling may be made 

by the electing taxpayer as part of its 

request for a schedule of ruling amounts 

or as part of a request under § 1.468A– 

8 for a schedule of deduction amounts. 

(2) Limitation on contributions. 

Except as otherwise provided in 

§ 1.468A–8 (relating to special transfers 

under section 468A(f)), a nuclear 

decommissioning fund is not permitted 

to accept any contributions in cash or 

property other than cash payments with 

respect to which a deduction is allowed 

under section 468A(a) and § 1.468A– 

2(a). Thus, for example, except in the 

case of a special transfer pursuant to 

§ 1.468A–8, securities may not be 

contributed to a nuclear 

decommissioning fund even if the 

taxpayer or a fund established by the 

taxpayer previously held such securities 

for the purpose of providing funds for 

the decommissioning of a nuclear power 

plant. 

(3) Limitation on use of fund—(i) In 

general. The assets of a nuclear 

decommissioning fund are to be used 

exclusively— 

(A) To satisfy, in whole or in part, the 

liability of the electing taxpayer for 

decommissioning costs of the nuclear 

power plant to which the nuclear 

decommissioning fund relates; 

(B) To pay administrative costs and 

other incidental expenses of the nuclear 

decommissioning fund; and 

(C) To the extent that the assets of the 

nuclear decommissioning fund are not 

currently required for the purposes 

described in paragraph (a)(3)(i)(A) or (B) 

of this section, to make investments. 

(ii) Definition of administrative costs 

and expenses. For purposes of 

paragraph (a)(3)(i) of this section, the 

term administrative costs and other 

incidental expenses of a nuclear 

decommissioning fund means all 

ordinary and necessary expenses 

incurred in connection with the 

operation of the nuclear 

decommissioning fund. Such term 

includes the tax imposed by section 

468A(e)(2) and § 1.468A–4(a), any State 

or local tax imposed on the income or 

the assets of the fund, legal expenses, 

accounting expenses, actuarial expenses 

and trustee expenses. Such term does 

not include decommissioning costs or 

the payment of insurance premiums on 

a policy to pay for the nuclear 

decommissioning costs of a nuclear 

power plant. Such term also does not 

include the excise tax imposed on the 

trustee or other disqualified person 

under section 4951 or the 

reimbursement of any expenses 

incurred in connection with the 

assertion of such tax unless such 

expenses are considered reasonable and 

necessary under section 4951(d)(2)(C) 

and it is determined that the trustee or 

other disqualified person is not liable 

for the excise tax. 

(4) Trust provisions. Each qualified 

nuclear decommissioning fund trust 

agreement must provide that assets in 

the fund must be used as authorized by 

section 468A and §§ 1.468A–1 through 

1.468A–9 and that the agreement may 

not be amended so as to violate section 

468A or §§ 1.468A–1 through 1.468A–9. 

(b) Prohibitions against self-dealing— 

(1) In general. Except as otherwise 

provided in this paragraph (b), the 

excise taxes imposed by section 4951 

shall apply to each act of self-dealing 

between a disqualified person and a 

nuclear decommissioning fund. 

(2) Self-dealing defined. For purposes 

of this paragraph (b), the term selfdealing means any act described in 

section 4951(d), except— 

(i) A payment by a nuclear 

decommissioning fund for the purpose 

of satisfying, in whole or in part, the 

liability of the electing taxpayer for 

decommissioning costs of the nuclear 

power plant to which the nuclear 

decommissioning fund relates; 

(ii) A withdrawal of an excess 

contribution by the electing taxpayer 

pursuant to the rules of paragraph (c)(2) 

of this section; 

(iii) A withdrawal by the electing 

taxpayer of amounts that have been 

treated as distributed under paragraph 

(c)(3) of this section; 

(iv) A payment of amounts remaining 

in a nuclear decommissioning fund to 

the electing taxpayer after the 

termination of such fund (as determined 

under paragraph (d) of this section); 

(v) Any act described in section 

4951(d)(2)(B) or (C); 

(vi) Any act that is described in 

§ 53.4951–1(c) of this chapter and is 

undertaken to facilitate the temporary 

investment of assets or the payment of 

reasonable administrative expenses of 

the nuclear decommissioning fund; or 

(vii) A payment by a nuclear 

decommissioning fund for the 

performance of trust functions and 

certain general banking services by a 

bank or trust company that is a 

disqualified person if the banking 

services are reasonable and necessary to 

carry out the purposes of the fund and 

the compensation paid to the bank or 

trust company for such services, taking 

into account the fair interest rate for the 

use of the funds by the bank or trust 

company, is not excessive. 

(3) Disqualified person defined. For 

purposes of this paragraph (b), the term 

disqualified person includes each 

person described in section 4951(e)(4) 

and § 53.4951–1(d). 

(4) General banking services. The 

general banking services allowed by 

paragraph (b)(2)(vii) of this section are— 

(i) Checking accounts, as long as the 

bank does not charge interest on any 

overwithdrawals; 

(ii) Savings accounts, as long as the 

fund may withdraw its funds on no 

more than 30 days’ notice without 

subjecting itself to a loss of interest on 

its money for the time during which the 

money was on deposit; and 

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(iii) Safekeeping activities (see 

§ 53.4941(d)–3(c)(2), Example 3, of this 

chapter). 

(c) Disqualification of nuclear 

decommissioning fund—(1) In general— 

(i) Disqualification events. Except as 

otherwise provided in paragraph (c)(2) 

of this section, the IRS may, in its 

discretion, disqualify all or any portion 

of a nuclear decommissioning fund if at 

any time during a taxable year of the 

fund— 

(A) The fund does not satisfy the 

requirements of paragraph (a) of this 

section; or 

(B) The fund and a disqualified 

person engage in an act of self-dealing 

(as defined in paragraph (b)(2) of this 

section). 

(ii) Date of disqualification. (A) 

Except as otherwise provided in this 

paragraph (c)(1)(ii), the date on which a 

disqualification under this paragraph (c) 

will take effect (date of disqualification) 

is the date that the fund does not satisfy 

the requirements of paragraph (a) of this 

section or the date on which the act of 

self-dealing occurs, whichever is 

applicable. 

(B) If the IRS determines, in its 

discretion, that the disqualification 

should take effect on a date subsequent 

to the date specified in paragraph 

(c)(1)(ii)(A) of this section, the date of 

disqualification is such subsequent date. 

(iii) Notice of disqualification. The 

IRS will notify the electing taxpayer of 

the disqualification of a nuclear 

decommissioning fund and the date of 

disqualification by registered or 

certified mail to the last known address 

of the electing taxpayer (the notice of 

disqualification). For further guidance 

regarding the definition of last known 

address, see § 301.6212–2 of this 

chapter. 

(2) Exception to disqualification—(i) 

In general. A nuclear decommissioning 

fund will not be disqualified under 

paragraph (c)(1) of this section by reason 

of an excess contribution or the 

withdrawal of such excess contribution 

by an electing taxpayer if the amount of 

the excess contribution is withdrawn by 

the electing taxpayer on or before the 

date prescribed by law (including 

extensions) for filing the return of the 

nuclear decommissioning fund for the 

taxable year to which the excess 

contribution relates. In the case of an 

excess contribution that is the result of 

a payment made pursuant to § 1.468A– 

3(g)(1), a nuclear decommissioning fund 

will not be disqualified under paragraph 

(c)(1) of this section if the amount of the 

excess contribution is withdrawn by the 

electing taxpayer on or before the later 

of— 

(A) The date prescribed by law 

(including extensions) for filing the 

return of the nuclear decommissioning 

fund for the taxable year to which the 

excess contribution relates; or 

(B) The date that is 30 days after the 

date that the taxpayer receives the 

ruling amount for such taxable year. 

(ii) Excess contribution defined. For 

purposes of this section, an excess 

contribution is the amount by which 

cash payments made (or deemed made) 

to a nuclear decommissioning fund 

during any taxable year exceed the 

payment limitation contained in section 

468A(b) and § 1.468A–2(b). The amount 

of a special transfer permitted under 

§ 1.468A–8 is not treated as a cash 

payment for this purpose. 

(iii) Taxation of income attributable 

to an excess contribution. The income of 

a nuclear decommissioning fund 

attributable to an excess contribution is 

required to be included in the gross 

income of the nuclear decommissioning 

fund under § 1.468A–4(b). 

(3) Disqualification treated as 

distribution. If all or any portion of a 

nuclear decommissioning fund is 

disqualified under paragraph (c)(1) of 

this section, the portion of the nuclear 

decommissioning fund that is 

disqualified is treated as distributed to 

the electing taxpayer on the date of 

disqualification. Such a distribution 

shall be treated for purposes of section 

1001 as a disposition of property held 

by the nuclear decommissioning fund 

(see § 1.468A–4(c)(2)). In addition, the 

electing taxpayer must include in gross 

income for the taxable year that 

includes the date of disqualification an 

amount equal to the fair market value of 

the distributable assets of the nuclear 

decommissioning fund multiplied by 

the fraction of the nuclear 

decommissioning fund that was 

disqualified under paragraph (c)(1) of 

this section. For this purpose, the fair 

market value of the distributable assets 

of the nuclear decommissioning fund is 

equal to the fair market value of the 

assets of the fund determined as of the 

date of disqualification, reduced by— 

(i) The amount of any excess 

contribution that was not withdrawn 

before the date of disqualification if no 

deduction was allowed with respect to 

such excess contribution; 

(ii) The amount of any deemed 

distribution that was not actually 

distributed before the date of 

disqualification (as determined under 

§ 1.468A–2(d)(2)(iii)) if the amount of 

the deemed distribution was included 

in the gross income of the electing 

taxpayer for the taxable year in which 

the deemed distribution occurred; and 

(iii) The amount of any tax that— 

(A) Is imposed on the income of the 

fund; 

(B) Is attributable to income taken into 

account before the date of 

disqualification or as a result of the 

disqualification; and 

(C) Has not been paid as of the date 

of disqualification. 

(4) Further effects of disqualification. 

Contributions made to a disqualified 

fund after the date of disqualification 

are not deductible under section 

468A(a) and § 1.468A–2(a), or, if the 

fund is disqualified only in part, are 

deductible only to the extent provided 

in the notice of disqualification. In 

addition, if any assets of the fund that 

are deemed distributed under paragraph 

(c)(3) of this section are held by the fund 

after the date of disqualification (or if 

additional assets are acquired with 

nondeductible contributions made to 

the fund after the date of 

disqualification), the income earned by 

such assets after the date of 

disqualification must be included in the 

gross income of the electing taxpayer 

(see section 671) to the extent that such 

income is otherwise includible under 

chapter 1 of the Internal Revenue Code 

(Code). An electing taxpayer can 

establish a nuclear decommissioning 

fund to replace a fund that has been 

disqualified in its entirety only if the 

IRS specifically consents to the 

establishment of a replacement fund in 

connection with the issuance of an 

initial schedule of ruling amounts for 

such replacement fund. 

(d) Termination of nuclear 

decommissioning fund upon substantial 

completion of decommissioning—(1) In 

general. Upon substantial completion of 

the decommissioning of a nuclear power 

plant to which a nuclear 

decommissioning fund relates, such 

nuclear decommissioning fund shall be 

considered terminated and treated as 

having distributed all of its assets on the 

date the termination occurs (the 

termination date). Such a distribution 

shall be treated for purposes of section 

1001 as a disposition of property held 

by the nuclear decommissioning fund 

(see § 1.468A–4(c)(2)). In addition, the 

electing taxpayer shall include in gross 

income for the taxable year in which the 

termination occurs an amount equal to 

the fair market value of the assets of the 

fund determined as of the termination 

date, reduced by— 

(i) The amount of any deemed 

distribution that was not actually 

distributed before the termination date 

if the amount of the deemed distribution 

was included in the gross income of the 

electing taxpayer for the taxable year in 

which the deemed distribution 

occurred; and 

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(ii) The amount of any tax that— 

(A) Is imposed on the income of the 

fund; 

(B) Is attributable to income taken into 

account before the termination date or 

as a result of the termination; and 

(C) Has not been paid as of the 

termination date. 

(2) Additional rules. Contributions 

made to a nuclear decommissioning 

fund after the termination date are not 

deductible under section 468A(a) and 

§ 1.468A–2(a). In addition, if any assets 

are held by the fund after the 

termination date, the income earned by 

such assets after the termination date 

must be included in the gross income of 

the electing taxpayer (see section 671) to 

the extent that such income is otherwise 

includible under chapter 1 of the Code. 

Finally, under § 1.468A–2(e), an electing 

taxpayer using an accrual method of 

accounting is allowed a deduction for 

nuclear decommissioning costs that are 

incurred during any taxable year even if 

such costs are incurred after substantial 

completion of decommissioning (for 

example, expenses incurred to monitor 

or safeguard the plant site). 

(3) Substantial completion of 

decommissioning and termination date. 

(i) The substantial completion of the 

decommissioning of a nuclear power 

plant occurs on the date that the 

maximum acceptable radioactivity 

levels mandated by the Nuclear 

Regulatory Commission with respect to 

a decommissioned nuclear power plant 

are satisfied (the substantial completion 

date). Except as otherwise provided in 

paragraph (d)(3)(ii) of this section, the 

substantial completion date is also the 

termination date. 

(ii) If a significant portion of the total 

estimated decommissioning costs with 

respect to a nuclear power plant are not 

incurred on or before the substantial 

completion date, an electing taxpayer 

may request, and the IRS will issue, a 

ruling that designates a date subsequent 

to the substantial completion date as the 

termination date. The termination date 

designated in the ruling will not be later 

than the last day of the third taxable 

year after the taxable year that includes 

the substantial completion date. The 

request for a ruling under this paragraph 

(d)(3)(ii) must be filed during the 

taxable year that includes the 

substantial completion date and must 

comply with the procedural rules in 

effect at the time of the request. 

§ 1.468A–6 Disposition of an interest in a 

nuclear power plant. 

(a) In general. This section describes 

the Federal income tax consequences of 

a transfer of the assets of a nuclear 

decommissioning fund (Fund) within 

the meaning of § 1.468A–1(b)(4) in 

connection with a sale, exchange, or 

other disposition by a taxpayer 

(transferor) of all or a portion of its 

qualifying interest in a nuclear power 

plant to another taxpayer (transferee). 

This section also explains how a 

schedule of ruling amounts will be 

determined for the transferor and 

transferee. For purposes of this section, 

a nuclear power plant includes a plant 

that previously qualified as a nuclear 

power plant and that has permanently 

ceased to produce electricity. 

(b) Requirements. This section applies 

if— 

(1) Immediately before the 

disposition, the transferor maintained a 

Fund with respect to the interest 

disposed of; 

(2) Immediately after the 

disposition— 

(i) The transferee maintains a Fund 

with respect to the interest acquired; 

(ii) The interest acquired is a 

qualifying interest of the transferee in 

the nuclear power plant; 

(3) In connection with the disposition, 

either— 

(i) The transferee acquires part or all 

of the transferor’s qualifying interest in 

the plant and a proportionate amount of 

the assets of the transferor’s Fund (all 

such assets if the transferee acquires the 

transferor’s entire qualifying interest in 

the plant) is transferred to a Fund of the 

transferee; or 

(ii) The transferee acquires the 

transferor’s entire qualifying interest in 

the plant and the transferor’s entire 

Fund is transferred to the transferee; 

and 

(4) The transferee continues to satisfy 

the requirements of § 1.468A–5(a)(1)(iii), 

which permits an electing taxpayer to 

maintain only one Fund for each plant. 

(c) Tax consequences. A disposition 

that satisfies the requirements of 

paragraph (b) of this section will have 

the following tax consequences at the 

time it occurs: 

(1) The transferor and its Fund. (i) 

Except as provided in paragraph 

(c)(1)(ii) of this section, neither the 

transferor nor the transferor’s Fund will 

recognize gain or loss or otherwise take 

any income or deduction into account 

by reason of the transfer of a 

proportionate amount of the assets of 

the transferor’s Fund to the transferee’s 

Fund (or by reason of the transfer of the 

transferor’s entire Fund to the 

transferee). For purposes of §§ 1.468A– 

1 through 1.468A–9, this transfer (or the 

transfer of the transferor’s Fund) will 

not be considered a distribution of 

assets by the transferor’s Fund. 

(ii) Notwithstanding paragraph 

(c)(1)(i) of this section, if the transferor 

has made a special transfer under 

§ 1.468A–8 prior to the transfer of the 

Fund or Fund assets, any deduction 

with respect to that special transfer 

allowable under section 468A(f)(2) for a 

taxable year ending after the date of the 

transfer of the Fund or Fund assets (the 

unamortized special transfer deduction) 

is allowed under section 468A(f)(2)(C) 

for the taxable year that includes the 

date of the transfer of the Fund or Fund 

assets. If the taxpayer transfers only a 

portion of its interest in a nuclear power 

plant, only the corresponding portion of 

the unamortized special transfer 

deduction qualifies for the acceleration 

under section 468A(f)(2)(C). 

(2) The transferee and its Fund. 

Neither the transferee nor the 

transferee’s Fund will recognize gain or 

loss or otherwise take any income or 

deduction into account by reason of the 

transfer of a proportionate amount of the 

assets of the transferor’s Fund to the 

transferee’s Fund (or by reason of the 

transfer of the transferor’s Fund to the 

transferee). For purposes of §§ 1.468A– 

1 through 1.468A–9, this transfer (or the 

transfer of the transferor’s Fund) will 

not constitute a payment or a 

contribution of assets by the transferee 

to its Fund. 

(3) Basis. Transfers of assets of a Fund 

to which this section applies do not 

affect basis. Thus, the transferee’s Fund 

will have a basis in the assets received 

from the transferor’s Fund that is the 

same as the basis of those assets in the 

transferor’s Fund immediately before 

the disposition. 

(d) Determination of proportionate 

amount. For purposes of this section, a 

transferor of a qualifying interest in a 

nuclear power plant is considered to 

transfer a proportionate amount of the 

assets of its Fund to a Fund of a 

transferee of the interest if, on the date 

of the transfer of the interest, the 

percentage of the fair market value of 

the Fund’s assets attributable to the 

assets transferred equals the percentage 

of the transferor’s qualifying interest 

that is transferred. 

(e) Calculation of schedule of ruling 

amounts and schedule of deduction 

amounts for dispositions described in 

this section—(1) Transferor. If a 

transferor disposes of all or a portion of 

its qualifying interest in a nuclear power 

plant in a transaction to which this 

section applies, the transferor’s 

schedule of ruling amounts with respect 

to the interests disposed of and retained 

(if any) and, if applicable, the amount 

allowable as a deduction for a special 

transfer under § 1.468A–8 will be 

determined under the following rules: 

(i) Taxable year of disposition; ruling 

amount. If the transferor does not file a 

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request for a revised schedule of ruling 

amounts on or before the deemed 

payment deadline for the taxable year of 

the transferor in which the disposition 

of its interest in the nuclear power plant 

occurs (that is, the date that is two and 

one-half months after the close of that 

year), the transferor’s ruling amount 

with respect to that plant for that year 

will equal the sum of— 

(A) The ruling amount contained in 

the transferor’s current schedule of 

ruling amounts with respect to that 

plant for that taxable year multiplied by 

the portion of the qualifying interest 

that is retained (if any); and 

(B) The ruling amount contained in 

the transferor’s current schedule of 

ruling amounts with respect to that 

plant for that taxable year multiplied by 

the product of— 

(1) The portion of the transferor’s 

qualifying interest that is disposed of; 

and 

(2) A fraction, the numerator of which 

is the number of days in that taxable 

year that precede the date of 

disposition, and the denominator of 

which is the number of days in that 

taxable year. 

(ii) Taxable year of disposition; 

deduction under § 1.468A–8. If the 

transferor has elected to make a special 

transfer under section 468A(f), the 

amount allowable as a deduction under 

§ 1.468A–8 for the taxable year in which 

it transfers a portion of its interest in the 

nuclear plant is equal to the deduction 

amount for that taxable year from its 

existing schedule of deduction amounts 

multiplied by the percentage of its 

interest that it retains. This deduction is 

in addition to the deduction described 

in paragraph (c)(1)(ii) of this section. 

(iii) Taxable years after the year of 

disposition. A transferor that retains a 

qualifying interest in a nuclear power 

plant must file a request for a revised 

schedule of ruling amounts (and, if 

applicable, a revised schedule of 

deduction amounts) with respect to that 

interest on or before the deemed 

payment deadline for the first taxable 

year of the transferor beginning after the 

disposition. See §§ 1.468A–3(f)(1)(ii)(B) 

and 1.468A–8(c)(3). If the transferor 

does not timely file such a request, the 

transferor’s ruling amount and the 

transferor’s deduction amount under 

§ 1.468A–8 with respect to that interest 

for the affected year or years will be 

zero, unless the Internal Revenue 

Service (IRS) waives the application of 

this paragraph (e)(1)(iii) upon a showing 

of good cause for the delay. 

(2) Transferee. If a transferee acquires 

all or a portion of a transferor’s 

qualifying interest in a nuclear power 

plant in a transaction to which this 

section applies, the transferee’s 

schedule of ruling amounts with respect 

to the interest acquired will be 

determined under the following rules: 

(i) Taxable year of disposition. If the 

transferee does not file a request for a 

schedule of ruling amounts on or before 

the deemed payment deadline for the 

taxable year of the transferee in which 

the disposition occurs (that is, the date 

that is two and one-half months after the 

close of that year), the transferee’s ruling 

amount with respect to the interest 

acquired in the nuclear power plant for 

that year is equal to the amount 

contained in the transferor’s current 

schedule of ruling amounts for that 

plant for the taxable year of the 

transferor in which the disposition 

occurred, multiplied by the product of— 

(A) The portion of the transferor’s 

qualifying interest that is transferred; 

and 

(B) A fraction, the numerator of which 

is the number of days in the taxable year 

of the transferor including and 

following the date of disposition, and 

the denominator of which is the number 

of days in that taxable year. 

(ii) Taxable years after the year of 

disposition. A transferee of a qualifying 

interest in a nuclear power plant must 

file a request for a revised schedule of 

ruling amounts with respect to that 

interest on or before the deemed 

payment deadline for the first taxable 

year of the transferee beginning after the 

disposition. See § 1.468A–3(f)(1)(ii)(B). 

If the transferee does not timely file 

such a request, the transferee’s ruling 

amount with respect to that interest for 

the affected year or years will be zero, 

unless the IRS waives the application of 

this paragraph (e)(2)(ii) upon a showing 

of good cause for the delay. 

(3) Examples. The following examples 

illustrate the provisions of this 

paragraph (e): 

Example 1. (i) X Corporation is a calendar 

year taxpayer engaged in the sale of electric 

energy generated by a nuclear power plant. 

The plant is owned entirely by X. On May 

27, 2010, X transfers a 60-percent qualifying 

interest in the plant to Y Corporation, a 

calendar year taxpayer. Before the transfer, X 

had received a schedule of ruling amounts 

containing an annual ruling amount of $10 

million for the taxable years 2005 through 

2025. For 2010, neither X nor Y files a 

request for a revised schedule of ruling 

amounts. 

(ii) Under paragraph (e)(1)(i) of this 

section, X’s ruling amount for 2010 is 

calculated as follows: ($10,000,000 × .40) + 

($10,000,000 × .60 × 146/365)=$6,400,000. 

Under paragraph (e)(2)(i) of this section, Y’s 

ruling amount for 2010 is calculated as 

follows: $10,000,000 × .60 × 219/ 

365=$3,600,000. Under paragraphs (e)(1)(iii) 

and (e)(2)(ii) of this section, X and Y must 

file requests for revised schedules of ruling 

amounts by March 15, 2012. 

Example 2. Y Corporation, the sole owner 

of a nuclear power plant, is a calendar year 

taxpayer. In year 1, Y elects to make a special 

transfer under section 468A(f)(1) to the 

nuclear decommissioning fund Y maintains 

with respect to the plant. The amount of the 

special transfer is $100×, and the remaining 

useful life of the plant is 20 years. Y obtains 

a schedule of deduction amounts under 

§ 1.468A–8T(c) permitting a $5× deduction 

each year over the 20-year remaining useful 

life, and deducts $5× of the special transfer 

amount in year 1, year 2, year 3, and year 4. 

On the first day of year 5, Y transfers a 25% 

interest in the plant to an unrelated party. 

Under paragraph (c)(1)(ii) of this section, Y 

may deduct in Year 5 the unamortized 

special transfer deduction corresponding to 

the portion of the plant transferred (25 

percent of $80× or $20×). In addition, under 

paragraph (e)(1)(ii) of this section, Y may 

deduct the portion of the deduction amount 

for year 5 from the schedule of deduction 

amounts corresponding to its retained 

interest in the plant (75 percent of $5× or 

$3.75×). Pursuant to paragraph (e)(1)(iii) of 

this section, Y must file a request for a 

revised schedule of ruling amounts by March 

15 of year 6. 

(f) Anti-abuse provision. The IRS may 

treat a disposition as satisfying the 

requirements of this section if the IRS 

determines that this treatment is 

necessary or appropriate to carry out the 

purposes of section 468A and 

§§ 1.468A–1 through 1.468A–9. 

§ 1.468A–7 Manner of and time for making 

election. 

(a) In general. An eligible taxpayer is 

allowed a deduction for the taxable year 

in which the taxpayer makes a cash 

payment (or is deemed to make a cash 

payment) to a nuclear decommissioning 

fund or for a special transfer under 

§ 1.468A–8 only if the taxpayer elects 

the application of section 468A. A 

separate election is required for each 

nuclear decommissioning fund and for 

each taxable year with respect to which 

payments are to be deducted under 

section 468A or a special transfer is 

made under § 1.468A–8. In the case of 

an affiliated group of corporations that 

join in the filing of a consolidated return 

for a taxable year, the common parent 

must make a separate election on behalf 

of each member whose payments to a 

nuclear decommissioning fund during 

such taxable year are to be deducted 

under section 468A and each member 

that makes a special transfer under 

§ 1.468A–8 with respect to such year. 

The election under section 468A for any 

taxable year is irrevocable and must be 

made by attaching a statement (Election 

Statement) and a copy of the schedule 

of ruling amounts provided pursuant to 

the rules of § 1.468A–3 to the taxpayer’s 

Federal income tax return (or, in the 

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case of an affiliated group of 

corporations that join in the filing of a 

consolidated return, the consolidated 

return) for such taxable year. The return 

to which the Election Statement and a 

copy of the schedule of ruling amounts 

is attached must be filed on or before 

the time prescribed by law (including 

extensions) for filing the return for the 

taxable year with respect to which 

payments are to be deducted under 

section 468A. 

(b) Required information. The 

Election Statement must include the 

following information: 

(1) The legend ‘‘Election Under 

Section 468A’’ typed or legibly printed 

at the top of the first page. 

(2) The electing taxpayer’s name, 

address and taxpayer identification 

number (or, in the case of an affiliated 

group of corporations that join in the 

filing of a consolidated return, the 

name, address and taxpayer 

identification number of each electing 

taxpayer). 

(3) The taxable year for which the 

election is made. 

(4) For each nuclear decommissioning 

fund for which an election is made— 

(i) The name and location of the 

nuclear power plant to which the fund 

relates; 

(ii) The name and employer 

identification number of the nuclear 

decommissioning fund; 

(iii) The total amount of actual cash 

payments made to the nuclear 

decommissioning fund during the 

taxable year that were not treated as 

deemed cash payments under § 1.468A– 

2(c)(1) for a prior taxable year; 

(iv) The total amount of cash 

payments deemed made to the nuclear 

decommissioning fund under § 1.468A– 

2(c)(1) for the taxable year; 

(v) The total amount of any special 

transfers (whether in cash or property) 

made to the nuclear decommissioning 

fund under § 1.468A–8 during the 

taxable year that were not treated as 

deemed transfers under § 1.468A–8(a)(4) 

for a prior taxable year; 

(vi) The total amount of any special 

transfers (whether in cash or property) 

deemed made to the nuclear 

decommissioning fund under § 1.468A– 

8(a)(4) for the taxable year; and 

(vii) For each item of property 

included in the amounts described in 

paragraph (b)(4)((v) or (vi) of this 

section, the amount of the item of 

property and whether the basis of the 

item of property is determined under 

§ 1.468A–8(b)(5)(iii)(A) or § 1.468A– 

8(b)(5)(iii)(B). 

§ 1.468A–8 Special transfers to qualified 

funds pursuant to section 468A(f). 

(a) General rule—(1) In general. Under 

section 468A(f), a taxpayer maintaining 

a qualified nuclear decommissioning 

fund with respect to a nuclear power 

plant may transfer cash or property into 

the fund (a special transfer). The special 

transfer is not subject to the ruling 

amount limitation in section 468A(b) 

and is not treated as a cash payment for 

purposes of that limitation. Thus, a 

taxpayer may, in the same taxable year, 

pay the ruling amount and make a 

special transfer into the fund. A special 

transfer may be made in cash, property, 

or both cash and property. The amount 

of a special transfer (that is, the amount 

of cash and the fair market value of 

property transferred) may not exceed 

the present value of the pre-2005 

nonqualifying amount of nuclear 

decommissioning costs with respect to 

the nuclear power plant. The taxpayer is 

entitled to a deduction against income 

for a special transfer, as described in 

paragraph (b) of this section. A special 

transfer may not be made to a nuclear 

decommissioning fund before the first 

taxable year in which a deduction 

amount is applicable to the nuclear 

decommissioning fund (see paragraph 

(c) of this section). 

(2) Pre-2005 nonqualifying amount— 

(i) In general. The present value of the 

pre-2005 nonqualifying amount of 

nuclear decommissioning costs with 

respect to a nuclear power plant is the 

amount equal to the pre-2005 

nonqualifying percentage of the present 

value of the estimated future 

decommissioning costs (as defined in 

§ 1.468A–1(b)(6)) with respect to the 

nuclear power plant as of the first day 

of the taxable year of the taxpayer in 

which the special transfer is made or 

deemed made (or a later date that is on 

or before the date on which the special 

transfer is expected to be made if the 

taxpayer establishes to the satisfaction 

of the IRS that the determination of 

present value as of such date is 

reasonable and consistent with the 

principles and provisions of this 

section). For this purpose, the pre-2005 

nonqualifying percentage for the plant is 

100 percent reduced by the sum of— 

(A) The qualifying percentage (within 

the meaning of § 1.468A–3(d)(4) as in 

effect on December 31, 2005) used in 

determining the taxpayer’s last schedule 

of ruling amounts for the nuclear 

decommissioning fund under the law in 

effect before the enactment of the 

Energy Policy Act of 2005 (that is, the 

percentage of the plant’s total nuclear 

decommissioning costs that were 

permitted to be funded through the fund 

under the law in effect before the 

enactment of the Energy Policy Act of 

2005); and 

(B) The percentage of 

decommissioning costs transferred in 

any previous special transfer (that is, the 

amount transferred as a percentage of 

the present value of the estimated future 

costs of decommissioning as of the first 

day of the taxable year in which such 

previous transfer was made). 

(ii) Pre-2005 nonqualifying amount of 

transferee. If there is a transfer of a 

nuclear decommissioning fund or part 

or all of its assets and § 1.468A–6 

applies to the transfer, the pre-2005 

nonqualifying amount determined with 

respect to the transferee is equal to the 

pre-2005 nonqualifying amount (or a 

proportionate part of the pre-2005 

nonqualifying amount) that would have 

been determined with respect to the 

transferor but for such transfer. 

(3) Transfers in multiple years. A 

taxpayer making a special transfer is not 

required to transfer the entire eligible 

amount in a single year. The 

requirements of paragraph (c) of this 

section apply separately to each year in 

which a special transfer is made. In 

calculating the amount of any 

subsequent transfer, the taxpayer must 

reduce the pre-2005 nonqualifying 

percentage under paragraph (a)(2) of this 

section to take into account all previous 

transfers. For example, if a taxpayer has 

a pre-2005 nonqualifying percentage of 

40 percent, and transfers half of the 

eligible amount in a special transfer, any 

subsequent transfer must be calculated 

on the basis of a pre-2005 nonqualifying 

percentage of 20 percent. 

(4) Deemed payment rules—(i) In 

general. The amount of any special 

transfer (whether in cash or property) 

described in § 1.468A–8 and made by an 

electing taxpayer to a nuclear 

decommissioning fund on or before the 

15th day of the third calendar month 

after the close of any taxable year (the 

deemed payment deadline date) shall be 

deemed made during such taxable year 

if the electing taxpayer irrevocably 

designates the amount as relating to 

such taxable year on its timely filed 

Federal income tax return for such 

taxable year or, in the case of special 

transfers described in paragraph 

(a)(4)(ii) of this section, on an amended 

return for such taxable year (see 

§ 1.468A–7(b)(4)(v) and (vi) for rules 

relating to such designation). 

(ii) Special rule for certain special 

transfers. Special transfers that the 

electing taxpayer designates as relating 

to a taxable year beginning after 

December 31, 2005, and ending before 

January 1, 2010, which are actually 

made within 90 days after the electing 

taxpayer receives a ruling from the 

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80714 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 

Secretary relating to the special transfer 

are deemed made during the taxable 

year designated as the year to which the 

special transfer relates. 

(b) Deduction for amounts 

transferred—(1) In general. (i) Except as 

provided in this paragraph (b), the 

deduction for any special transfer is 

allowed ratably over the remaining 

useful life of the nuclear power plant. 

The amount of the deduction for any 

taxable year is the deduction amount for 

such year specified in the schedule of 

deduction amounts required under 

paragraph (c) of this section. 

(ii) For purposes of this paragraph (b), 

the remaining useful life of the nuclear 

power plant is the period beginning on 

the first day of the taxable year during 

which the transfer is made and ending 

on the last day of the taxable year that 

includes the last day of the estimated 

useful life of the nuclear power plant. 

The last day of the estimated useful life 

of the nuclear power plant is 

determined for this purpose under the 

rules of § 1.468A–3(c)(2). 

(2) Amount of deduction—(i) General 

rule. Except as provided in this 

paragraph (b)(2), the deduction for 

property contributed in a special 

transfer is limited to the lesser of the fair 

market value of the property contributed 

or the taxpayer’s basis in that property. 

(ii) Election—(A) In general. If the fair 

market value of the property contributed 

is less than the taxpayer’s adjusted basis 

in such property as of the date the 

property is contributed and the fund 

elects to treat the fair market value of 

the property as its adjusted basis in the 

property, the taxpayer may deduct an 

amount equal to the adjusted basis of 

the contributed property. 

(B) Manner of making election. The 

election described in paragraph 

(b)(2)(ii)(A) of this section is made for 

property contributed in a special 

transfer by attaching a description of the 

property and a statement that the fund 

is making an election under § 1.468A– 

8(b)(2)(ii) with respect to the property to 

the return of the fund for the taxable 

year in which the property is 

contributed to the fund. 

(C) Election allowed for property 

transferred prior to December 23, 2010. 

The election described in paragraph 

(b)(2)(ii)(A) of this section may be made 

and a deduction equal to adjusted basis 

will be allowed for property contributed 

in a special transfer prior to December 

23, 2010. The election in such a case 

may be made on an amended return of 

the fund for the taxable year in which 

the property is contributed to the fund 

and the transferor may amend 

previously filed returns to claim a 

deduction calculated by reference to the 

adjusted basis of the property. 

(3) Denial of deduction for previously 

deducted amounts. If a deduction (other 

than a deduction under section 468A) 

has been allowed to the taxpayer (or a 

predecessor) on account of expected 

decommissioning costs for a nuclear 

power plant (a nonconforming 

deduction) or an amount otherwise 

includible in income has been excluded 

from the gross income of the taxpayer 

(or a predecessor) on account of such 

expected decommissioning costs (a 

nonconforming exclusion), the 

deduction allowed for a special transfer 

to the nuclear decommissioning fund 

maintained with respect to the plant is 

reduced. In the case of a single special 

transfer of the full eligible amount, the 

reduction is equal to the aggregate 

amount of all nonconforming 

deductions and nonconforming 

exclusions. In the case of a transfer of 

less than the full eligible amount, the 

reduction is a ratable portion of such 

aggregate amount. 

(4) Transfers of qualified nuclear 

decommissioning funds. (i) If a special 

transfer is made to any qualified nuclear 

decommissioning fund, there is a 

subsequent transfer of the fund or the 

assets of the fund (a fund transfer), and 

§ 1.468–6 applies to the fund transfer, 

any amount of the deduction under 

paragraph (b) of this section allocable to 

taxable years ending after the date of the 

fund transfer will be allowed as a 

current deduction to the transferor for 

the taxable year that includes the date 

of the fund transfer. See § 468A–6(c) for 

additional rules concerning transfers of 

decommissioning funds, including the 

transfer of a portion of the taxpayer’s 

interest in a nuclear power plant. If a 

taxpayer transfers only part of the fund 

or the fund’s assets, the rules in this 

paragraph (b)(4) apply only to the 

corresponding portion of the deduction 

under paragraph (b) of this section. 

(ii) If a deduction is allowed to the 

transferor under paragraph (b)(4)(i) of 

this section and the transferee is related 

to the transferor, the Internal Revenue 

Service (IRS) will not approve the 

transferee’s schedule of ruling amounts 

for taxable years beginning after the date 

of the transfer unless the ruling amounts 

are deferred in a manner that results in 

recapture of the acceleration amount. 

For this purpose— 

(A) The acceleration amount is the 

difference between the deduction 

allowed under this paragraph (b)(4) and 

the present value as of the beginning of 

the acceleration period of the 

deductions that, but for the transfer, 

would have been allowed under this 

paragraph (b) for taxable years during 

the acceleration period; 

(B) The acceleration amount is 

recaptured if the aggregate present value 

of the ruling amounts at the beginning 

of the acceleration period is equal to the 

amount by which the aggregate present 

value of the ruling amounts that would 

have been approved but for this 

paragraph (b)(4)(ii) exceeds the 

acceleration amount; 

(C) The acceleration period is the 

period from the first day of the 

transferor’s first taxable year beginning 

after the date of the transfer until the 

end of the plant’s remaining useful life; 

(D) Present values will be determined 

using the assumptions that are used in 

determining the transferee’s first 

schedule of ruling amounts; and 

(E) A transferor and a transferee are 

related if their relationship is specified 

in section 267(b) or section 707(b)(1) or 

they are treated as a single taxpayer 

under section 41(f)(1)(A) or (B). 

(5) Special rules—(i) Gain or loss not 

recognized on transfers to fund. No gain 

or loss will be recognized on any special 

transfer. 

(ii) Taxpayer basis in fund. 

Notwithstanding any other provision of 

the Internal Revenue Code (Code) and 

regulations, the taxpayer’s basis in the 

fund is not increased by reason of the 

special transfer. 

(iii) Fund basis in transferred 

property—(A) In general. Except as 

provided in paragraph (b)(5)(iii)(B) of 

this section, the fund’s basis in any 

property transferred in a special transfer 

is the same as the transferor’s basis in 

the property immediately before the 

transfer. 

(B) Basis in case of election. If a fund 

makes the election described in 

paragraph (b)(2)(ii) of this section, the 

fund’s basis in the property transferred 

is the fair market value of the property 

on the date of transfer. 

(c) Schedule of deductions required— 

(1) In general. A taxpayer may not make 

a special transfer to a qualified nuclear 

decommissioning fund unless the 

taxpayer requests from the IRS a 

schedule of deduction amounts in 

connection with such transfer. A 

schedule of deduction amounts for a 

nuclear decommissioning fund 

(schedule of deduction amounts) is a 

ruling (within the meaning of 

§ 601.201(a)(2) of this chapter) 

specifying the annual deductions 

(deduction amounts) that, over the 

taxable years in the remaining useful 

life of the nuclear power plant, will 

result in the deduction of the entire 

amount of the special transfer. Such a 

request may be combined with a request 

for a schedule of ruling amounts under 

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Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 80715 

§ 1.468A–3(a). In the case of a combined 

request, the schedule of deduction 

amounts requested under this paragraph 

(c)(1) must be stated separately from the 

schedule of ruling amounts requested 

under § 1.468A–3(a) and approval of the 

schedule of deduction amounts under 

this section will constitute a separate 

ruling. A request for a schedule of 

deduction amounts must comply with 

all provisions of paragraph (d) of this 

section. 

(2) Transfers in multiple taxable 

years. A taxpayer making a special 

transfer in more than one taxable year 

pursuant to paragraph (a)(3) of this 

section must request a separate schedule 

of deduction amounts in connection 

with each special transfer. More than 

one schedule of deduction amounts can 

be requested in a single ruling request 

to the Secretary and the Secretary will 

provide, in a single ruling, separate 

schedules of deduction amounts for 

each of a series of special transfers 

provided that each request for a separate 

schedule of deduction amounts 

complies with all requirements of this 

paragraph. 

(3) Transfer of partial interest in fund. 

If a taxpayer transfers part of a fund or 

a fund’s assets and is allowed a 

deduction under paragraph (b)(3) of this 

section, the taxpayer must request a new 

schedule of deduction amounts in 

connection with the transfer. 

(4) Special transfer permitted before 

receipt of schedule. If an electing 

taxpayer has filed a timely request for a 

schedule of deduction amounts in 

connection with a special transfer for a 

taxable year and does not receive the 

schedule of deduction amounts before 

the deemed payment deadline for such 

taxable year, the taxpayer may make a 

special transfer to the nuclear 

decommissioning fund on the basis of 

the special transfer amount proposed in 

the taxpayer’s request. If the schedule of 

deduction amounts provided by the 

Secretary is based on a special transfer 

amount that differs from the special 

transfer amount proposed in the 

taxpayer’s request, rules similar to the 

rules of § 1.468A–3(g)(2) and (3) shall 

apply. 

(d) Manner of requesting schedule of 

deduction amounts—(1) In general. (i) 

In order to receive a deduction amount 

for any taxable year, a taxpayer must file 

a request for a schedule of deduction 

amounts that complies with the 

requirements of this paragraph (d), the 

applicable procedural rules set forth in 

§ 601.201(e) of this chapter (Statement 

of Procedural Rules) and the 

requirements of any applicable revenue 

procedure that is in effect on the date 

the request is filed. 

(ii) A separate request for a schedule 

of deduction amounts is required for 

each nuclear decommissioning fund 

established by a taxpayer (see § 1.468A– 

5(a) for rules relating to the number of 

nuclear decommissioning funds that a 

taxpayer can establish). 

(iii) Except as provided by § 1.468A– 

5(a)(1)(iv) (relating to certain 

unincorporated organizations that may 

be taxable as corporations) and 

§ 1.468A–3 (relating to a request for a 

schedule of ruling amounts), a request 

for a schedule of deduction amounts 

must not contain a request for a ruling 

on any other issue, whether the issue 

involves section 468A or another 

section of the Code. 

(iv) In the case of an affiliated group 

of corporations that join in the filing of 

a consolidated return, the common 

parent of the group may request a 

schedule of deduction amounts for each 

member of the group that possesses a 

qualifying interest in the same nuclear 

power plant by filing a single 

submission with the IRS. 

(v) Except as provided in paragraph 

(d)(1)(vi) of this section, the IRS will not 

provide or revise a deduction amount 

applicable to a taxable year in response 

to a request for a schedule of deduction 

amounts that is filed after the deemed 

payment deadline date (as defined in 

paragraph (a)(4) of this section) for such 

taxable year. 

(vi) For special transfers relating to 

taxable years beginning after December 

31, 2005, and before January 1, 2010, the 

IRS will not provide a deduction 

amount in response to a request for a 

schedule of deduction amounts that is 

filed after February 22, 2011. 

(vii) Except as provided in paragraph 

(d)(1)(viii) of this section, a request for 

a schedule of deduction amounts shall 

be considered filed only if such request 

complies substantially with the 

requirements of this paragraph (d). In 

determining the date when a request is 

filed, the principles of sections 7502 

and 7503 shall apply. 

(viii) If a request does not comply 

substantially with the requirements of 

this paragraph (d), the IRS will notify 

the taxpayer of that fact. If the 

information or materials necessary to 

comply substantially with the 

requirements of this paragraph (d) are 

provided to the IRS within 30 days after 

this notification, the request will be 

considered filed on the date of the 

original submission. In addition, the 

request will be considered filed on the 

date of the original submission in a case 

in which the information and materials 

are provided more than 30 days after the 

notification if the IRS determines that 

the electing taxpayer made a good faith 

effort to provide the applicable 

information or materials within 30 days 

after notification and also determines 

that treating the request as filed on the 

date of the original submission is 

consistent with the purposes of section 

468A. In any other case in which the 

information or materials necessary to 

comply substantially with the 

requirements of this paragraph (d) are 

not provided within 30 days after the 

notification, the request will be 

considered filed on the date that all 

information or materials necessary to 

comply with the requirements of this 

paragraph (d) are provided. 

(2) Information required. A request for 

a schedule of deduction amounts must 

contain the following information: 

(i) The taxpayer’s name, address and 

taxpayer identification number. 

(ii) Whether the request is for an 

initial schedule of deduction amounts 

or a schedule of deduction amounts for 

a subsequent special transfer. 

(iii) The name and location of the 

nuclear power plant with respect to 

which a schedule of deduction amounts 

is requested. 

(iv) A description of the taxpayer’s 

qualifying interest in the nuclear power 

plant and the percentage of such nuclear 

power plant that the qualifying interest 

of the taxpayer represents. 

(v) The present value of the estimated 

future decommissioning costs (as 

defined in § 1.468A–1(b)(6)) with 

respect to the taxpayer’s qualifying 

interest in the nuclear power plant as of 

the first day of the taxable year of the 

taxpayer in which a transfer is made 

under this section. 

(vi) A description of the assumptions, 

estimates and other factors that were 

used by the taxpayer to determine the 

amount of decommissioning costs, 

including each of the following if 

applicable: 

(A) A description of the proposed 

method of decommissioning the nuclear 

power plant (for example, prompt 

removal/dismantlement, safe storage 

entombment with delayed 

dismantlement, or safe storage 

mothballing with delayed 

dismantlement). 

(B) The estimated year in which 

substantial decommissioning costs will 

first be incurred. 

(C) The estimated year in which the 

decommissioning of the nuclear power 

plant will be substantially complete (see 

§ 1.468A–5(d)(3) for a definition of 

substantial completion of 

decommissioning). 

(D) The total estimated cost of 

decommissioning expressed in current 

dollars (that is, based on price levels in 

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80716 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 

effect at the time of the current 

determination). 

(E) The total estimated cost of 

decommissioning expressed in future 

dollars (that is, based on anticipated 

price levels when expenses are expected 

to be paid). 

(F) For each taxable year in the period 

that begins with the year specified in 

paragraph (d)(2)(vi)(B) of this section 

(the estimated year in which substantial 

decommissioning costs will first be 

incurred) and ends with the year 

specified in paragraph (d)(2)(vi)(C) of 

this section (the estimated year in which 

the decommissioning of the nuclear 

power plant will be substantially 

complete), the estimated cost of 

decommissioning expressed in future 

dollars. 

(G) A description of the methodology 

used in converting the estimated cost of 

decommissioning expressed in current 

dollars to the estimated cost of 

decommissioning expressed in future 

dollars. 

(H) The assumed after-tax rate of 

return to be earned by the amounts 

collected for decommissioning. 

(I) A copy of each engineering or cost 

study that was relied on or used by the 

taxpayer in determining the amount of 

decommissioning costs. 

(vii) The taxpayer’s pre-2005 

nonqualifying percentage (as defined in 

paragraph (a)(2) of this section). 

(viii) The estimated useful life of the 

nuclear power plant (as such term is 

defined in paragraph (b)(1)(ii) or (iii) of 

this section). 

(ix) If the request is for a subsequent 

schedule of deduction amounts, the 

amount of the previous special transfer 

and the present value of the estimated 

future decommissioning costs (as 

defined in § 1.468A–1(b)(6)) with 

respect to the taxpayer’s qualifying 

interest in the nuclear power plant as of 

the first day of the taxable year of the 

taxpayer in which the previous special 

transfer was made. 

(x) If the request is for a subsequent 

schedule of deduction amounts, a copy 

of all schedules of deduction amounts 

that relate to the nuclear power plant to 

which the request relates and that were 

previously issued to the taxpayer 

making the request. 

(xi) If the request for a schedule of 

deduction amounts contains a request, 

pursuant to § 1.468A–5(a)(1)(iv), that the 

IRS rule whether an unincorporated 

organization through which the assets of 

the fund are invested is an association 

taxable as a corporation for Federal tax 

purposes, a copy of the legal documents 

establishing or otherwise governing the 

organization. 

(xii) Any other information required 

by the IRS that may be necessary or 

useful in determining the schedule of 

deduction amounts. 

(3) Statement required. A taxpayer 

requesting a schedule of deduction 

amounts under this paragraph (d) must 

submit a statement that any 

nonconforming deductions and 

nonconforming exclusions have reduced 

the deduction allowed for the special 

transfer in accordance with paragraph 

(b)(2) of this section. 

(4) Administrative procedures. The 

IRS may prescribe administrative 

procedures that supplement the 

provisions of paragraphs (d)(1) and (2) 

of this section. In addition, the IRS may, 

in its discretion, waive the requirements 

of paragraphs (d)(1) and (2) of this 

section under appropriate 

circumstances. 

§ 1.468A–9 Effective/applicability date. 

Sections 1.468A–1 through 1.468A–8 

are effective on December 23, 2010 and 

apply with respect to taxable years 

ending after such date. Special rules 

that are provided for taxable years 

ending on or before such date, such as 

the special rule for certain special 

transfers contained in § 1.468A– 

8(a)(4)(ii), apply with respect to such 

taxable years. In addition, a taxpayer 

may apply the provisions of §§ 1.468A– 

1 through 1.468A–8 with respect to a 

taxable year ending on or before 

December 23, 2010 if all such provisions 

are consistently applied. 

PART 602—OMB CONTROL NUMBERS 

UNDER THE PAPERWORK 

REDUCTION ACT 

■ Par. 4. The authority citation for part 

602 continues to read as follows: 

Authority: 26 U.S.C. 7805. 

■ Par. 5. In § 602.101, paragraph (b) is 

amended as follows: 

■ 1. The following entries to the table 

are removed: 

§ 602.101 OMB Control numbers. 

* * * * * 

(b) * * * 

CFR part or section where 

identified and described 

Current OMB 

control No. 

* * * * * 

1.468A–3T ............................ 1545–1269 

1545–1378 

1545–1511 

* * * * * 

1.468A–4T ............................ 1545–0954 

* * * * * 

1.468A–7T ............................ 1545–0954 

CFR part or section where 

identified and described 

Current OMB 

control No. 

1545–1511 

* * * * * 

1.468A–3T(h), 1.468A–7T, 

and 1.468A–8T(d) ............. 1545–2091 

* * * * * 

■ 2. The following entries are revised in 

the table: 

§ 602.101 OMB Control numbers. 

* * * * * 

(b) * * * 

CFR part or section where 

identified and described 

Current OMB 

control No. 

* * * * * 

1.468A–7 .............................. 1545–0954 

1545–1511 

* * * * * 

■ 3. The following entry is added in 

numerical order to the table: 

§ 602.101 OMB Control numbers. 

* * * * * 

(b) * * * 

CFR part or section where 

identified and described 

Current OMB 

control No. 

* * * * * 

1.468A–3(h), 1.468A–7, and 

1.468A–8(d) ...................... 1545–2091 

* * * * * 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: November 1, 2010. 

Michael Mundaca, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2010–32049 Filed 12–22–10; 8:45 am] 

BILLING CODE 4830–01–P 

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