52556 Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Rules and Regulations 

annual fiscal period, other than a period 

in the fiscal year within which the 

registration statement became effective, 

or, for offerings conducted pursuant to 

§ 230.415(a)(1)(vii) or § 230.415(a)(1)(x), 

the takedown for the offering occurred, 

there are no asset-backed securities of 

such class that were sold in a registered 

transaction held by non-affiliates of the 

depositor and a certification on Form 15 

(17 CFR 249.323) has been filed; or 

(2) When there are no asset-backed 

securities of such class that were sold in 

a registered transaction still 

outstanding, immediately upon filing 

with the Commission a certification on 

Form 15 (17 CFR 249.323) if the issuer 

of such class has filed all reports 

required by Section 13(a), without 

regard to Rule 12b–25 (17 CFR 249.322), 

for the shorter of its most recent three 

fiscal years and the portion of the 

current year preceding the date of filing 

Form 15, or the period since the issuer 

became subject to such reporting 

obligation. If the certification on Form 

15 is subsequently withdrawn or 

denied, the issuer shall, within 60 days, 

file with the Commission all reports 

which would have been required if such 

certification had not been filed. 

Note 1 to Paragraph (b): Securities held of 

record by a broker, dealer, bank or nominee 

for any of them for the accounts of customers 

shall be considered as held by the separate 

accounts for which the securities are held. 

Note 2 to Paragraph (b): An issuer may not 

suspend reporting if the issuer and its 

affiliates acquire and resell securities as part 

of a plan or scheme to evade the reporting 

obligations of Section 15(d). 

(c) This section does not affect any 

other reporting obligation applicable 

with respect to any classes of securities 

from additional takedowns under the 

same or different registration statements 

or any reporting obligation that may be 

applicable pursuant to section 12 of the 

Act (15 U.S.C. 78l). 

PART 249—FORMS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 5. The authority citation for part 249 

continues to read in part as follows: 

Authority: 15 U.S.C. 78a et seq. and 7201 

et seq.; and 18 U.S.C. 1350, unless otherwise 

noted. 

* * * * * 

■ 6. Amend Form 15 (referenced in 

§ 249.323) by: 

■ a. Adding a checkbox referring to 

‘‘Rule 15d–22(b)’’ after the checkbox 

referring to ‘‘Rule 15d–6’’; and 

■ b. By revising the first sentence of the 

Instruction to read: ‘‘This form is 

required by Rules 12g–4, 12h–3, 15d–6 

and 15d–22 of the General Rules and 

Regulations under the Securities 

Exchange Act of 1934.’’ 

Note: The text of Form 15 does not and this 

amendment will not appear in the Code of 

Federal Regulations. 

By the Commission. 

Dated: August 17, 2011. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–21500 Filed 8–22–11; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 and 602 

[TD 9547] 

RIN 1545–BF05 

Election To Expense Certain Refineries 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document provides final 

regulations relating to the election to 

expense qualified refinery property 

under section 179C of the Internal 

Revenue Code (Code). These final 

regulations adopt the temporary 

regulations with certain modifications 

to reflect changes to the law made by 

the Energy Improvement and Extension 

Act of 2008. 

DATES: Effective Date: These regulations 

are effective August 22, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Philip Tiegerman (202) 622–3110 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these regulations has 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 (1545–2103). Responses to this 

collection of information are mandatory. 

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 

Section 179C was added to the Code 

by section 1323(a) of the Energy Policy 

Act of 2005, Public Law 109–58 (119 

Stat. 594), to encourage the construction 

of new refineries and the expansion of 

existing refineries to enhance the 

nation’s refinery capacity. Section 

179C(a) allows a taxpayer to elect to 

deduct as an expense 50 percent of the 

cost of any qualified refinery property. 

The remaining 50 percent of the 

taxpayer’s qualifying expenditures 

generally are recovered under section 

168 and section 179B, if applicable. All 

costs properly capitalized into qualified 

refinery property are includable in the 

cost of the qualified refinery property. 

As originally enacted, section 

179C(c)(1)(B) required that qualified 

refinery property be placed in service by 

a taxpayer after August 8, 2005, and 

before January 1, 2012. Under section 

179C(c)(1)(F) as originally enacted, (i) 

the construction of the property must 

have been subject to a written binding 

construction contract entered into 

before January 1, 2008, (ii) the property 

must have been placed in service before 

January 1, 2008, or (iii) in the case of 

self-constructed property, the 

construction of the property must have 

begun after June 14, 2005, and before 

January 1, 2008. Section 179C(d)(1) 

originally required that a qualified 

refinery be designed to serve the 

primary purpose of processing liquid 

fuel from crude oil or qualified fuels (as 

defined in section 45K(c)). Under 

section 179C(e) as originally enacted, 

qualified refinery property must have 

enabled the existing qualified refinery to 

increase total volume output 

(determined without regard to asphalt or 

lube oil) by 5 percent or more on an 

average daily basis or to process 

qualified fuels (as defined in section 

45K(c)) at a rate that is equal to or 

greater than 25 percent of the total 

throughput of the qualified refinery on 

an average daily basis. 

Section 209 of the Energy 

Improvement and Extension Act of 2008 

(the ‘‘2008 Act’’), Division B, Public 

Law 110–343 (122 Stat. 3765), amended 

section 179C in several respects. The 

2008 Act extended the placed in service 

date of section 179C(c)(1)(B) to January 

1, 2014. In addition, the 2008 Act 

amended section 179C(c)(1)(F) to 

provide that (i) the construction of the 

property must be subject to a written 

binding construction contract entered 

into before January 1, 2010, (ii) the 

property must be placed in service 

before January 1, 2010, or (iii) in the 

case of self-constructed property, the 

construction of the property must begin 


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after June 14, 2005, and before January 

1, 2010. 

Effective for property placed in 

service after October 3, 2008, the 2008 

Act amended the definition of 

‘‘qualified refinery’’ under section 

179C(d)(1) to include a refinery that is 

designed to serve the primary purpose 

of processing liquid fuel directly from 

shale or tar sands, and expanded the 

production capacity requirement of 

section 179C(e)(2) to include property 

that enables the existing qualified 

refinery to process shale or tar sands. 

On July 9, 2008, the Treasury 

Department and the IRS published in 

the Federal Register temporary 

regulations (TD 9412), 73 FR 39230, and 

a notice of proposed rulemaking (REG– 

146895–05), 73 FR 39270, by crossreference to temporary regulations. A 

public hearing was scheduled for 

November 20, 2008. The public hearing 

was cancelled on November 6, 2008 (73 

FR 66001) because no written comments 

or requests to speak were received. 

The temporary regulations and 

proposed regulations are hereby 

removed and the final regulations adopt 

the rules of the temporary and proposed 

regulations with certain revisions, 

described below, to reflect amendments 

to the statute made by the 2008 Act. 

Explanation of Provisions 

Placed in Service and Construction and 

Written Binding Contract Requirements 

Section 1.179C–1T(b)(4) and 

§ 1.179C–1T(b)(7)(i)(A) of the temporary 

regulations required that qualified 

refinery property be placed in service by 

the taxpayer after August 8, 2005, and 

before January 1, 2012. Section 1.179C– 

1(b)(4) and § 1.179C–1(b)(7)(i)(A) of the 

final regulations provide that the 

property must be placed in service after 

August 8, 2005, and before January 1, 

2014. 

Section 1.179C–1T(b)(7)(iii) of the 

temporary regulations provided that the 

manufacture, construction, or 

production of self-constructed property 

must begin before January 1, 2008. 

Under § 1.179C–1(b)(7)(iii) of the final 

regulations, the manufacture, 

construction, or production of selfconstructed property must begin before 

January 1, 2010. 

Under § 1.179C–1T(b)(7)(iii)(C) of the 

temporary regulations, a component of 

self-constructed property had to be 

acquired or self-constructed before 

January 1, 2008, in order to qualify as 

qualified refinery property. Section 

1.179C–1(b)(7)(iii)(C) of the final 

regulations provides that the component 

must be acquired or self-constructed 

before January 1, 2010. 

Qualified Refinery Property 

Section 1.179C–1T(b)(2)(i) of the 

temporary regulations provided that a 

qualified refinery is any refinery located 

in the United States that is designed to 

serve the primary purpose of processing 

crude oil or qualified fuels. The final 

regulations add new § 1.179C– 

1(b)(2)(i)(A) and new § 1.179C– 

1(b)(2)(i)(B). Section 1.179C– 

1(b)(2)(i)(A) of the final regulations 

provides that in the case of property 

placed in service after August 8, 2005, 

and on or before October 3, 2008, a 

qualified refinery is any refinery located 

in the United States that is designed to 

serve the primary purpose of processing 

liquid fuel from crude oil or qualified 

fuels. Section 1.179C–1(b)(2)(i)(B) of the 

final regulations provides that, in the 

case of property placed in service after 

October 3, 2008, and before January 1, 

2014, a qualified refinery is any refinery 

located in the United States that is 

designed to serve the primary purpose 

of processing liquid fuel from crude oil, 

qualified fuels, or directly from shale or 

tar sands. 

Production Capacity 

Section 1.179C–1T(b)(5)(i) of the 

temporary regulations generally 

provided that refinery property is 

considered to be qualified refinery 

property if (A) it enables the existing 

qualified refinery to increase the total 

volume output by at least 5 percent on 

an average daily basis; or (B) it enables 

the existing qualified refinery to 

increase the percentage of total 

throughput attributable to processing 

qualified fuels to a rate that is at least 

25 percent of the total throughput on an 

average daily basis. The final 

regulations, in § 1.179C–1(b)(5)(i), 

modify this definition to provide 

generally that refinery property is 

considered to be qualified refinery 

property if (A) it enables the existing 

qualified refinery to increase the total 

volume output by at least 5 percent on 

an average daily basis; (B) in the case of 

property placed in service after August 

8, 2005, and on or before October 3, 

2008, it enables the existing qualified 

refinery to increase the percentage of 

total throughput attributable to 

processing qualified fuels to a rate that 

is at least 25 percent of the total 

throughput on an average daily basis; or 

(C) in the case of property placed in 

service after October 3, 2008, and before 

January 1, 2014, it enables the existing 

qualified refinery to increase the 

percentage of total throughput 

attributable to processing shale, tar 

sands, or qualified fuels to a rate that is 

at least 25 percent of total throughput 

on an average daily basis. 

Effective/Applicability Date 

This section is applicable for taxable 

years ending on or after August 22, 

2011. For taxable years ending before 

August 22, 2011, taxpayers may apply 

the proposed regulations published on 

July 9, 2008, or, in the alternative, may 

apply these final regulations. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 12866 as supplemented 

by Executive Order 13563. The 

collections of information in § 1.179– 

1(d)(2), (e)(2), and (f) are required by 

section 179C(b), (g), and (h), 

respectively, and, therefore, are not 

imposed by these regulations. 

Accordingly, they are not subject to the 

Regulatory Flexibility Act. Only the 

collection of information in § 1.179– 

1(d)(3), regarding the revocation of an 

election under section 179C(a), is 

imposed by these regulations. It is 

hereby certified that the collection of 

information contained in § 1.179–1(d)(3) 

of the regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

This certification is based upon the fact 

that although most of the 12 taxpayers 

who potentially could or would make 

an election under section 179C(a) will 

be small entities, it is expected that few, 

if any, of those 12 taxpayers once having 

made the election will choose to revoke 

it. Therefore, the collection of 

information will not affect a substantial 

number of small entities. The 

information required to revoke an 

election under section 179C(a) consists 

entirely of a portion of the information 

required to make the election. 

Consequently, the economic burden for 

those taxpayers who choose to revoke 

the election is minimal in nature and 

the regulations do not impose any 

burden in addition to the burden 

associated with making the election. 

Therefore, a regulatory assessment is not 

required. It also has been determined 

that section 553(b) of the Administrative 

Procedure Act (5 U.S.C. chapter 6) does 

not apply to these regulations. 

Drafting Information 

The principal author of these 

regulations is Philip Tiegerman, Office 

of Associate Chief Counsel 

(Passthroughs and Special Industries). 

However, other personnel from the IRS 

and Treasury Department participated 

in their development. 


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52558 Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Rules and Regulations 

List of Subjects 

26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

26 CFR Part 602 

Reporting and recordkeeping 

requirements. 

Adoption of 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 continues to read in part as 

follows: 

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

■ Par. 2. Section 1.179C–1 is added to 

read as follows: 

§ 1.179C–1 Election to expense certain 

refineries. 

(a) Scope and definitions—(1) Scope. 

This section provides the rules for 

determining the deduction allowable 

under section 179C(a) for the cost of any 

qualified refinery property. The 

provisions of this section apply only to 

a taxpayer that elects to apply section 

179C in the manner prescribed under 

paragraph (d) of this section. 

(2) Definitions. For purposes of 

section 179C and this section, the 

following definitions apply: 

(i) Applicable environmental laws are 

any applicable federal, state, or local 

environmental laws. 

(ii) Qualified fuels has the meaning 

set forth in section 45K(c). 

(iii) Cost is the unadjusted 

depreciable basis (as defined in 

§ 1.168(b)–1(a)(3), but without regard to 

the reduction in basis for any portion of 

the basis the taxpayer properly elects to 

treat as an expense under section 179C 

and this section) of the property. 

(iv) Throughput is a volumetric rate 

measuring the flow of crude oil, 

qualified fuels, or, in the case of 

property placed in service after October 

3, 2008, and before January 1, 2014, 

shale or tar sands, processed over a 

given period of time, typically 

referenced on the basis of barrels per 

calendar day. 

(v) Barrels per calendar day is the 

amount of fuels that a facility can 

process under usual operating 

conditions, expressed in terms of 

capacity during a 24-hour period and 

reduced to account for down time and 

other limitations. 

(vi) United States has the same 

meaning as that term is defined in 

section 7701(a)(9). 

(b) Qualified refinery property—(1) In 

general. Qualified refinery property is 

any property that meets the 

requirements set forth in paragraphs 

(b)(2) through (b)(7) of this section. 

(2) Description of qualified refinery 

property—(i) In general. Property that 

comprises any portion of a qualified 

refinery may be qualified refinery 

property. For purposes of section 179C 

and this section, a qualified refinery is 

any refinery located in the United States 

that— 

(A) In the case of property placed in 

service after August 8, 2005, and on or 

before October 3, 2008, is designed to 

serve the primary purpose of processing 

liquid fuel from crude oil or qualified 

fuels; or 

(B) In the case of property placed in 

service after October 3, 2008, and before 

January 1, 2014, is designed to serve the 

primary purpose of processing liquid 

fuel from crude oil, qualified fuels, or 

directly from shale or tar sands. 

(ii) Nonqualified refinery property. 

Refinery property is not qualified 

refinery property for purposes of this 

paragraph (b)(2) if— 

(A) The primary purpose of the 

refinery property is for use as a topping 

plant, asphalt plant, lube oil facility, 

crude or product terminal, or blending 

facility; or 

(B) The refinery property is built 

solely to comply with consent decrees 

or projects mandated by Federal, State, 

or local governments. 

(3) Original use—(i) In general. For 

purposes of the deduction allowable 

under section 179C(a), refinery property 

will meet the requirements of this 

paragraph (b)(3) if the original use of the 

property commences with the taxpayer. 

Except as provided in paragraph 

(b)(3)(ii) of this section, original use 

means the first use to which the 

property is put, whether or not that use 

corresponds to the use of the property 

by the taxpayer. Thus, if a taxpayer 

incurs capital expenditures to 

recondition or rebuild property acquired 

or owned by the taxpayer, only the 

capital expenditures incurred by the 

taxpayer to recondition or rebuild the 

property acquired or owned by the 

taxpayer satisfy the original use 

requirement. However, the cost of 

reconditioned or rebuilt property 

acquired by a taxpayer does not satisfy 

the original use requirement. Whether 

property is reconditioned or rebuilt 

property is a question of fact. For 

purposes of this paragraph (b)(3)(i), 

acquired or self-constructed property 

that contains used parts will be treated 

as reconditioned or rebuilt only if the 

cost of the used parts is more than 20 

percent of the total cost of the property. 

(ii) Sale-leaseback. If any new portion 

of a qualified refinery is originally 

placed in service by a person after 

August 8, 2005, and is sold to a taxpayer 

and leased back to the person by the 

taxpayer within three months after the 

date the property was originally placed 

in service by the person, the taxpayerlessor is considered the original user of 

the property. 

(4) Placed-in-service date—(i) In 

general. Refinery property will meet the 

requirements of this paragraph (b)(4) if 

the property is placed in service by the 

taxpayer after August 8, 2005, and 

before January 1, 2014. 

(ii) Sale-leaseback. If a new portion of 

refinery property is originally placed in 

service by a person after August 8, 2005, 

and is sold to a taxpayer and leased 

back to the person by the taxpayer 

within three months after the date the 

property was originally placed in 

service by the person, the property is 

treated as originally placed in service by 

the taxpayer-lessor not earlier than the 

date on which the property is used by 

the lessee under the leaseback. 

(5) Production capacity—(i) In 

general. Refinery property is considered 

qualified refinery property if— 

(A) It enables the existing qualified 

refinery to increase the total volume 

output, determined without regard to 

asphalt or lube oil, by at least 5 percent 

on an average daily basis; 

(B) In the case of property placed in 

service after August 8, 2005, and on or 

before October 3, 2008, it enables the 

existing qualified refinery to increase 

the percentage of total throughput 

attributable to processing qualified fuels 

to a rate that is at least 25 percent of 

total throughput on an average daily 

basis; or 

(C) In the case of property placed in 

service after October 3, 2008, and before 

January 1, 2014, it enables the existing 

qualified refinery to increase the 

percentage of total throughput 

attributable to processing qualified 

fuels, shale, or tar sands to a rate that 

is at least 25 percent of total throughput 

on an average daily basis. 

(ii) When production capacity is 

tested. The production capacity 

requirement of this paragraph (b)(5) is 

determined as of the date the property 

is placed in service by the taxpayer. Any 

reasonable method may be used to 

determine the appropriate baseline for 

measuring capacity increases and to 

demonstrate and substantiate that the 

capacity of the existing qualified 

refinery has been sufficiently increased. 

(iii) Multi-stage projects. In the case of 

multi-stage projects, a taxpayer must 

satisfy the reporting requirements of 

paragraph (f)(2) of this section, 


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Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Rules and Regulations 52559 

sufficient to establish that the 

production capacity requirements of 

this paragraph (b)(5) will be met as a 

result of the taxpayer’s overall plan. 

(6) Applicable environmental laws— 

(i) In general. The environmental 

compliance requirement applies only 

with respect to refinery property, or any 

portion of refinery property, that is 

placed in service after August 8, 2005. 

A refinery’s failure to meet applicable 

environmental laws with respect to a 

portion of the refinery that was in 

service prior to August 8, 2005 will not 

disqualify a taxpayer from making the 

election under section 179C(a) with 

respect to otherwise qualifying refinery 

property. 

(ii) Waiver under the Clean Air Act. 

Refinery property must comply with the 

Clean Air Act, notwithstanding any 

waiver received by the taxpayer under 

that Act. 

(7) Construction of property—(i) In 

general. Qualified property will meet 

the requirements of this paragraph (b)(7) 

if no written binding contract for the 

construction of the property was in 

effect before June 14, 2005, and if— 

(A) The construction of the property 

is subject to a written binding contract 

entered into before January 1, 2010; 

(B) The property is placed in service 

before January 1, 2010; or 

(C) In the case of self-constructed 

property, the construction of the 

property began after June 14, 2005, and 

before January 1, 2010. 

(ii) Definition of binding contract—(A) 

In general. A contract is binding only if 

it is enforceable under state law against 

the taxpayer or a predecessor, and does 

not limit damages to a specified amount 

(for example, by use of a liquidated 

damages provision). For this purpose, a 

contractual provision that limits 

damages to an amount equal to at least 

5 percent of the total contract price will 

not be treated as limiting damages to a 

specified amount. In determining 

whether a contract limits damages, the 

fact that there may be little or no 

damages because the contract price does 

not significantly differ from fair market 

value will not be taken into account. 

(B) Conditions. A contract is binding 

even if subject to a condition, as long as 

the condition is not within the control 

of either party or the predecessor of 

either party. A contract will continue to 

be binding if the parties make 

insubstantial changes in its terms and 

conditions, or if any term is to be 

determined by a standard beyond the 

control of either party. A contract that 

imposes significant obligations on the 

taxpayer or a predecessor will be treated 

as binding, notwithstanding the fact that 

insubstantial terms remain to be 

negotiated by the parties to the contract. 

(C) Options. An option to either 

acquire or sell property is not a binding 

contract. 

(D) Supply agreements. A binding 

contract does not include a supply or 

similar agreement if the payment 

amount and design specification of the 

property to be purchased have not been 

specified. 

(E) Components. A binding contract to 

acquire one or more components of a 

larger property will not be treated as a 

binding contract to acquire the larger 

property. If a binding contract to acquire 

a component does not satisfy the 

requirements of this paragraph (b)(7), 

the component is not qualified refinery 

property. 

(iii) Self-constructed property—(A) In 

general. Except as provided in 

paragraph (b)(7)(iii)(B) of this section, if 

a taxpayer manufactures, constructs, or 

produces property for use by the 

taxpayer in its trade or business (or for 

the production of income by the 

taxpayer), the construction of property 

rules in this paragraph (b)(7) are treated 

as met for qualified refinery property if 

the taxpayer begins manufacturing, 

constructing, or producing the property 

after June 14, 2005, and before January 

1, 2010. Property that is manufactured, 

constructed, or produced for the 

taxpayer by another person under a 

written binding contract (as defined in 

paragraph (b)(7)(ii) of this section) that 

is entered into prior to the manufacture, 

construction, or production of the 

property for use by the taxpayer in its 

trade or business (or for the production 

of income) is considered to be 

manufactured, constructed, or produced 

by the taxpayer. 

(B) When construction begins. For 

purposes of this paragraph (b)(7)(iii), 

construction of property generally 

begins when physical work of a 

significant nature begins. Physical work 

does not include preliminary activities 

such as planning or designing, securing 

financing, exploring, or researching. The 

determination of when physical work of 

a significant nature begins depends on 

the facts and circumstances. 

(C) Components of self-constructed 

property—(1) Acquired components. If a 

binding contract (as defined in 

paragraph (b)(7)(ii) of this section) to 

acquire a component of self-constructed 

property is in effect on or before June 

14, 2005, the component does not 

satisfy the requirements of paragraph 

(b)(7)(i) of this section, and is not 

qualified refinery property. However, if 

construction of the self-constructed 

property begins after June 14, 2005, the 

self-constructed property may be 

qualified refinery property if it meets all 

other requirements of section 179C and 

this section (including paragraph 

(b)(7)(i) of this section), even though the 

component is not qualified refinery 

property. If the construction of selfconstructed property begins before June 

14, 2005, neither the self-constructed 

property nor any component related to 

the self-constructed property is 

qualified refinery property. If the 

component is acquired before January 1, 

2010, but the construction of the selfconstructed property begins after 

December 31, 2009, the component may 

qualify as qualified refinery property 

even if the self-constructed property is 

not qualified refinery property. 

(2) Self-constructed components. If 

the manufacture, construction, or 

production of a component fails to meet 

any of the requirements of paragraph 

(b)(7)(iii) of this section, the component 

is not qualified refinery property. 

However, if the manufacture, 

construction, or production of a 

component fails to meet any of the 

requirements provided in paragraph 

(b)(7)(iii) of this section, but the 

construction of the self-constructed 

property begins after June 14, 2005, the 

self constructed property may qualify as 

qualified refinery property if it meets all 

other requirements of section 179C and 

this section (including paragraph 

(b)(7)(i) of this section). If the 

construction of the self-constructed 

property begins before June 14, 2005, 

neither the self-constructed property nor 

any components related to the selfconstructed property are qualified 

refinery property. If the component was 

self-constructed before January 1, 2010, 

but the construction of the selfconstructed property begins after 

December 31, 2009, the component may 

qualify as qualified refinery property, 

although the self-constructed property is 

not qualified refinery property. 

(c) Computation of expense deduction 

for qualified refinery property. In 

general, the allowable deduction under 

paragraph (d) of this section for 

qualified refinery property is 

determined by multiplying by 50 

percent the cost of the qualified refinery 

property paid or incurred by the 

taxpayer. 

(d) Election—(1) In general. A 

taxpayer may make an election to 

deduct as an expense 50 percent of the 

cost of any qualified refinery property. 

A taxpayer making this election takes 

the 50 percent deduction for the taxable 

year in which the qualified refinery 

property is placed in service. 

(2) Time and manner for making 

election—(i) Time for making election. 

An election specified in this paragraph 


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52560 Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Rules and Regulations 

(d) generally must be made not later 

than the due date (including extensions) 

for filing the original Federal income tax 

return for the taxable year in which the 

qualified refinery property is placed in 

service by the taxpayer. 

(ii) Manner of making election. The 

taxpayer makes an election under 

section 179C(a) and this paragraph (d) 

by entering the amount of the deduction 

at the appropriate place on the 

taxpayer’s timely filed original Federal 

income tax return for the taxable year in 

which the qualified refinery property is 

placed in service, and attaching a report 

as specified in paragraph (f) of this 

section to the taxpayer’s timely filed 

original federal income tax return for 

the taxable year in which the qualified 

refinery property is placed in service. 

(3) Revocation of election—(i) In 

general. An election made under section 

179C(a) and this paragraph (d), and any 

specification contained in such election, 

may not be revoked except with the 

consent of the Commissioner of Internal 

Revenue. 

(ii) Revocation prior to the revocation 

deadline. A taxpayer is deemed to have 

requested, and to have been granted, the 

consent of the Commissioner to revoke 

an election under section 179C(a) and 

this paragraph (d) if the taxpayer 

revokes the election before the 

revocation deadline. The revocation 

deadline is 24 months after the due date 

(including extensions) for filing the 

taxpayer’s Federal income return for the 

taxable year for which the election 

applies. An election under section 

179C(a) and this paragraph (d) is 

revoked by attaching a statement to an 

amended return for the taxable year for 

which the election applies. The 

statement must specify the name and 

address of the refinery for which the 

election applies and the amount 

deducted on the taxpayer’s original 

Federal income tax return for the 

taxable year for which the election 

applies. 

(iii) Revocation after the revocation 

deadline. An election under section 

179C(a) and this paragraph (d) may not 

be revoked after the revocation 

deadline. The revocation deadline may 

not be extended under § 301.9100–1. 

(iv) Revocation by cooperative 

taxpayer. A taxpayer that has made an 

election to allocate the section 179C 

deduction to cooperative owners under 

section 179C(g) and paragraph (e) of this 

section may not revoke its election 

under section 179C(a). 

(e) Election to allocate section 179C 

deduction to cooperative owners—(1) In 

general. If a cooperative taxpayer makes 

an election under section 179C(g) and 

this paragraph (e), the cooperative 

taxpayer may elect to allocate all, some, 

or none of the deduction allowable 

under section 179C(a) for that taxable 

year to the cooperative owner(s). This 

allocation is equal to the cooperative 

owner(s)’ ratable share of the total 

amount allocated, determined on the 

basis of each cooperative owner’s 

ownership interest in the cooperative 

taxpayer. For purposes of this section, a 

cooperative taxpayer is an organization 

to which part I of subchapter T applies, 

and in which another organization to 

which part I of subchapter T applies 

(cooperative owner) directly holds an 

ownership interest. No deduction shall 

be allowed under section 1382 for any 

amount allocated under this paragraph 

(e). 

(2) Time and manner for making 

election—(i) Time for making election. 

A cooperative taxpayer must make the 

election under section 179C(g) and this 

paragraph (e) by the due date (including 

extensions) for filing the cooperative 

taxpayer’s original Federal income tax 

return for the taxable year to which the 

cooperative taxpayer’s election under 

section 179C(a) and paragraph (d) of this 

section applies. 

(ii) Manner of making election. An 

election under this paragraph (e) is 

made by attaching to the cooperative 

taxpayer’s timely filed Federal income 

tax return for the taxable year (including 

extensions) to which the cooperative 

taxpayer’s election under section 

179C(a) and paragraph (d) of this section 

applies a statement providing the 

following information: 

(A) The name and taxpayer 

identification number of the cooperative 

taxpayer. 

(B) The amount of the deduction 

allowable to the cooperative taxpayer 

for the taxable year to which the 

election under section 179C(a) and 

paragraph (d) of this section applies. 

(C) The name and taxpayer 

identification number of each 

cooperative owner to which the 

cooperative taxpayer is allocating all or 

some of the deduction allowable. 

(D) The amount of the allowable 

deduction that is allocated to each 

cooperative owner listed in paragraph 

(e)(2)(ii)(C) of this section. 

(3) Written notice to owners. If any 

portion of the deduction allowable 

under section 179C(a) is allocated to a 

cooperative owner, the cooperative 

taxpayer must notify the cooperative 

owner of the amount of the deduction 

allocated to the cooperative owner in a 

written notice, and on Form 1099– 

PATR, ‘‘Taxable Distributions Received 

from Cooperatives.’’ This notice must be 

provided on or before the due date 

(including extensions) of the 

cooperative taxpayer’s original federal 

income tax return for the taxable year 

for which the cooperative taxpayer’s 

election under section 179C(a) and 

paragraph (d) of this section applies. 

(4) Irrevocable election. A section 

179C(g) election, once made, is 

irrevocable. 

(f) Reporting requirement—(1) In 

general. A taxpayer may not claim a 

deduction under section 179C(a) for any 

taxable year unless the taxpayer files a 

report with the Secretary containing 

information with respect to the 

operation of the taxpayer’s refineries. 

(2) Information to be included in the 

report. The taxpayer must specify— 

(i) The name and address of the 

refinery; 

(ii) Under which production capacity 

requirement under section 179C(e) and 

paragraph (b)(5)(i)(A), (B), and (C) of 

this section the taxpayer’s qualified 

refinery qualifies; 

(iii) Whether the refinery is qualified 

refinery property under section 179C(d) 

and paragraph (b)(2) of this section, 

sufficient to establish that the primary 

purpose of the refinery is to process 

liquid fuel from crude oil, qualified 

fuels, or directly from shale or tar sands. 

(iv) The total cost basis of the 

qualified refinery property at issue for 

the taxpayer’s current taxable year; and 

(v) The depreciation treatment of the 

capitalized portion of the qualified 

refinery property. 

(3) Time and manner for submitting 

report—(i) Time for submitting report. 

The taxpayer is required to submit the 

report specified in this paragraph (f) not 

later than the due date (including 

extensions) of the taxpayer’s Federal 

income tax return for the taxable year in 

which the qualified refinery property is 

placed in service. 

(ii) Manner of submitting report. The 

taxpayer must attach the report 

specified in this paragraph (f) to the 

taxpayer’s timely filed original Federal 

income tax return for the taxable year in 

which the qualified refinery property is 

placed in service. 

(g) Effective/applicability date. This 

section is applicable for taxable years 

ending on or after August 22, 2011. For 

taxable years ending before August 22, 

2011, taxpayers may apply the proposed 

regulations published on July 9, 2008, 

or, in the alternative, may apply these 

final regulations. 

§ 1.179C–1T [Removed] 

■ Par. 3. Section 1.179C–1T is removed. 


rmajette on DSK89S0YB1PROD with RULES
Federal Register / Vol. 76, No. 163 / Tuesday, August 23, 2011 / Rules and Regulations 52561 

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 by adding the following entry 

in numerical order to the table to read 

as follows: 

§ 602.101 OMB control numbers. 

* * * * * 

(b) * * * 

CFR part or section where 

identified and described 

Current OMB 

Control No. 

* * * * * 

1.179C–1 ................................ 1545–2103 

* * * * * 

Approved: August 9, 2011. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

Emily S. McMahon, 

(Acting) Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2011–21408 Filed 8–22–11; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9543] 

RIN 1545–BA99 

Timely Mailing Treated as Timely Filing 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains 

regulations amending a Treasury 

Regulation to provide guidance as to the 

only ways to establish prima facie 

evidence of delivery of documents that 

have a filing deadline prescribed by the 

internal revenue laws, absent direct 

proof of actual delivery. The regulations 

provide that the proper use of registered 

or certified mail, or a service of a private 

delivery service (PDS) designated under 

criteria established by the IRS, will 

constitute prima facie evidence of 

delivery. The regulations are necessary 

to provide greater certainty on this issue 

and to provide specific guidance. The 

regulations affect taxpayers who mail 

Federal tax documents to the Internal 

Revenue Service or the United States 

Tax Court. 

DATES: Effective Date: These regulations 

are effective on August 23, 2011. 

Applicability Date: These regulations 

apply to any payment or document 

mailed and delivered in accordance 

with the requirements of this section in 

an envelope bearing a postmark dated 

after September 21, 2004. 

FOR FURTHER INFORMATION CONTACT: 

Steven Karon, (202) 622- 4570 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these final regulations has 

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– 

1899. The collection of information in 

these final regulations is in § 301.7502– 

1. This information is required in order 

for taxpayers to be able to establish the 

postmark date and prima facie evidence 

of delivery when using certified or 

registered mail. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number. 

Books or records relating to a 

collection of information must be 

retained as long as their contents might 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and return information are 

confidential, as required by 26 U.S.C. 

6103. 

Background 

This document contains regulations 

amending 26 CFR part 301 under 

section 7502 of the Internal Revenue 

Code (Code). Section 7502(a) first 

appeared as part of the recodification of 

the Code in 1954. Section 7502(a) is 

commonly known as the timely mailing/ 

timely filing rule. Section 301.7502–1 of 

the Procedure and Administration 

Regulations provides rules for taxpayers 

to follow to qualify for favorable 

treatment under section 7502. There is 

a conflict among the Federal circuit 

courts of appeal as to whether the 

provisions in section 7502 provide the 

exclusive means to establish prima facie 

evidence of delivery of a document to 

the IRS or the United States Tax Court. 

Specifically, courts have reached 

differing conclusions regarding whether 

a taxpayer may raise a presumption of 

delivery of Federal tax documents to the 

IRS and the United States Tax Court 

only in situations in which the taxpayer 

uses registered or certified mail. 

A notice of proposed rulemaking 

(REG–138176–02) was published in the 

Federal Register (69 FR 56377) on 

September 21, 2004. The proposed 

regulations clarified that, other than 

direct proof of actual delivery, the 

exclusive means to establish prima facie 

evidence of delivery of Federal tax 

documents to the IRS and the United 

States Tax Court is to prove the use of 

registered or certified mail. Under 

section 7502(f)(3), the IRS may extend to 

a service provided by a PDS a rule 

similar to the prima facie evidence of 

delivery rule applicable to certified and 

registered mail. Prior to the publication 

of the notice of proposed rulemaking, 

the IRS had not received any comments 

or suggestions for extending this rule, 

even though the IRS and the Treasury 

Department previously requested 

comments in a prior notice of proposed 

rulemaking under section 7502. See 

Federal Register, 64 FR 2606 (January 

15, 1999). Because the IRS was 

clarifying what documentation it will 

accept as proof of delivery, additional 

comments were sought on this issue. 

Accordingly, in the notice of proposed 

rulemaking, the IRS and the Treasury 

Department encouraged the public to 

make comments regarding whether the 

prima facie evidence of delivery rule 

should be extended to a service 

provided by a PDS. 

Eighteen written comments were 

received in response to the notice of 

proposed rulemaking. Three 

commenters requested a public hearing. 

A notice of public hearing on proposed 

rulemaking was published in the 

Federal Register (69 FR 68282) on 

November 24, 2004. A public hearing 

was held on January 11, 2005. Three 

commenters appeared at the public 

hearing and commented on the notice of 

proposed rulemaking. 

All comments were considered and 

are available for public inspection upon 

request. After consideration of the 

written comments and the comments 

provided at the public hearing, the 

proposed regulations under section 

7502 are adopted as revised by this 

Treasury Decision. The public 

comments, public hearing, and the 

revisions are discussed in this preamble. 

Summary of Comments and 

Explanation of Provisions 

Four commenters expressed concern 

that the proposed regulations limited 

the proof to satisfy the timely mailing/ 

timely filing rule of section 7502(a) 

rather than the prima facie evidence of 

delivery rule of section 7502(c). These 

final regulations do not limit the use of 


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