45518 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2012–0727; Directorate 

Identifier 2012–NM–012–AD] 

RIN 2120–AA64 

Airworthiness Directives; The Boeing 

Company Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to adopt a new 

airworthiness directive (AD) for certain 

The Boeing Company Model DC–9–81 

(MD–81), DC–9–82 (MD–82), DC–9–83 

(MD–83), DC–9–87 (MD–87), and MD– 

88 airplanes. This proposed AD was 

prompted by reports of fatigue cracks 

found in Stringer 11 at the outboard 

flap, inboard drive hinge at Station 

Xrs=164.000. This proposed AD would 

require repetitive inspections for cracks 

in Stringer 11, and a splice repair if 

necessary; and repetitive post-repair 

inspections, and repair if necessary. We 

are proposing this AD to detect and 

correct such cracking, which could 

result in the wing structure not 

supporting the limit load condition, 

which could lead to loss of structural 

integrity of the wing. 

DATES: We must receive comments on 

this proposed AD by September 17, 

2012. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE., 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this proposed AD, contact Boeing 

Commercial Airplanes, Attention: Data 

& Services Management, 3855 

Lakewood Boulevard, MC D800–0019, 

Long Beach, California 90846–0001; 

telephone 206–544–5000, extension 2; 

fax 206–766–5683; Internet https:// 

www.myboeingfleet.com. You may 

review copies of the referenced service 

information at the FAA, Transport 

Airplane Directorate, 1601 Lind Avenue 

SW., Renton, Washington. For 

information on the availability of this 

material at the FAA, call 425–227–1221. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 

9 a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Office 

(phone: 800–647–5527) is in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

FOR FURTHER INFORMATION CONTACT: 

Roger Durbin, Airframe Branch, ANM– 

120L, FAA, Los Angeles Aircraft 

Certification Office (ACO), 3960 

Paramount Boulevard, Lakewood, 

California 90712–4137; phone: (562) 

627–5233; fax: (562) 627–5210; email: 

roger.durbin@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposal. Send your comments to 

an address listed under the ADDRESSES

section. Include ‘‘Docket No. FAA– 

2012–0727; Directorate Identifier 2012– 

NM–012–AD’’ at the beginning of your 

comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD because of those 

comments. 

We will post all comments we 

receive, without change, to http:// 

www.regulations.gov, including any 

personal information you provide. We 

will also post a report summarizing each 

substantive verbal contact we receive 

about this proposed AD. 

Discussion 

We received reports of fatigue cracks 

found in Stringer 11 at the outboard 

flap, inboard drive hinge at Station 

Xrs=164.000. The cracking occurred at 

the end fastener of the wing bulkhead 

clip attachment to the stringer. If 

undetected, a crack in the stringer may 

grow until the stringer severs, initiating 

a crack in the wing lower skin. This 

condition, if not corrected, could result 

in the wing structure not supporting the 

limit load condition, which could lead 

to loss of the structural integrity of the 

wing. 

Relevant Service Information 

We reviewed Boeing Alert Service 

Bulletin MD80–57A243, dated 

December 20, 2011. The service 

information describes procedures for 

repetitive in-tank eddy current high 

frequency (ETHF) inspections for cracks 

in Stringer 11 at the outboard flap, 

inboard drive hinge at Station 

Xrs=164.000, and a splice repair if 

necessary; and repetitive post-repair 

inspections, and repair if necessary. 

FAA’s Determination 

We are proposing this AD because we 

evaluated all the relevant information 

and determined the unsafe condition 

described previously is likely to exist or 

develop in other products of these same 

type designs. 

Proposed AD Requirements 

This proposed AD would require 

accomplishing the actions specified in 

the service information described 

previously, except as discussed under 

‘‘Differences Between the Proposed AD 

and the Service Information.’’ 

Differences Between the Proposed AD 

and the Service Information 

The service bulletin specifies to 

contact the manufacturer for 

instructions on how to repair certain 

conditions, but this proposed AD would 

require repairing those conditions in 

one of the following ways: 

• In accordance with a method that 

we approve; or 

• Using data that meet the 

certification basis of the airplane, and 

that have been approved by the Boeing 

Commercial Airplanes Organization 

Designation Authorization (ODA) whom 

we have authorized to make those 

findings. 

Costs of Compliance 

We estimate that this proposed AD 

affects 502 airplanes of U.S. registry. 

We estimate the following costs to 

comply with this proposed AD: 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules 45519 

ESTIMATED COSTS

Action Labor cost Parts 

cost Cost per product Cost on U.S. operators 

Inspection ................. 13 work-hours × $85 per hour = $1,105 

per inspection cycle.

None $1,105 per inspection cycle.$554,710 per inspection cycle. 

Post-repair inspection 13 work-hours × $85 per hour = $1,105 .... None 1,105 ........................ 554,710 

We estimate the following costs to do 

any necessary repairs that would be 

required based on the results of the 

proposed inspection. We have no way of 

determining the number of aircraft that 

might need this repair: 

ON-CONDITION COSTS

Action Labor cost Parts cost Cost per 

product 

Splice repair per wing ................................. 93 work-hours × $85 per hour = $7,905 ....................................... $17,759 $25,664 

We have received no definitive data 

that would enable us to provide cost 

estimates for the on-condition actions of 

the post-repair inspection specified in 

this proposed AD. 

Authority for This Rulemaking 

Title 49 of the United States Code 

specifies the FAA’s authority to issue 

rules on aviation safety. Subtitle I, 

section 106, describes the authority of 

the FAA Administrator. Subtitle VII: 

Aviation Programs, describes in more 

detail the scope of the Agency’s 

authority. 

We are issuing this rulemaking under 

the authority described in Subtitle VII, 

Part A, Subpart III, Section 44701: 

‘‘General requirements.’’ Under that 

section, Congress charges the FAA with 

promoting safe flight of civil aircraft in 

air commerce by prescribing regulations 

for practices, methods, and procedures 

the Administrator finds necessary for 

safety in air commerce. This regulation 

is within the scope of that authority 

because it addresses an unsafe condition 

that is likely to exist or develop on 

products identified in this rulemaking 

action. 

Regulatory Findings 

We determined that this proposed AD 

would not have federalism implications 

under Executive Order 13132. This 

proposed AD would not have a 

substantial direct effect on the States, on 

the relationship between the national 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. 

For the reasons discussed above, I 

certify this proposed regulation: 

(1) Is not a ‘‘significant regulatory 

action’’ under Executive Order 12866, 

(2) Is not a ‘‘significant rule’’ under 

the DOT Regulatory Policies and 

Procedures (44 FR 11034, February 26, 

1979), 

(3) Will not affect intrastate aviation 

in Alaska, and 

(4) Will not have a significant 

economic impact, positive or negative, 

on a substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Incorporation by reference, 

Safety. 

The Proposed Amendment 

Accordingly, under the authority 

delegated to me by the Administrator, 

the FAA proposes to amend 14 CFR part 

39 as follows: 

PART 39—AIRWORTHINESS 

DIRECTIVES 

1. The authority citation for part 39 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40113, 44701. 

§ 39.13 [Amended] 

2. The FAA amends § 39.13 by adding 

the following new airworthiness 

directive (AD): 

The Boeing Company: Docket No. FAA– 

2012–0727; Directorate Identifier 2012– 

NM–012–AD. 

(a) Comments Due Date 

We must receive comments by September 

17, 2012. 

(b) Affected ADs 

None. 

(c) Applicability 

This AD applies to The Boeing Company 

Model DC–9–81 (MD–81), DC–9–82 (MD–82), 

DC–9–83 (MD–83), and DC–9–87 (MD–87), 

and MD–88 airplanes, certificated in any 

category, as identified in Boeing Alert 

Service Bulletin MD80–57A243, dated 

December 20, 2011. 

(d) Subject 

Joint Aircraft System Component (JASC)/ 

Air Transport Association (ATA) of America 

Code 57, Wings. 

(e) Unsafe Condition 

This AD was prompted by reports of 

fatigue cracks found in Stringer 11 at the 

outboard flap, inboard drive hinge at Station 

Xrs=164.000. We are issuing this AD to 

detect and correct such cracking, which 

could result in the wing structure not 

supporting the limit load condition, which 

could lead to loss of structural integrity of the 

wing. 

(f) Compliance 

Comply with this AD within the 

compliance times specified, unless already 

done. 

(g) Repetitive Inspections 

Before the accumulation of 19,000 total 

flight cycles, or within 8,710 flight cycles 

after the effective date of this AD, whichever 

occurs later: Do an in-tank eddy current high 

frequency (ETHF) inspection for cracks in 

Stringer 11 at the outboard flap, inboard 

drive hinge at Station Xrs=164.000, in 

accordance with the Accomplishment 

Instructions of Boeing Alert Service Bulletin 

MD80–57A243, dated December 20, 2011. If 

no cracking is found, repeat the inspection 

thereafter at intervals not to exceed 29,000 

flight cycles. 

(h) Splice Repair 

If any cracking is found during the 

inspection required by paragraph (g) of this 

AD: Before further flight, do a splice repair, 

in accordance with the Accomplishment 

Instructions of Boeing Alert Service Bulletin 

MD80–57A243, dated December 20, 2011. 

(i) Post-Repair Inspection 

Within 60,000 flight cycles after doing the 

splice repair specified in paragraph (h) of this 

AD: Do an ETHF inspection for cracks in 

Stringer 11 at the outboard flap, inboard 

drive hinge at Station Xrs=164.000, in 

accordance with the Accomplishment 

Instructions of Boeing Alert Service Bulletin 

MD80–57A243, dated December 20, 2011. 

Repeat the inspection thereafter at intervals 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

45520 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules 

not to exceed 29,000 flight cycles. If any 

crack is found: Before further flight, repair 

the crack using a method approved in 

accordance with the procedures specified in 

paragraph (j) of this AD. 

(j) Alternative Methods of Compliance 

(AMOCs) 

(1) The Manager, Los Angeles Aircraft 

Certification Office (ACO), FAA, has the 

authority to approve AMOCs for this AD, if 

requested using the procedures found in 14 

CFR 39.19. In accordance with 14 CFR 39.19, 

send your request to your principal inspector 

or local Flight Standards District Office, as 

appropriate. If sending information directly 

to the manager of the ACO, send it to the 

attention of the person identified in the 

Related Information section of this AD. 

(2) Before using any approved AMOC, 

notify your appropriate principal inspector, 

or lacking a principal inspector, the manager 

of the local flight standards district office/ 

certificate holding district office. 

(3) An AMOC that provides an acceptable 

level of safety may be used for any repair 

required by this AD if it is approved by The 

Boeing Commercial Airplanes Organization 

Designation Authorization (ODA) that has 

been authorized by the Manager, Los Angeles 

ACO to make those findings. For a repair 

method to be approved, the repair must meet 

the certification basis of the airplane, and 14 

CFR 25.571, Amendment 45, and the 

approval must specifically refer to this AD. 

(k) Related Information 

(1) For more information about this AD, 

contact Roger Durbin, Airframe Branch, 

ANM–120L, FAA, Los Angeles Aircraft 

Certification Office (ACO), 3960 Paramount 

Boulevard, Lakewood, California 90712– 

4137; phone (562) 627–5233; fax (562) 627– 

5210; email: roger.durbin@faa.gov. 

(2) For service information identified in 

this AD, contact Boeing Commercial 

Airplanes, Attention: Data & Services 

Management, 3855 Lakewood Boulevard, MC 

D800–0019, Long Beach, California 90846– 

0001; telephone 206–544–5000, extension 2; 

fax 206–766–5683; Internet https:// 

www.myboeingfleet.com. You may review 

copies of the referenced service information 

at the FAA, Transport Airplane Directorate, 

1601 Lind Avenue SW., Renton, Washington. 

For information on the availability of this 

material at the FAA, call 425–227–1221. 

Issued in Renton, Washington on July 23, 

2012. 

Kalene C. Yanamura, 

Acting Manager, Transport Airplane 

Directorate, Aircraft Certification Service. 

[FR Doc. 2012–18622 Filed 7–31–12; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–101812–07] 

RIN 1545–BI83 

Reimbursed Entertainment Expenses 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations explaining the 

exception to the deduction limitations 

on certain expenditures paid or incurred 

under reimbursement or other expense 

allowance arrangements. These 

proposed regulations affect taxpayers 

that pay or receive advances, 

allowances, or reimbursements under 

reimbursement or other expense 

allowance arrangements. These 

proposed regulations clarify the rules 

for these arrangements. 

DATES: Comments or a request for a 

public hearing must be received by 

October 30, 2012. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–101812–07), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–101812– 

07), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC, or sent electronically 

via the Federal eRulemaking Portal at 

www.regulations.gov (IRS REG–101812– 

07). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Patrick Clinton, (202) 622–4930 ; 

concerning submissions of comments 

and/or requests for a public hearing, 

Oluwafunmilayo (Funmi) Taylor, (202) 

622–7180 (not toll free numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

amendments to the Income Tax 

Regulations (26 CFR part 1) explaining 

the exception to the section 274(a) and 

(n) deduction limitations on certain 

expenditures paid or incurred under 

reimbursement or other expense 

allowance arrangements. The proposed 

regulations clarify the definition of 

reimbursement or other expense 

allowance arrangements for purposes of 

section 274(a) and (n) and how the 

deduction limitations apply to 

reimbursement arrangements between 

three parties, as addressed in Transport 

Labor Contract/Leasing, Inc. v. 

Commissioner, 461 F.3d 1030 (8th Cir. 

2006), rev’g 123 T.C. 154 (2004) (TLC), 

and Rev. Rul. 2008–23 (2008–18 I.R.B. 

852). 

Section 274(a)(1) limits deductions for 

certain expenses for entertainment, 

amusement, or recreation activities and 

for facilities used in connection with 

entertainment, amusement, or recreation 

activities. Section 274(n)(1) generally 

limits the amount allowable as a 

deduction for any expense for food, 

beverages, entertainment activities, or 

entertainment facilities to 50 percent of 

the amount otherwise allowable. 

However, the limitations of sections 

274(a)(1) and 274(n)(1) do not apply to 

an expense described in section 

274(e)(3). 

In general, section 274(e)(3) excepts 

from the limitations of section 274(a) 

expenses a taxpayer pays or incurs in 

performing services for another person 

under a reimbursement or other expense 

allowance arrangement with the other 

person. The exception applies if the 

taxpayer is an employee performing 

services for an employer and the 

employer does not treat the 

reimbursement for the expenses as 

compensation and wages to the taxpayer 

(section 274(e)(3)(A)). In that case, the 

employee is not treated as having 

additional compensation and has no 

deduction for the expense. The 

employer bears and deducts the expense 

and is subject to the deduction 

limitations. See § 1.274–2(f)(2)(iv)(b) of 

the Income Tax Regulations. 

If the employer treats the 

reimbursement as compensation and 

wages, the employee may be able to 

deduct the expense as an employee 

business expense. The employee bears 

the expense and is subject to the 

deduction limitations. Section 1.274– 

2(f)(2)(iv)(b)(1). The employer deducts 

an expense for compensation, which is 

not subject to the deduction limitations 

under section 274. Section 1.274– 

2(f)(2)(iv)(b)(2); see also section 162. 

The section 274(e)(3) exception also 

applies if the taxpayer performs services 

for a person other than an employer and 

the taxpayer accounts (substantiates, as 

required by section 274(d)) to that 

person. Section 274(e)(3)(B). Therefore, 

in a reimbursement or other expense 

allowance arrangement in which a 

client or customer reimburses the 

expenses of an independent contractor, 

the deduction limitations do not apply 

to the independent contractor to the 

extent the independent contractor 

accounts to the client by substantiating 

the expenses as required by section 

274(d). If the independent contractor is 

mstockstill on DSK4VPTVN1PROD with PROPOSALS