909 
shall not exceed the ruling amount applicable to 
such taxable year. 
‘‘(2) CONTRIBUTIONS
AFTER
FUNDING
PE-
RIOD.—Notwithstanding any other provision of this 
section, a taxpayer may pay into the Fund in any 
taxable year after the last taxable year to which the 
ruling amount applies. Payments may not be made 
under the preceding sentence to the extent such pay-
ments would cause the assets of the Fund to exceed 
the nuclear decommissioning costs allocable to the 
taxpayer’s current or former interest in the nuclear 
power plant to which the Fund relates. The limita-
tion under the preceding sentence shall be deter-
mined by taking into account a reasonable rate of 
inflation for the nuclear decommissioning costs and 
a reasonable after-tax rate of return on the assets 
of the Fund until such assets are anticipated to be 
expended.’’. 
(b) CLARIFICATION
OF
TREATMENT
OF
FUND 
TRANSFERS.—Section 468A(e) (relating to Nuclear De-
commissioning Reserve Fund) is amended by adding at 
the end the following new paragraph: 
‘‘(8) TREATMENT OF FUND TRANSFERS.— 
‘‘(A) IN GENERAL.—If, in connection with 
the transfer of the taxpayer’s interest in a nu-
910 
clear power plant, the taxpayer transfers the 
Fund with respect to such power plant to the 
transferee of such interest and the transferee 
elects to continue the application of this section 
to such Fund— 
‘‘(i) the transfer of such Fund shall 
not cause such Fund to be disqualified 
from the application of this section, and 
‘‘(ii) no amount shall be treated as 
distributed from such Fund, or be includ-
able in gross income, by reason of such 
transfer. 
‘‘(B) SPECIAL RULES IF TRANSFEROR IS 
TAX-EXEMPT ENTITY.— 
‘‘(i) IN GENERAL.—If— 
‘‘(I) a person exempt from tax-
ation under this title transfers an in-
terest in a nuclear power plant, 
‘‘(II) such person has set aside 
amounts for nuclear decommissioning 
which are transferred to the trans-
feree of the interest, and 
‘‘(III) the transferee elects the 
application of this subparagraph no 
later than the due date (including ex-
911 
tensions) of its return of tax for the 
taxable year in which the transfer oc-
curs, 
the amounts so set aside shall be treated 
as if contributed by such person to a Fund 
immediately before the transfer and then 
transferred in the Fund to the transferee. 
‘‘(ii) LIMITATION.—The amount treat-
ed as transferred to a Fund under clause 
(i) shall not exceed the amount which 
bears the same ratio to the present value 
of the nuclear decommissioning costs of 
the transferor with respect to the nuclear 
power plant as the number of years the 
nuclear power plant has been in service 
bears to the estimated useful life of such 
power plant. 
‘‘(iii) BASIS.—The transferee’s basis 
in any asset treated as transferred in the 
Fund shall be the same as the adjusted 
basis of such asset in the hands of the 
transferor. 
‘‘(iv) RULING AMOUNT REQUIRED.— 
This subparagraph shall not apply to any 
transfer unless the transferee requests
912 
from the Secretary a schedule of ruling 
amounts. 
‘‘(v) ELECTION
DISREGARDED.—An 
election under this subparagraph shall be 
disregarded in determining the Federal in-
come tax of the transferor.’’. 
(c) TREATMENT
OF CERTAIN DECOMMISSIONING 
COSTS.— 
(1) IN GENERAL.—Section 468A is amended by 
redesignating subsections (f) and (g) as subsections 
(g) and (h), respectively, and by inserting after sub-
section (e) the following new subsection: 
‘‘(f) TRANSFERS INTO QUALIFIED FUNDS.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(b), any taxpayer maintaining a Fund to which this 
section applies with respect to a nuclear power plant 
may transfer into such Fund not more than an 
amount equal to the present value of the portion of 
the total nuclear decommissioning costs with respect 
to such nuclear power plant previously excluded for 
such nuclear power plant under subsection (d)(2)(A) 
as in effect immediately before the date of the enact-
ment of the Energy Tax Policy Act of 2004. 
‘‘(2) 
DEDUCTION
FOR
AMOUNTS
TRANS-
FERRED.—
913 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (C), the deduction allowed by 
subsection (a) for any transfer permitted by 
this subsection shall be allowed ratably over the 
remaining estimated useful life (within the 
meaning of subsection (d)(2)(A)) of the nuclear 
power plant beginning with the taxable year 
during which the transfer is made. 
‘‘(B) DENIAL
OF
DEDUCTION
FOR
PRE-
VIOUSLY DEDUCTED AMOUNTS.—No deduction 
shall be allowed for any transfer under this sub-
section of an amount for which a deduction was 
previously allowed to the taxpayer (or a prede-
cessor) or a corresponding amount was not in-
cluded in gross income of the taxpayer (or a 
predecessor). For purposes of the preceding 
sentence, a ratable portion of each transfer 
shall be treated as being from previously de-
ducted or excluded amounts to the extent there-
of. 
‘‘(C) TRANSFERS OF QUALIFIED FUNDS.— 
If— 
‘‘(i) any transfer permitted by this 
subsection is made to any Fund to which 
this section applies, and
914 
‘‘(ii) such Fund is transferred there-
after, 
any deduction under this subsection for taxable 
years ending after the date that such Fund is 
transferred shall be allowed to the transferor 
for the taxable year which includes such date. 
‘‘(D) SPECIAL RULES.— 
‘‘(i) GAIN
OR
LOSS
NOT
RECOG-
NIZED.—No gain or loss shall be recog-
nized on any transfer permitted by this 
subsection. 
‘‘(ii) TRANSFERS
OF
APPRECIATED 
PROPERTY.—If appreciated property is 
transferred in a transfer permitted by this 
subsection, the amount of the deduction 
shall not exceed the adjusted basis of such 
property. 
‘‘(3) NEW RULING AMOUNT REQUIRED.—Para-
graph (1) shall not apply to any transfer unless the 
taxpayer requests from the Secretary a new schedule 
of ruling amounts in connection with such transfer. 
‘‘(4) NO
BASIS
IN
QUALIFIED
FUNDS.—Not-
withstanding any other provision of law, the tax-
payer’s basis in any Fund to which this section ap-
915 
plies shall not be increased by reason of any transfer 
permitted by this subsection.’’. 
(2) NEW RULING AMOUNT TO TAKE INTO AC-
COUNT TOTAL COSTS.—Subparagraph (A) of section 
468A(d)(2) (defining ruling amount) is amended to 
read as follows: 
‘‘(A) fund the total nuclear decommis-
sioning costs with respect to such power plant 
over the estimated useful life of such power 
plant, and’’. 
(d) TECHNICAL AMENDMENTS.—Section 468A(e)(2) 
(relating to taxation of Fund) is amended— 
(1) by striking ‘‘rate set forth in subparagraph 
(B)’’ in subparagraph (A) and inserting ‘‘rate of 20 
percent’’, 
(2) by striking subparagraph (B), and 
(3) by redesignating subparagraphs (C) and 
(D) as subparagraphs (B) and (C), respectively. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
SEC. 1329. TREATMENT OF CERTAIN INCOME OF COOPERA-
TIVES. 
(a) INCOME FROM OPEN ACCESS AND NUCLEAR DE-
COMMISSIONING TRANSACTIONS.—
916 
(1) IN GENERAL.—Subparagraph (C) of section 
501(c)(12) is amended by striking ‘‘or’’ at the end 
of clause (i), by striking clause (ii), and by adding 
at the end the following new clauses: 
‘‘(ii) from any provision or sale of 
electric energy transmission services or an-
cillary services if such services are provided 
on a nondiscriminatory open access basis 
under an open access transmission tariff 
approved or accepted by FERC or under 
an 
independent 
transmission 
provider 
agreement approved or accepted by FERC 
(other than income received or accrued di-
rectly or indirectly from a member), 
‘‘(iii) from the provision or sale of 
electric energy distribution services or an-
cillary services if such services are provided 
on a nondiscriminatory open access basis 
to distribute electric energy not owned by 
the mutual or electric cooperative com-
pany— 
‘‘(I) to end-users who are served 
by distribution facilities not owned by 
such company or any of its members 
(other than income received or ac-
917 
crued directly or indirectly from a 
member), or 
‘‘(II) generated by a generation 
facility not owned or leased by such 
company or any of its members and 
which is directly connected to dis-
tribution facilities owned by such com-
pany or any of its members (other 
than income received or accrued di-
rectly or indirectly from a member), 
‘‘(iv) from any nuclear decommis-
sioning transaction, or 
‘‘(v) from any asset exchange or con-
version transaction.’’. 
(2) DEFINITIONS AND SPECIAL RULES.—Para-
graph (12) of section 501(c) is amended by adding 
at the end the following new subparagraphs: 
‘‘(E) For purposes of subparagraph (C)(ii), 
the term ‘FERC’ means the Federal Energy 
Regulatory Commission and references to such 
term shall be treated as including the Public 
Utility Commission of Texas with respect to 
any ERCOT utility (as defined in section 
212(k)(2)(B) of the Federal Power Act (16 
U.S.C. 824k(k)(2)(B))).
918 
‘‘(F) 
For 
purposes 
of 
subparagraph 
(C)(iii), the term ‘nuclear decommissioning 
transaction’ means— 
‘‘(i) any transfer into a trust, fund, or 
instrument established to pay any nuclear 
decommissioning costs if the transfer is in 
connection with the transfer of the mutual 
or cooperative electric company’s interest 
in a nuclear power plant or nuclear power 
plant unit, 
‘‘(ii) any distribution from any trust, 
fund, or instrument established to pay any 
nuclear decommissioning costs, or 
‘‘(iii) any earnings from any trust, 
fund, or instrument established to pay any 
nuclear decommissioning costs. 
‘‘(G) 
For 
purposes 
of 
subparagraph 
(C)(iv), the term ‘asset exchange or conversion 
transaction’ means any voluntary exchange or 
involuntary conversion of any property related 
to generating, transmitting, distributing, or sell-
ing electric energy by a mutual or cooperative 
electric company, the gain from which qualifies 
for deferred recognition under section 1031 or 
1033, but only if the replacement property ac-