Source: https://www.federalregister.gov/documents/2014/07/28/2014-17697/branded-prescription-drug-fee
Timestamp: 2017-03-23 10:45:14
Document Index: 306941734

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43631-43645
https://www.federalregister.gov/d/2014-17697
This document contains final regulations that provide guidance on the annual fee imposed on covered entities engaged in the business of manufacturing or importing branded prescription drugs. This fee was enacted by section 9008 of the Patient Protection and Affordable Care Act, as amended by section 1404 of the Health Care and Education Reconciliation Act of 2010. This document also withdraws the Branded Prescription Drug Fee temporary regulations and contains new temporary regulations regarding the definition of controlled group that apply beginning on January 1, 2015. The final regulations and the new temporary Start Printed Page 43632regulations affect persons engaged in the business of manufacturing or importing certain branded prescription drugs. The text of the temporary regulations in this document also serves as the text of proposed regulations set forth in a notice of proposed rulemaking (REG-123286-14) on this subject in the Proposed Rules section in this issue of the Federal Register.
Applicability Date: For dates of applicability, see §§ 51.11, 51.11T, and 51.6302-1(b).
The collection of information contained in these regulations has been reviewed and approved by the Office of Management and Budget under control number 1545-2209. The collection of information in these final regulations is in §§ 51.2(f)(2) and 51.7. Section 51.2(f)(2) requires consents to be maintained, in the case of a controlled group that is not an affiliated group, by the designated entity and each member of the controlled group. Section § 51.7 requires a covered entity that chooses to dispute its preliminary fee calculation to provide certain information.
To be a covered entity, a manufacturer or importer must have gross receipts from branded prescription drug sales. Section 9008(b)(1) requires the IRS to calculate each covered entity's fee each fee year using sales data from the preceding calendar year. Pursuant to section 9008(g), the Centers for Medicare and Medicaid Services of the Department of Health and Human Services (CMS), the Department of Start Printed Page 43633Veterans Affairs (VA), and the Department of Defense (DOD) (collectively, the Agencies) provide sales data to the IRS. For purposes of calculating the fee, the temporary regulations used the second calendar year preceding the fee year as the sales year. This rule is necessary because CMS cannot complete its data processing within the necessary time frame. The temporary regulations further provided that, because the use of the second preceding year as the sales year, rather than the immediately preceding year, may affect the amount of the fee paid by a covered entity, the annual fee due in every year after 2011 will include an adjustment amount. This amount will be added (or subtracted), as appropriate, to (or from) the fee otherwise payable by the covered entity in the fee year in which the adjustment is calculated. Because CMS cannot complete its data processing any earlier, the final regulations adopt this approach.
In accordance with the statute, the temporary regulations provided that a covered entity includes a controlled group. The temporary regulations defined the term controlled group to mean a group of at least two covered entities that are treated as a single employer under section 52(a), 52(b), 414(m), or 414(o). Under the final regulations, this definition applies through December 31, 2014. Therefore, this definition applies for purposes of determining who is in the controlled group through the 2016 fee year because the fee for the 2016 fee year is based upon data from the 2014 sales year. In this Treasury decision, the Treasury Department and the IRS are also issuing new temporary regulations (the 2014 temporary regulations), that define the term controlled group to mean a group of two or more persons, including at least one person that is a covered entity, that are treated as a single employer under section 52(a), 52(b), 414(m) or 414(o). This new definition applies beginning on January 1, 2015. Therefore, this definition applies for purposes of determining who is in the controlled group beginning with the 2017 fee year because the fee for the 2017 fee year is based upon data from the 2015 sales year. The broader definition of controlled group in the 2014 temporary regulations is supported by the statutory language and is consistent with how controlled group rules with similar statutory language are applied, including how controlled group is defined in § 57.2(c)(1) for purposes of the health insurance providers fee under ACA section 9010. The Treasury Department and the IRS expect that the broader definition in the 2014 temporary regulations will primarily impact joint and several liability for the fee and will not otherwise affect the administration of the fee. The final regulations include conforming changes to the provision for joint and several liability to clarify that joint and several liability applies to all members of the controlled group under either definition of controlled group, whichever applies.
The final regulations modify the temporary regulations to better coordinate with the consolidated return regulations. Specifically, the final regulations provide that the designated entity of a controlled group, without regard to foreign corporations included under section 9008(d)(2)(B), that is a consolidated group (within the meaning of § 1.1502-1(h)) is the agent for the group (within the meaning of § 1.1502-77).
The temporary regulations required the designated entity to state under penalties of perjury that all the covered entities that are members of the controlled group have consented to the selection of the designated entity. The final regulations adopt this requirement and further require each member of the controlled group to maintain a record of its consent. The final regulations also require the designated entity to maintain a record of all of the members' consents. Under the final regulations, this consent requirement does not apply to a controlled group that is a consolidated group (within the meaning of § 1.1502-1(h)). If a controlled group that is not a consolidated group does not select a designated entity, the final regulations provide that the IRS will select a designated entity and all covered entities in the controlled group Start Printed Page 43634will be deemed to have consented to the IRS's selection of a designated entity.
Commenters requested that the final regulations treat a drug as an orphan drug if the section 45C credit was “allowable”; that is, the section 45C credit could have been claimed, but was not actually claimed. Another commenter requested that the final regulations extend orphan drug treatment to any drug for which the section 45C credit was allowable but for which a research tax credit under section 41 was claimed with respect to a taxable year ending on or before December 31, 2010. Several commenters also reasoned that the statutory exception for orphan drugs should be extended to any drug that has been designated by the FDA as an orphan drug. Commenters also requested that the final regulations extend the orphan drug exclusion to drug sales for therapies that have only been approved to treat orphan diseases, and to all products that are FDA-approved for marketing solely for rare diseases and conditions. The final regulations do not adopt these suggestions because the plain language of section 9008(e)(3) requires that the drug be an orphan drug for which the section 45C credit was actually allowed rather than merely allowable. The terms “allowed” and “allowable” have separate and distinct meanings throughout the Code. For example, under section 1016(a)(2), a taxpayer may adjust basis to the extent the amount was “allowed” as a deduction in computing taxable income but not less than the amount “allowable.” [1] In addition, the overwhelming weight of authority under the case law interprets the term “allowed” in the Code to require the taxpayer to have actually taken the amount into account for tax purposes.[2] The FDA's mere classification of a drug as an orphan drug is not a determining factor because the plain language of section 9008(e)(3) applies the exclusion only to sales of drugs for which a section 45C credit was in fact allowed.
On September 24, 1984, Congress enacted the Drug Price Competition and Patent Restoration Act of 1984, Public Law 98-417 (1984) (the 1984 Act). The 1984 Act added section 505(j) to provide an expedited approval process for generic drugs. Because an applicant submits an application for approval of a generic drug after the 1984 Act under section 505(j) rather than section 505(b), such a drug is not a branded prescription drug for purposes of the branded prescription drug fee.
The temporary regulations gave each covered entity the opportunity to provide information relevant to the determination of the fee by annually submitting Form 8947, including information regarding rebates. Commenters asked that CMS include all rebate data in its reports to the IRS, rather than have the IRS collect rebate data from the covered entities on Form 8947. CMS now includes rebate data for Start Printed Page 43635Medicare and federal Medicaid in its reports. Therefore, the final regulations eliminate the provision for separate reporting of Medicare and federal Medicaid rebates by covered entities and Form 8947 no longer requests information on these rebates. However, CMS does not include Medicaid state supplemental rebate data. Until CMS can include Medicaid state supplemental rebate data in its reports to the IRS, covered entities will continue to have the opportunity to submit this rebate data on Form 8947. Therefore, the final regulations retain the provision that permits separate reporting of Medicaid state supplemental rebate data by covered entities.
A commenter requested that the final regulations clarify the treatment of coverage gap discount amounts. The final regulations adopt this suggestion effective for fee years beginning in 2014. The Medicare Part D coverage gap, also known as the “donut hole,” is a gap in prescription drug coverage that is being closed due to the Affordable Care Act. Part of closing the coverage gap is the Coverage Gap Discount Program Start Printed Page 43636described in section 1860D-14A of the Social Security Act, which requires a 50-percent manufacturer-paid discount on covered brand-name drugs in certain instances. For fee years 2012 and 2013, CMS did not deduct coverage gap discount amounts from the Ingredient Cost. This comment, however, prompted CMS to recharacterize coverage gap discount amounts as a type of rebate, discount, or other price concession for purposes of the fee calculation. Therefore, beginning with the final fee calculation for fee year 2014, CMS will report Medicare Part D sales data to the IRS that is net of coverage gap discount amounts. The final regulations reflect this change.
The temporary regulations provided that CMS will determine branded prescription drug sales under Medicare Part B using two data sources. First, CMS will use the data reported by manufacturers pursuant to section 1847A(c) of the Social Security Act (42 U.S.C. 1395w-3a(c)) to calculate the annual weighted average sales price (ASP) for each Healthcare Common Procedure Coding System code (HCPCS code) for the sales year. Second, CMS will use the Medicare Part B National Summary Data File located at http://www.cms.gov/​Research-Statistics-Data-and-Systems/​Files-for-Order/​NonIdentifiableDataFiles/​PartBNationalSummaryDataFile.html to obtain the number of allowed billing units per HCPCS code for claims incurred during the sales year. The temporary regulations further provided separate detailed methods for CMS to use this data to determine Medicare Part B sales amounts depending on whether (1) the HCPCS code consists solely and exclusively of branded prescription drugs manufactured by a single entity, (2) the HCPCS code consists of a mixture of branded prescription drugs made by different manufacturers and/or a mixture of branded prescription and generic drugs, or (3) CMS is unable to establish a reliable proportion of sales attributable to each NDC assigned to the HCPCS code.
Commenters requested that the final regulations clarify the meaning of the phrase “drugs paid for by the states in the Medicaid Drug Rebate Program” and whether it includes units paid for under managed care organization plans. In response to this request, the final regulations specify that “drugs paid for by the states in the Medicaid Drug Rebate Program” includes all branded prescription drug units for which the states bill rebates to covered entities Start Printed Page 43637under the Medicaid Drug Rebate Program. This program includes, but is not limited to, units paid for under various health care plans such as fee for service, managed care organizations, and drugs administered in a non-retail setting such as drugs administered in a physician's office, clinic, hospital or other setting. Under the Medicaid Drug Rebate Program, states provide the required utilization data. States report separate totals for each NDC for both fee-for-service and managed care organization utilization data. Also, as stated earlier in this preamble, the final regulations specify that the Medicaid Drug Rebate Program's calculated branded prescription drug fee does not include state-only pharmaceutical program sales or rebates.
Commenters asked how a covered entity can ensure that a state has updated its Medicaid data files to accurately reflect state rebates. This issue is beyond the scope of these regulations. However, since 2011, in the context of the dispute resolution process, CMS, IRS, and covered entities have devoted extensive resources to resolving discrepancies between a state's reported rebate data that CMS uses to compute Medicaid's branded prescription drug sales data for the IRS and the rebate data that covered entities receive from that state. To resolve these discrepancies on a timely basis, CMS has established a reconciliation process. To maximize the effectiveness of this reconciliation process, however, a covered entity must use the CMS reconciliation process in a timeframe that allows discrepancies to be resolved before CMS computes the branded prescription sales data that it sends the IRS for purposes of computing a covered entity's preliminary fee calculation. A covered entity's timely use of the CMS reconciliation process will help minimize, if not eliminate, the errors related to CMS's Medicaid data that a covered entity would otherwise include in its error report. The web address for this resource is http://medicaid.gov/​Medicaid-CHIP-Program-Information/​By-Topics/​Benefits/​Prescription-Drugs/​Branded-Prescription-Drug.html. This CMS Medicaid Branded Prescription Drug Fee program Web page also has additional information regarding Medicaid sales data. Covered entities may email questions to CMS Medicaid regarding the data used in this program at MedicaidBPD@cms.hhs.gov with “BPD” in the email subject line.
Section 51.4T(f) described the TRICARE and DOD methodologies for calculating sales data. Section 51.4(f) continues to describe the DOD methodology. A new subsection, § 51.4(g), describes the TRICARE methodology.
A commenter asked that the final regulations provide for a separate dispute resolution process for the adjustment amount after the final fee calculation because errors reported in the dispute resolution process may not be resolved in time to be reflected in the final fee calculation. The final regulations do not adopt this suggestion. The adjustment amount is part of the preliminary fee calculation. Therefore, each covered entity has an opportunity to raise disputes regarding the adjustment amount during the existing dispute resolution process. Moreover, an adjustment to one covered entity's Start Printed Page 43638final fee calculation would necessitate a recalculation of each covered entity's prior final fee calculation because the fee is an allocated fee. The final regulations clarify that the IRS will not make adjustments to a final fee calculation.
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as Start Printed Page 43639supplemented by Executive Order 13563. 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 5) does not apply to these regulations. It is hereby certified that the collection of information in these final regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the only collection burden imposed by these regulations is the requirement to maintain a record of consent to the selection of a designated entity, and this collection burden applies only to designated entities of controlled groups, which tend to be large corporations, and their members. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f), the notice of proposed rulemaking was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.
Paragraph 1. The authority citation for part 51 continues to read as follows:End Amendment Part
Par. 2. Section 51.1 is added to read as follows:End Amendment Part
§ 51.1 Overview.
§ 51.1T [Removed]
Par. 3. Section 51.1T is removed.End Amendment Part
Par. 4. Section 51.2T is revised to read as follows:End Amendment Part
(a) Through (e)(2) [Reserved]. For further guidance see § 51.2(a) through (e)(2).
(e)(4) through (m) [Reserved]. For further guidance see § 51.2(e)(4) through (m).
(ii) After December 31, 2014. For guidance regarding the definition of controlled group after December 31, 2014, see § 51.2T(e)(3).
(5) Covered entity status—(i) Rule. An entity's status as a covered entity begins in the first fee year in which the entity has branded prescription drug sales and continues each subsequent fee year until there are no remaining branded prescription drug sales for that entity to be taken into account as described in § 51.5(c) or used to calculate the Start Printed Page 43640adjustment amount described in § 51.5(e).
(B) Analysis. Entity A is a covered entity beginning in 2011 because it had gross receipts from branded prescription drug sales in 2011. For the 2011 fee year, Entity A does not owe a fee because the 2011 fee is based on sales data from the 2009 sales year. For the 2012 fee year, Entity A does not owe a fee because the 2012 fee is based on sales data from the 2010 sales year. Entity A continues to be a covered entity for the 2012 fee year because its branded prescription drug sales from the 2011 sales year have not yet been taken into account as described in § 51.5(c) and used to calculate the adjustment amount described in § 51.5(e). For the 2013 fee year, Entity A continues to be a covered entity because a portion of its branded prescription drug sales from the 2011 sales year are taken into account as described in § 51.5(c) for purposes of computing the 2013 fee. For the 2013 fee year, Entity A is also liable for the adjustment amount described in § 51.5(e) for the difference between its 2012 fee computed using sales data from the 2010 sales year, which is $0, and what the 2012 fee would have been using sales data from the 2011 sales year. For the 2014 fee year, Entity A continues to be a covered entity because a portion of its branded prescription drug sales for the 2011 sales year are used to calculate the adjustment amount described in § 51.5(e). Therefore, for the 2014 fee year, Entity A will receive an adjustment amount for the difference between its 2013 fee computed using sales data from the 2011 sales year, and what the 2013 fee would have been using sales data from the 2012 sales year, which is $0. After the 2014 fee year, there are no remaining branded prescription drug sales to be taken into account as described in § 51.5(c) or used to calculate the adjustment amount described in § 51.5(e) for Entity A. Accordingly, Entity A is not a covered entity after the 2014 fee year.
(iii) Filing an error report for the group, if applicable, as described in § 51.7; and
(ii) Requirement for affiliated groups; agent for the group. If the controlled group, without regard to foreign corporations included under section 9008(d)(2)(B), is also an affiliated group whose common parent files a consolidated return for federal income tax purposes, the designated entity is the agent for the group (within the meaning of § 1.1502-77 of this title).
(ii) Analysis. In 2011 and 2012, Drug A is an orphan drug because: first, it was a branded prescription drug for which a person claimed a section 45C credit and for which that credit was allowed for a taxable year; second, there was not a final assessment or court order disallowing the full credit taken for the drug; and third, before 2012, the FDA did not approve the drug for marketing for any indication other than the treatment of a Start Printed Page 43641rare disease or condition for which a section 45C credit was allowed. However, Drug A is not an orphan drug for the 2013 sales year or later sales years because in 2012 the FDA approved Drug A for marketing for an indication other than the treatment of the rare disease or condition for which the section 45C credit was allowed and this indication was not for treatment of another rare disease or condition for which a section 45C credit was allowed. Example 2:
(l) Sales taken into account. The term sales taken into account means branded prescription drug sales after application of the percentage adjustment table in section 9008(b)(2) (relating to annual sales less than $400,000,001). See § 51.5(a)(3).
Par. 6. Section 51.3 is added to read as follows:End Amendment Part
§ 51.3 Information requested from covered entities.
§ 51.3T [Removed]
Par. 7. Section 51.3T is removed.End Amendment Part
Par. 8. Section 51.4 is added to read as follows:End Amendment Part
§ 51.4 Information provided by the Agencies.
(a) In general. For each sales year, the IRS will compile a list of branded prescription drugs by NDC using the data submitted on Forms 8947 and in error reports submitted as part of the dispute resolution process (described in § 51.7) and, after applying appropriate due diligence, will provide this list to the Agencies. The Agencies will provide data to the IRS on branded prescription drug sales that occurred during the sales year by Program and NDC. The Agencies will provide data for use in preparing the preliminary fee calculation (described in §§ 51.5 and 51.6) and may revise or supplement that data following review of error reports submitted as part of the dispute resolution process. The calculation methodology for calculating the sales amounts for each Program, including any reasonable estimation techniques and assumptions that the Agencies expect to use, is described in this section.
(i) CMS will use data reported by manufacturers pursuant to section 1847A(c) of the Social Security Act to calculate the annual weighted average sales price (ASP) for each Healthcare Common Procedure Coding System (HCPCS) code for the sales year.Start Printed Page 43642
HCPCSNDCPart B amountJ987612345-6789-01$789,000 12345-6789-020 12345-6789-030 12345-6800-800 12345-6800-900
(f) Department of Defense. DOD will determine branded prescription drug sales to DOD (for DOD programs other than the TRICARE retail pharmacy program) by providing, by Labeler Code, the manufacturer's name, the NDC, brand name, and the amount paid (net of rebates and or refunds) for each branded prescription drug procured by DOD (for DOD programs other than the TRICARE retail pharmacy program) during the sales year. For DOD programs other than the TRICARE retail pharmacy program, a drug is procured based upon the date it was ordered. DOD includes the Industrial Funding Fee and the Cost Recovery Fee in its drug sales data Start Printed Page 43643because these amounts are part of the price DOD pays to procure a drug.
§ 51.4T [Removed]
Par. 9. Section 51.4T is removed.End Amendment Part
Par. 10. Section 51.5 is added to read as follows:End Amendment Part
§ 51.5 Fee calculation.
Covered entity's branded prescription drug sales during the calendar year that are:Percentage of branded prescription drug sales taken into account is:Not more than $5,000,0000More than $5,000,000 but not more than $125,000,00010More than $125,000,000 but not more than $225,000,00040More than $225,000,000 but not more than $400,000,00075More than $400,000,000100
(2) Amounts paid to a covered entity because of an adjustment amount. If a covered entity's adjustment amount reduces the fee computed under paragraph (d) of this section below zero and results in an amount due to the covered entity for the fee year, the IRS will pay this amount due to the covered Start Printed Page 43644entity. A covered entity does not file Form 843, Claim for Refund and Request for Abatement, to receive this amount owed to a covered entity.
§ 51.5T [Removed]
Par. 11. Section 51.5T is removed.End Amendment Part
Par. 12. Section 51.6 is added to read as follows:End Amendment Part
§ 51.6 Notice of preliminary fee calculation.
(a) Content of notice. For each sales year, the IRS will make a preliminary calculation of the fee for each covered entity as described in § 51.5. The IRS will notify each covered entity of its preliminary fee calculation for that sales year. The notification to a covered entity of its preliminary fee calculation will include—
(3) The covered entity's branded prescription drug sales taken into account after application of § 51.5(a)(4);
(5) The covered entity's adjustment amount calculated as described in § 51.5(e); and
§ 51.6T [Removed]
Par. 13. Section 51.6T is removed.End Amendment Part
Par. 14. Section 51.7 is added to read as follows:End Amendment Part
§ 51.7 Dispute resolution process.
§ 51.7T [Removed]
Par. 15. Section 51.7T is removed.End Amendment Part
Par. 16. Section 51.8 is added to read as follows:End Amendment Part
§ 51.8 Notification and payment of fee.
(2) The covered entity's adjustment amount calculated as described in § 51.5;
(4) The covered entity's branded prescription drug sales taken into account after application of § 51.5(a)(4);
(b) Differences in preliminary fee calculation and final fee calculation. A covered entity's final fee calculation may differ from the covered entity's preliminary fee calculation because of changes made pursuant to the dispute resolution process described in § 51.7. Even if a covered entity did not file an Start Printed Page 43645error report described in § 51.7, a covered entity's final fee may differ from a covered entity's preliminary fee because of a change in data reported by the Agencies after resolution of error reports, including a change in the aggregate prescription drug sales figure. A change in aggregate prescription drug sales data can affect each covered entity's fee because each covered entity's fee is a fraction of the aggregate fee collected from all covered entities. A covered entity's final fee may also differ from its preliminary fee calculation because the data used in the preliminary fee calculation may have contained inaccurate branded prescription drug sales information that was corrected or updated at the conclusion of the dispute resolution process.
(c) Payment of final fee. Each covered entity must pay its final fee by September 30th of the fee year. For a controlled group, the payment must be made using the designated entity's EIN as reported on Form 8947. The fee must be paid by electronic funds transfer as required by § 51.6302-1. There is no tax return to be filed for the fee.
§ 51.8T [Removed]
Par. 17. Section 51.8T is removed.End Amendment Part
Par. 18. Section 51.9 is added to read as follows:End Amendment Part
§ 51.9 Tax treatment of fee.
§ 51.9T [Removed]
Par. 19. Section 51.9T is removed.End Amendment Part
Par. 20. Section 51.10 is added to read as follows:End Amendment Part
§ 51.10 Refund claims.
§ 51.10T [Removed]
Par. 21. Section 51.10T is removed.End Amendment Part
Par. 22. Section 51.11T is revised to read as follows:End Amendment Part
§ 51.11T Effective/applicability date.
(a) through (b) [Reserved]. For further guidance see § 51.11(a) through (b).
(d) The applicability of § 51.2T(e)(3) expires on July 24, 2017.
Par. 23. Section 51.11 is added to read as follows:End Amendment Part
(a) Except as otherwise provided in this section, §§ 51.1 through 51.10 apply on and after July 28, 2014.
(c) [Reserved]. For further guidance see § 51.11T(c).
§ 51.12T [Removed]
Par. 24. Section 51.12T is removed.End Amendment Part
Par. 25. Section 51.6302-1 is added to read as follows:End Amendment Part
§ 51.6302-1 Method of paying the branded prescription drug fee.
(a) Fee to be paid by electronic funds transfer. Under the authority of section 6302(a), the fee imposed on branded prescription drug sales by section 9008 and § 51.5 must be paid by electronic funds transfer as defined in § 31.6302-1(h)(4)(i) of this title, as if the fee were a depository tax. For the time for paying the fee, see § 51.8.
§ 51.6302-1T [Removed]
Par. 26. Section 51.6302-1T is removed.End Amendment Part
Par. 27. The authority citation for part 602 continues to read as follows:End Amendment Part
Par. 28. In § 602.101, paragraph (b) is amended by:End Amendment Part
Start Amendment Part1. Removing the entry for 51.8T from the table; and End Amendment Part
Start Amendment Part2. Adding entries, in numerical order, for 51.2(f)(2)(ii) and 51.7 to the table to read as follows: End Amendment Part
CFR part or section where identified and describedCurrent OMB Control No. * * * * * 51.2(f)(2)(ii)1545-220951.71545-2209 * * * * * Start Signature
Likewise, under section 1250(b)(3), if a taxpayer can establish that the amount “allowed” as a deduction was less than the amount “allowable,” then the amount taken into account for purposes of a depreciation adjustment is the amount “allowed.” See also section 36B(c)(1)(D) and section 42(j)(5)(A)(i).
See Virginian Hotel Corporation of Lynchburg v. Helvering, 319 U.S. 523, 526 (1943); Flood v. United States, 33 F.3d 1174, 1178 n.5 (9th Cir. 1994); Lenz v. Commissioner, 101 T.C. 260, 265 (1993); Hightower v. Commissioner, T.C. Memo 1982-559.