Alaska Administrative Code › Title 15 - Revenue › Chapter 56 - Oil and Gas Exploration, Production and Pipeline Transportation Property Tax › 15 AAC 56.110 - Pipeline property

Current through May 31, 2024
(a) Property used or committed by agreement
			 for use in the pipeline transportation of gas or unrefined oil or in the
			 operation or maintenance of facilities used for pipeline transportation of gas
			 or unrefined oil shall be valued at its full and true value as of January 1 of
			 each year.
(b) The full and true
			 value of pipeline property under construction will be all the actual costs
			 incurred or accrued with respect to the pipeline property, regardless of the
			 nature of the items of costs, as of the assessment date. Pipelines under
			 construction will be valued in the context of the entire pipeline being
			 constructed. The costs will be included in the valuation of the pipeline as
			 they are incurred except as otherwise specifically provided in (1), (2), and
			 (3) of this subsection. Examples of those costs which are included as they are
			 incurred, include but are not limited to permanent camps and related
			 facilities, pump stations, permanent storage facilities, roads, permanent
			 airstrips, terminal facilities, tank farms, docks, labor, materials, supplies,
			 machinery, equipment, pipe, easements, rights-of-way, improvements, structures,
			 and all other related costs.
(1) Those costs
			 which are more properly attributable to the period of construction of the
			 pipeline project will be included as they are accrued with respect to the
			 property. These costs, which may be included as they accrue, are construction
			 machinery and equipment, construction camps and related facilities. These
			 accrued costs also include unallocated costs which relate to the overall
			 project and are incurred both within and without the state and include such
			 items as overhead and administrative costs, engineering costs, design costs,
			 and research and development costs. The method for the allocation of these
			 accrued costs will be based on a formula which prorates the costs accrued in a
			 given year over the estimated months remaining to complete the pipeline project
			 from the date the cost is incurred. It will be presumed that the cost is
			 incurred at the midpoint of the calendar year in which it has been incurred.
For the purpose of illustration of this method of allocation
				the following example is offered:
EXAMPLE
A pipeline transportation company anticipates that the
				construction phase of its project will commence during January, 1975, and will
				terminate in December, 1976. (A 24-month construction period.) During 1974 the
				company acquires construction equipment, construction camps, and related
				facilities for a cost of $20,000; during 1975, $200,000; and during 1976,
				$100,000. For the purpose of accrual of these costs it is assumed that they
				were expended at midyear. This accounts for a six-month depreciation factor on
				the first year's investment and a 30-month depreciation period for the costs
				incurred in the first year. Subsequent investment periods are treated in the
				same manner with annual adjustments made for the months remaining during the
				construction period.
The costs accrued with respect to the pipeline project for each
				assessment date during the construction period will be calculated as
				follows:
Date Factor Cost Value 1-1-756/30 x 20,000 =
				4,0001-1-7618/30x20,000 = 12,0006/18 x 200,000 = 66,66778,6671-1-7630/30 x
				20,000 = 20,00018/18x200,000 = 200,0006/6 x 100,000 =
				100,000320,000
(2) Salvage
			 value will be recognized as a reduction of the actual costs incurred or accrued
			 with respect to the pipeline project under the following circumstances:
(A) In the case of equipment, machinery, or
			 facilities sold, there will be deducted the actual realized sales price from
			 the cost of the pipeline project for subsequent assessment purposes.
(B) In the case of roads or airstrips that
			 are used during the construction period or a portion thereof, and are
			 subsequently dedicated to and accepted by the state; as of January 1 following
			 the date that the pipeline begins to transport gas or unrefined oil, there will
			 be deducted the salvage value of these roads or airstrips. The deductible
			 salvage value of the road or airstrip as of that date will be assumed to be the
			 undepreciated cost based on a useful life of 10 years.
(3) Ad valorem taxes assessed and paid during
			 construction will be excluded from the costs incurred or accrued with respect
			 to the pipeline project.