Nuclear Decommissioning Funds, 74175-74192 [E7-25223]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 72, Number 249 (Monday, December 31, 2007)]
[Rules and Regulations]
[Pages 74175-74192]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-25223]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9374]
RIN 1545-BF09


Nuclear Decommissioning Funds

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and Temporary regulation.

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SUMMARY: This document contains final and temporary regulations under 
section 468A of the Internal Revenue Code relating to deductions for 
contributions to trusts maintained for decommissioning nuclear power 
plants. The temporary regulations affect most taxpayers that own an 
interest in a nuclear power plant and reflect recent statutory changes. 
The text of these temporary regulations also serves as the text of the 
proposed regulations set forth in the notice of proposed rulemaking on 
this subject in the Proposed Rules section in this issue of the Federal 
Register.

DATES: Effective Date: These regulations are effective on December 31, 
2007.
    Applicability Dates: For dates of applicability, see Sec.  1.468A-
9T.

FOR FURTHER INFORMATION CONTACT: Patrick S. Kirwan, (202) 622-3110 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    These temporary regulations are being issued without prior notice 
and public procedure pursuant to the Administrative Procedure Act (5 
U.S.C. 553). For this reason, the collections of information contained 
in these regulations have been approved by the Office of Management and 
Budget on a temporary basis under control number 1545-2091 and pending 
receipt and review of comments, may be approved for a period of three 
years. Responses to these collections of information are required to 
obtain a tax benefit.
    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.
    For further information concerning this collection of information, 
and where to submit comments on the collection of information and the 
accuracy of the estimated burden, and suggestions for reducing this 
burden, please refer to the preamble of the cross-referencing notice of 
proposed rulemaking published in the Proposed Rules section in this 
issue of the Federal Register.
    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

    This document contains amendments to 26 CFR part 1 providing 
temporary regulations under section 468A of the Internal Revenue Code 
of 1986 (Code). Section 468A was amended by section 1310 of the Energy 
Policy Act of 2005 (the Energy Policy Act), Public Law 109-58 (119 
Stat. 594).

Explanation of Provisions

    Section 468A provides a deduction for amounts contributed to a 
qualified nuclear decommissioning reserve fund. Under prior law, the 
deduction was limited to the lesser of the amount included in the 
utility's cost of service for ratemaking purposes or the ruling amount. 
As a result, only regulated utilities could take advantage of section 
468A. The Energy Policy Act amendment of section 468A eliminated the 
cost-of-service limitation. Accordingly, decommissioning costs of an 
unregulated nuclear power plant may now be funded by deductible 
contributions to a qualified nuclear decommissioning fund.
    Under prior law, deductible contributions were also limited to the 
amount necessary to fund the plant's post-1983 nuclear decommissioning 
costs (determined as if decommissioning costs accrued ratably over the 
estimated useful life of the plant). The Energy Policy Act amendment of 
section 468A also eliminated this limitation. Accordingly, taxpayers 
may now fund the entire cost of decommissioning a plant through a 
qualified nuclear decommissioning fund.
    A plant's pre-1984 nuclear decommissioning costs can be funded by 
increasing the annual deductible contributions over the remaining 
useful life of the plant. In addition, however, the Energy Policy Act 
amendments to section 468A permit more rapid funding of the pre-1984 
costs. A taxpayer may contribute, in a single taxable year, all or any 
portion of the amount needed to fund pre-1984 nuclear decommissioning 
costs that have not been previously funded (a ``special transfer''). A 
special transfer is not deductible in full in the year the contribution 
is made. Instead, the deduction is allowed ratably over the remaining 
useful life of the nuclear plant. Gain or loss is not recognized on any 
special transfer, and the transferred assets have a carryover basis.
    Section 468A allows a deduction only if the Internal Revenue 
Service has given the taxpayer a schedule of ruling amounts (that is, a 
schedule specifying the maximum deductible contribution that can be 
made in each taxable year). The Energy Policy Act amendments provide 
that the taxpayer must obtain a new schedule of ruling amounts when the 
Nuclear Regulatory Commission (NRC) extends the operating license of 
the plant.

Useful Life

    The schedule of ruling amounts may not provide for more rapid than 
level funding over the estimated useful life of the nuclear power 
plant. Also, as noted above, deductions for special transfers are 
allowed ratably over the plant's remaining useful life. Under the 
current regulations, the useful life of the plant begins on the first 
day of the taxable year that includes the date that the nuclear power 
plant begins commercial operations, and ends on the last day of the 
taxable year that includes the estimated date on which the nuclear 
power plant will no longer be included in the taxpayer's rate base for 
ratemaking purposes. The proposed and temporary regulations retain this 
general framework for plants that were regulated by a public utility 
commission (PUC) before January 1, 2006, and permit the use of any 
reasonable method to determine the end of the estimated useful life for 
all other plants. The current regulations require adjustments to the 
estimated useful life to reflect changes in PUC assumptions regarding 
useful life. The proposed and temporary regulations eliminate this 
requirement. Taxpayers will, however, be permitted

[[Page 74176]]

to establish that a change in the plant's useful life is appropriate 
and may use the assumptions used in the most recent ratemaking 
proceeding as support for such a change.

Previously Excluded Amount

    Section 468A(f) provides that the amount of the special transfer 
with respect to a nuclear power plant may not exceed ``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 section 468A(d)(2)(A) as in effect 
immediately before the date of the enactment of [the Energy Policy 
Act].'' The legislative history (footnote 15 of H. Rep. 109-45) 
provides the following explanation of this rule:

    For example, if $100 is the present value of the total 
decommissioning costs of a nuclear powerplant, and if under present 
law the qualified fund is only permitted to accumulate $75 of 
decommissioning costs over such plant's estimated life (because the 
qualified fund was not in existence during 25 percent of the useful 
life of the nuclear powerplant), a taxpayer could contribute $25 to 
the qualified fund under this component of the provision.

The proposed and temporary regulations permit taxpayers to compute the 
maximum special transfer amount by (i) calculating the present value of 
the future decommissioning liability and (ii) reducing that present 
value by the amount of decommissioning costs that, under the law in 
effect before the enactment of the Energy Policy Act, could have been 
funded through a qualified fund. For this purpose, the amount of 
decommissioning costs that could have been funded through a qualified 
fund is determined by multiplying the present value of the future 
decommissioning liability by the qualifying percentage that, under the 
law in effect before the enactment of the Energy Policy Act, was used 
to determine the amount of decommissioning costs that could be funded 
through a qualified fund.

Special Transfers of Property

    Taxpayers may make special transfers of property other than cash. 
The legislative history (footnote 16 of H. Rep. 109-45) includes the 
following discussion relating to such transfers:

    A taxpayer recognizes no gain or loss on the contribution of 
property to a qualified fund under this special rule. The qualified 
fund will take a transferred (carryover) basis in such property. 
Correspondingly, a taxpayer's deduction (over the estimated life of 
the powerplant) is to be based on the adjusted tax basis of the 
property contributed rather than the fair market value of such 
property.

Although the deduction for contributed property is limited to the 
adjusted basis of the property, the regulations provide that the 
limitation on the amount of the special transfer is applied using the 
fair market value of the contributed property rather than its basis. 
This rule is necessary to prevent overfunding of the qualified fund.

Transfers to Related Persons

    Although deductions for special transfers are generally allowed 
ratably over the plant's remaining useful life, a special rule applies 
if the fund is transferred before the end of the remaining useful life. 
In that case, the entire remaining deduction for the special transfer 
is allowed in the year the fund is transferred. This acceleration 
allows the taxpayer to close its books on the asset. We have been asked 
to provide guidance on whether this acceleration would apply in the 
case of a transaction that qualifies for nonrecognition treatment (for 
example, under section 351). The IRS and Treasury believe that the 
acceleration applies but provides an inappropriate benefit to a 
taxpayer that directly or indirectly retains an interest in the plant. 
Consequently, in the case of a transfer of a qualified nuclear 
decommissioning fund to a related person, the regulations provide that 
the transferee's ruling amounts will be adjusted to the extent 
necessary to offset the inappropriate benefit provided by the 
acceleration of deductions.

Special Transfers in Multiple Taxable Years

    It may be necessary (for example, if assets are held in funds with 
penalties for early withdrawal) for taxpayers to spread the special 
transfer across more than one taxable year. The regulations provide 
that contributions in multiple years are permissible and include an 
example describing a special transfer spread across multiple years.

New Schedules of Ruling Amounts

    Under prior law, only regulated utilities could take advantage of 
section 468A and the IRS could rely upon the PUC with regulatory 
jurisdiction over the taxpayer to ensure that accurate and reasonable 
assumptions were used in calculating decommissioning cost of service 
for purposes of rate orders. Accordingly, the existing regulations 
require the taxpayer to use the PUC's assumptions in calculating the 
taxpayer's schedule of ruling amounts and to submit as part of the 
request for a schedule of ruling amounts ``a description of the 
assumptions, estimates, and other factors that were used'' by ``each 
public utility commission that has determined the amount of 
decommissioning costs to be included in the taxpayer's cost of service 
for ratemaking purposes.''
    Under current law, any taxpayer with an interest in a nuclear power 
plant may maintain a qualified nuclear decommissioning fund with 
respect to that interest, without regard to whether the taxpayer is, or 
ever has been, regulated by a PUC. The temporary and proposed 
regulations provide that, in the case of a plant that is currently 
subject to PUC regulation, the assumptions used by the PUC in 
determining decommissioning costs for the plant must be provided in the 
submission of the proposed schedule of ruling amounts. The taxpayer 
submitting the proposed schedule is not required to use the PUC's 
assumptions in calculating the proposed schedule, but is required to 
base the schedule upon reasonable assumptions.
    Under the temporary and proposed regulations, the electing taxpayer 
bears the burden of demonstrating that the requested schedule is based 
upon reasonable assumptions and is consistent with the principles and 
provisions of the applicable regulatory provisions. A taxpayer that 
remains subject to the ratemaking jurisdiction of a PUC and that 
calculates its schedule of ruling amounts using the assumptions 
described by the PUC in its most recent rate order will generally 
satisfy this burden of proof. In addition, a taxpayer that owns an 
interest in a deregulated nuclear plant may submit assumptions used by 
a PUC that formerly had regulatory jurisdiction over the plant as 
support for the assumptions used in calculating the taxpayer's proposed 
schedule of ruling amounts, with the understanding that the PUC 
assumptions may be given less weight if they are out of date or were 
developed in a proceeding for a different taxpayer. The use of other 
industry standards, such as the assumptions underlying the taxpayer's 
most recent financial assurance filing with the NRC, is an alternative 
means of demonstrating that the taxpayer has calculated its proposed 
schedule of ruling amounts on a reasonable basis. On the other hand, 
consistency with financial accounting statements is not sufficient, in 
the absence of other supporting evidence, to meet the taxpayer's burden 
of proof.

Additional Provisions and Changes

    The regulations follow the statute in requiring taxpayers to 
request a new

[[Page 74177]]

schedule of ruling amounts in any taxable year that the NRC extends the 
operating license for the plant. In addition, the regulations provide 
that a separate schedule of ruling amounts (a ``schedule of deduction 
amounts'') must be obtained from the Secretary before deductions may be 
claimed with respect to a special transfer.
    Finally, many conforming amendments have been made to the existing 
regulations reflecting the elimination of the cost-of-service 
limitation and the post-1983 decommissioning cost limitation, and to 
eliminate obsolete provisions.

Effective/Applicability Date

    The temporary regulations are applicable on December 31, 2007, and 
apply with respect to taxable years ending on or after such date. 
During the period between January 1, 2006, and December 31, 2007. a 
taxpayer may use any reasonable method consistent with the principles 
and provisions of section 468A to determine the schedule of ruling 
amounts or the schedule of deduction amounts. A taxpayer may apply the 
provisions of Sec. Sec.  1.468A-1T through 1.468A-8T to taxable years 
ending on or after January 1, 2006, and before December 31, 2007, 
provided that the taxpayer applies all provisions in Sec. Sec.  1.468A-
1T through 1.468A-8T to the taxable year.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) and (d) of the Administrative Procedure 
Act (5 U.S.C. chapter 5) does not apply to these regulations. For 
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), 
please refer to the Special Analyses section of the preamble to the 
cross-reference notice of proposed rulemaking published in the Proposed 
Rules section in this issue of the Federal Register. Pursuant to 
section 7805(f) of the Code, these regulations have been submitted to 
the Chief Counsel for Advocacy of the Small Business Administration for 
comment on their impact on small business.

Drafting Information

    The principal author of these regulations is Patrick S. Kirwan, 
Office of Associate Chief Counsel (Passthroughs and Special 
Industries). However, other personnel from the IRS and Treasury 
Department participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements

26 CFR Part 602

    Reporting and recordkeeping requirements.

Amendments to the Regulations

0
Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding an 
entry in numerical order to read in part as follows:

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

    Section 1.468A-5T also issued under 26 U.S.C. 468A(e)(5). * * *


Sec. Sec.  1.468A-0 through 1.468A-8  [Removed]

0
Par. 2. Sections 1.468A-0 through 1.468A-8 are removed.

0
Par. 3. Sections 1.468A-0T through 1.468A-9T are added to read as 
follows:


Sec.  1.468A-0T  Nuclear decommissioning costs; table of contents.

    This section lists the paragraphs contained in Sec. Sec.  1.468A-1T 
through 1.468A-9T.


Sec.  1.468A-1T  Nuclear decommissioning costs; general rules 
(temporary).

    (a) Introduction.
    (b) Definitions.
    (c) Special rules applicable to certain experimental nuclear 
facilities.


Sec.  1.468A-2T  Treatment of electing taxpayer (temporary).

    (a) In general.
    (b) Limitation on payments to a nuclear decommissioning fund.
    (1) In general.
    (2) Excess contributions not deductible.
    (c) Deemed payment rules.
    (d) Treatment of distributions.
    (1) In general.
    (2) Exceptions to inclusion in gross income.
    (i) Payment of administrative costs and incidental expenses.
    (ii) Withdrawals of excess contributions.
    (iii) Actual distributions of amounts included in gross income as 
deemed distributions.
    (e) Deduction when economic performance occurs.


Sec.  1.468A-3T  Ruling amount (temporary).

    (a) In general.
    (b) Level funding limitation.
    (c) Funding period.
    (d) Decommissioning costs allocable to a fund.
    (1) General rule.
    (2) Total estimated cost of decommissioning.
    (3) Taxpayer's share.
    (e) Manner of requesting schedule of ruling amounts.
    (1) In general.
    (2) Information required.
    (3) Administrative procedures.
    (f) Review and revision of schedule of ruling amounts.
    (1) Mandatory review.
    (2) Elective review.
    (3) Determination of revised schedule of ruling amounts.
    (g) Special rule permitting payments to a nuclear decommissioning 
fund before receipt of an initial or revised ruling amount applicable 
to a taxable year.


Sec.  1.468A-4T  Treatment of nuclear decommissioning fund (temporary).

    (a) In general.
    (b) Modified gross income.
    (c) Special rules.
    (1) Period for computation of modified gross income.
    (2) Gain or loss upon distribution of property by a fund.
    (3) Denial of credits against tax.
    (4) Other corporate taxes inapplicable.
    (d) Treatment as corporation for purposes of subtitle F.


Sec.  1.468A-5T  Nuclear decommissioning fund--miscellaneous provisions 
(temporary).

    (a) Qualification requirements.
    (1) In general.
    (2) Limitation on contributions.
    (3) Limitation on use of fund.
    (i) In general.
    (ii) Definition of administrative costs and expenses.
    (4) Trust provisions.
    (b) Prohibitions against self-dealing.
    (1) In general.
    (2) Self-dealing defined.
    (3) Disqualified person defined.
    (c) Disqualification of nuclear decommissioning fund.
    (1) In general.
    (2) Exception to disqualification.
    (i) In general.
    (ii) Excess contribution defined.
    (iii) Taxation of income attributable to an excess contribution.
    (3) Effect of disqualification.
    (4) Further effects of disqualification.
    (d) Termination of nuclear decommissioning fund upon substantial 
completion of decommissioning.
    (1) In general.
    (2) Additional rules.
    (3) Substantial completion of decommissioning defined.

[[Page 74178]]

Sec.  1.468A-6T  Disposition of an interest in a nuclear power plant 
(temporary).

    (a) In general.
    (b) Requirements.
    (c) Tax consequences.
    (1) The transferor and its Fund.
    (2) The transferee and its Fund.
    (3) Basis.
    (d) Determination of proportionate amount.
    (e) Calculation of schedule of ruling amounts and schedule of 
deduction amounts for dispositions described in this section.
    (1) Transferor.
    (i) Taxable year of disposition.
    (ii) Taxable years after the disposition.
    (2) Transferee.
    (i) Taxable year of disposition.
    (ii) Taxable years after the disposition.
    (3) Example.
    (f) Anti-abuse provision.


Sec.  1.468A-7T  Manner of and time for making election (temporary).

    (a) In general.
    (b) Required information.


Sec.  1.468A-8T  Special transfers to qualified funds pursuant to 
section 468A(f) (temporary).

    (a) General rule.
    (1) In general.
    (2) Previously excluded amount.
    (3) Transfers in multiple years.
    (4) Contributions of property.
    (b) Deduction for amounts transferred.
    (1) In general.
    (2) Denial of deduction for previously deducted amounts.
    (3) Transfers of qualified nuclear decommissioning funds.
    (4) Special rules.
    (i) Gain or loss not recognized on transfers to fund.
    (ii) Transfers of appreciated property to fund.
    (c) New ruling amount required.
    (1) In general.
    (2) Transfers in multiple taxable years.
    (d) Manner of requesting schedule of deduction amounts.
    (1) In general.
    (2) Information required.
    (3) Statement required.
    (4) Administrative procedures.


Sec.  1.468A-9T  Effective/applicability date and transitional rules 
(temporary).

    (a) Effective date.
    (b) Transitional rules.
    (1) Schedules of ruling amounts based on prior regulations.
    (2) Nuclear decommissioning fund qualification requirements.
    (3) Use of formula method.


Sec.  1.468A-1T  Nuclear decommissioning costs; general rules 
(temporary).

    (a) Introduction. Section 468A provides an elective method for 
taking into account nuclear decommissioning costs for Federal income 
tax purposes. In general, an eligible taxpayer that elects the 
application of section 468A pursuant to the rules contained in Sec.  
1.468A-7T is allowed a deduction (as determined under Sec.  1.468A-2T) 
for the taxable year in which the taxpayer makes a cash payment to a 
nuclear decommissioning fund. Taxpayers using an accrual method of 
accounting that do not elect the application of section 468A are not 
allowed a deduction for nuclear decommissioning costs prior to the 
taxable year in which economic performance occurs with respect to such 
costs (see section 461(h)).
    (b) Definitions. The following terms are defined for purposes of 
section 468A and the regulations:
    (1) The term eligible taxpayer means any taxpayer that possesses a 
qualifying interest in a nuclear power plant (including a nuclear power 
plant that is under construction).
    (2) The term qualifying interest means--
    (i) A direct ownership interest; and
    (ii) A leasehold interest in any portion of a nuclear power plant 
if--
    (A) The holder of the leasehold interest is primarily liable under 
Federal or State law for decommissioning such portion of the nuclear 
power plant; and
    (B) No other person establishes a nuclear decommissioning fund with 
respect to such portion of the nuclear power plant.
    (3) A direct ownership interest includes an interest held as a 
tenant in common or joint tenant, but does not include stock in a 
corporation that owns a nuclear power plant or an interest in a 
partnership that owns a nuclear power plant. Thus, in the case of a 
partnership that owns a nuclear power plant, the election under section 
468A must be made by the partnership and not by the partners. In the 
case of an unincorporated organization described in Sec.  1.761-2(a)(3) 
that elects under section 761(a) to be excluded from the application of 
subchapter K, each taxpayer that is a co-owner of the nuclear power 
plant is eligible to make a separate election under section 468A.
    (4) The terms nuclear decommissioning fund and qualified nuclear 
decommissioning fund mean a fund that satisfies the requirements of 
Sec.  1.468A-5T. The term nonqualified fund means a fund that does not 
satisfy those requirements.
    (5) The term nuclear power plant means any nuclear power reactor 
that is used predominantly in the trade or business of the furnishing 
or sale of electric energy. Each unit (that is, nuclear reactor) 
located on a multi-unit site is a separate nuclear power plant. The 
term nuclear power plant also includes the portion of the common 
facilities of a multi-unit site allocable to a unit on that site.
    (6) The term nuclear decommissioning costs or decommissioning costs 
means all otherwise deductible expenses to be incurred in connection 
with the entombment, decontamination, dismantlement, removal and 
disposal of the structures, systems and components of a nuclear power 
plant that has permanently ceased the production of electric energy. 
Such term includes all otherwise deductible expenses to be incurred in 
connection with the preparation for decommissioning, such as 
engineering and other planning expenses, and all otherwise deductible 
expenses to be incurred with respect to the plant after the actual 
decommissioning occurs, such as physical security and radiation 
monitoring expenses. Such term does not include otherwise deductible 
expenses to be incurred in connection with the disposal of spent 
nuclear fuel under the Nuclear Waste Policy Act of 1982 (Pub. L. 97-
425). An expense is otherwise deductible for purposes of this paragraph 
(b)(6) if it would be deductible under chapter 1 of the Internal 
Revenue Code without regard to section 280B.
    (7) The term public utility commission means any State or political 
subdivision thereof, any agency, instrumentality or judicial body of 
the United States, or any judicial body, commission or other similar 
body of the District of Columbia or of any State or any political 
subdivision thereof that establishes or approves rates for the 
furnishing or sale of electric energy.
    (8) The term ratemaking proceeding means any proceeding before a 
public utility commission in which rates for the furnishing or sale of 
electric energy are established or approved. Such term includes a 
generic proceeding that applies to two or more taxpayers that are 
subject to the jurisdiction of a single public utility commission.
    (9) The term special transfer means any transfer of funds to a 
qualified nuclear decommissioning fund pursuant to Sec.  1.468A-8T.
    (c) Special rules applicable to certain experimental nuclear 
facilities. (1) The owner of a qualifying interest in an experimental 
nuclear facility possesses a qualifying interest in a nuclear power 
plant for purposes of paragraph (b) of this section if such person is 
engaged in the trade or business of the furnishing or sale of electric 
energy.

[[Page 74179]]

    (2) An owner of stock in a corporation that owns an experimental 
nuclear facility possesses a qualifying interest in a nuclear power 
plant for purposes of paragraph (b)(1) of this section if--
    (i) Such stockholder satisfies the conditions of paragraph (c)(1) 
of this section; and
    (ii) The corporation that directly owns the facility is not engaged 
in the trade or business of the furnishing or sale of electric energy.
    (3) For purposes of this paragraph (c), an experimental nuclear 
facility is a nuclear power reactor that is used predominantly for the 
purpose of conducting experimentation and research.


Sec.  1.468A-2T  Treatment of electing taxpayer (temporary).

    (a) In general. An eligible taxpayer that elects the application of 
section 468A pursuant to the rules contained in Sec.  1.468A-7T (an 
electing taxpayer) is allowed a deduction for the taxable year in which 
the taxpayer makes a cash payment (or is deemed to make a cash payment 
as provided in paragraph (c) of this section) to a nuclear 
decommissioning fund and for any taxable year in which a deduction is 
allowed for a special transfer described in Sec.  1.468A-8T. The amount 
of the deduction for any taxable year equals the total amount of cash 
payments made (or deemed made) by the electing taxpayer to a nuclear 
decommissioning fund (or nuclear decommissioning funds) during such 
taxable year under this section, plus any amount allowable as a 
deduction in that taxable year for a special transfer described in 
Sec.  1.468A-8T. The amount of a special transfer permitted under Sec.  
1.468A-8T is not treated as a cash payment for purposes of this 
paragraph (a), and a taxpayer making a special transfer is allowed a 
ratable deduction in each taxable year during the remaining useful life 
of the nuclear power plant for the special transfer. A payment may not 
be made (or deemed made) to a nuclear decommissioning fund before the 
first taxable year in which all of the following conditions are 
satisfied:
    (1) The construction of the nuclear power plant to which the 
nuclear decommissioning fund relates has commenced.
    (2) A ruling amount is applicable to the nuclear decommissioning 
fund (see Sec.  1.468A-3T).
    (b) Limitation on payments to a nuclear decommissioning fund--(1) 
In general. For purposes of paragraph (a) of this section, the maximum 
amount of cash payments made (or deemed made) to a nuclear 
decommissioning fund under paragraph (a) of this section during any 
taxable year shall not exceed the ruling amount applicable to the 
nuclear decommissioning fund for such taxable year (as determined under 
Sec.  1.468A-3T).
    (2) Excess contributions not deductible. If the amount of cash 
payments made (or deemed made) to a nuclear decommissioning fund during 
any taxable year exceeds the limitation of paragraph (b)(1) of this 
section, the excess is not deductible by the electing taxpayer. In 
addition, see Sec.  1.468A-5T(c) for rules which provide that the 
Internal Revenue Service may disqualify a nuclear decommissioning fund 
if the amount of cash payments made (or deemed made) to a nuclear 
decommissioning fund during any taxable year exceeds the limitation of 
paragraph (b)(1) of this section.
    (3) Special transfer disregarded. The amount of a special transfer 
permitted under Sec.  1.468A-8T is not treated as a cash payment for 
purposes of this paragraph (b).
    (c) Deemed payment rules. (1) The amount of any cash payment made 
by an electing taxpayer to a nuclear decommissioning fund on or before 
the 15th day of the third calendar month after the close of any taxable 
year (the deemed payment deadline date) shall be deemed made during 
such taxable year if the electing taxpayer irrevocably designates the 
amount as relating to such taxable year on its timely filed Federal 
income tax return for such taxable year (see Sec.  1.468A-7T(b)(4)(iv) 
for rules relating to such designation).
    (2) The amount of any cash payment made by a customer of an 
electing taxpayer to a nuclear decommissioning fund of such electing 
taxpayer shall be deemed made by the electing taxpayer if the amount is 
included in the gross income of the electing taxpayer in the manner 
prescribed by section 88 and Sec.  1.88-1.
    (d) Treatment of distributions--(1) In general. Except as otherwise 
provided in paragraph (d)(2) of this section, the amount of any actual 
or deemed distribution from a nuclear decommissioning fund shall be 
included in the gross income of the electing taxpayer for the taxable 
year in which the distribution occurs. The amount of any distribution 
of property equals the fair market value of the property on the date of 
the distribution. See Sec.  1.468A-5T(c) and (d) for rules relating to 
the deemed distribution of the assets of a nuclear decommissioning fund 
in the case of a disqualification or termination of the fund. A 
distribution from a nuclear decommissioning fund shall include an 
expenditure from the fund or the use of the fund's assets--
    (i) To satisfy, in whole or in part, the liability of the electing 
taxpayer for decommissioning costs of the nuclear power plant to which 
the fund relates; and
    (ii) To pay administrative costs and other incidental expenses of 
the fund.
    (2) Exceptions to inclusion in gross income--(i) Payment of 
administrative costs and incidental expenses. The amount of any payment 
by a nuclear decommissioning fund for administrative costs or other 
incidental expenses of such fund (as defined in Sec.  1.468A-
5T(a)(3)(ii)) shall not be included in the gross income of the electing 
taxpayer unless such amount is paid to the electing taxpayer (in which 
case the amount of the payment is included in the gross income of the 
electing taxpayer under section 61).
    (ii) Withdrawals of excess contributions. The amount of a 
withdrawal of an excess contribution (as defined in Sec.  1.468A-
5T(c)(2)(ii)) by an electing taxpayer pursuant to the rules of Sec.  
1.468A-5T(c)(2) shall not be included in the gross income of the 
electing taxpayer. See paragraph (b)(2) of this section, which provides 
that the payment of such amount to the nuclear decommissioning fund is 
not deductible by the electing taxpayer.
    (iii) Actual distributions of amounts included in gross income as 
deemed distributions. If the amount of a deemed distribution is 
included in the gross income of the electing taxpayer for the taxable 
year in which the deemed distribution occurs, no further amount is 
required to be included in gross income when the amount of the deemed 
distribution is actually distributed by the nuclear decommissioning 
fund. The amount of a deemed distribution is actually distributed by a 
nuclear decommissioning fund as the first actual distributions are made 
by the nuclear decommissioning fund on or after the date of the deemed 
distribution.
    (e) Deduction when economic performance occurs. An electing 
taxpayer using an accrual method of accounting is allowed a deduction 
for nuclear decommissioning costs no earlier than the taxable year in 
which economic performance occurs with respect to such costs (see 
section 461(h)(2)). The amount of nuclear decommissioning costs that is 
deductible under this paragraph (e) is determined without regard to 
section 280B (see Sec.  1.468A-1T(b)(6)). A deduction is allowed under 
this paragraph (e) whether or not a deduction was allowed with respect 
to such costs under section 468A(a) and

[[Page 74180]]

paragraph (a) of this section for an earlier taxable year.


Sec.  1.468A-3T  Ruling amount (temporary).

    (a) In general. (1) Except as otherwise provided in paragraph (g) 
of this section or in Sec.  1.468A-8T (relating to deductions for 
special transfers into a nuclear decommissioning fund), an electing 
taxpayer is allowed a deduction under section 468A(a) for the taxable 
year in which the taxpayer makes a cash payment (or is deemed to make a 
cash payment) to a nuclear decommissioning fund only if the taxpayer 
has received a schedule of ruling amounts for the nuclear 
decommissioning fund that includes a ruling amount for such taxable 
year. Except as provided in paragraph (a)(4) or (5) of this section, a 
schedule of ruling amounts for a nuclear decommissioning fund (schedule 
of ruling amounts) is a ruling (within the meaning of Sec.  
601.201(a)(2) of this chapter) specifying the annual payments (ruling 
amounts) that, over the taxable years remaining in the funding period 
as of the date the schedule first applies, will result in a projected 
balance of the nuclear decommissioning fund as of the last day of the 
funding period equal to (and in no event greater than) the amount of 
decommissioning costs allocable to the fund. The projected balance of a 
nuclear decommissioning fund as of the last day of the funding period 
shall be calculated by taking into account the fair market value of the 
assets of the fund as of the first day of the first taxable year to 
which the schedule of ruling amounts applies and the estimated rate of 
return to be earned by the assets of the fund after payment of the 
estimated administrative costs and incidental expenses to be incurred 
by the fund (as defined in Sec.  1.468A-5T(a)(3)(ii)), including all 
Federal, State and local income taxes to be incurred by the fund (the 
after-tax rate of return). See paragraph (c) of this section for a 
definition of funding period and paragraph (d) of this section for 
guidance with respect to the amount of decommissioning costs allocable 
to a fund.
    (2) Each schedule of ruling amounts must be consistent with the 
principles and provisions of this section and must be based on 
reasonable assumptions concerning--
    (i) The after-tax rate of return to be earned by the amounts 
collected for decommissioning;
    (ii) The total estimated cost of decommissioning the nuclear power 
plant (see paragraph (d)(2) of this section); and
    (iii) The frequency of contributions to a nuclear decommissioning 
fund for a taxable year (for example, monthly, quarterly, semi-annual 
or annual contributions).
    (3) The Internal Revenue Service (IRS) shall provide a schedule of 
ruling amounts that is identical to the schedule of ruling amounts 
proposed by the taxpayer in connection with the taxpayer's request for 
a schedule of ruling amounts (see paragraph (e)(2)(viii) of this 
section), but no schedule of ruling amounts shall be provided unless 
the taxpayer's proposed schedule of ruling amounts is consistent with 
the principles and provisions of this section and is based on 
reasonable assumptions. If a proposed schedule of ruling amounts is not 
consistent with the principles and provisions of this section or is not 
based on reasonable assumptions, the taxpayer may propose an amended 
schedule of ruling amounts that is consistent with such principles and 
provisions and is based on reasonable assumptions.
    (4) The taxpayer bears the burden of demonstrating that the 
proposed schedule of ruling amounts is consistent with the principles 
and provisions of this section and is based on reasonable assumptions. 
If a public utility commission established or approved the currently 
applicable rates for the furnishing or sale by the taxpayer of 
electricity from the plant, the taxpayer can generally satisfy this 
burden of proof by demonstrating that the schedule of ruling amounts is 
calculated using the assumptions used by the public utility commission 
in its most recent order. In addition, a taxpayer that owns an interest 
in a deregulated nuclear plant may submit assumptions used by a public 
utility commission that formerly had regulatory jurisdiction over the 
plant as support for the assumptions used in calculating the taxpayer's 
proposed schedule of ruling amounts, with the understanding that the 
assumptions used by the public utility commission may be given less 
weight if they are out of date or were developed in a proceeding for a 
different taxpayer. The use of other industry standards, such as the 
assumptions underlying the taxpayer's most recent financial assurance 
filing with the NRC, are an alternative means of demonstrating that the 
taxpayer has calculated its proposed schedule of ruling amounts on a 
reasonable basis. Consistency with financial accounting statements is 
not sufficient, in the absence of other supporting evidence, to meet 
the taxpayer's burden of proof under this paragraph (a)(4).
    (5) The IRS will approve, at the request of the taxpayer, a formula 
or method for determining a schedule of ruling amounts (rather than 
providing a schedule specifying a dollar amount for each taxable year) 
if the formula or method is consistent with the principles and 
provisions of this section and is based on reasonable assumptions. See 
paragraph (f)(1)(ii) of this section for a special rule relating to the 
mandatory review of ruling amounts that are determined pursuant to a 
formula or method.
    (6) The IRS may, in its discretion, provide a schedule of ruling 
amounts that is determined on a basis other than the rules of 
paragraphs (a) through (d) of this section if--
    (i) In connection with its request for a schedule of ruling 
amounts, the taxpayer explains the need for special treatment and sets 
forth an alternative basis for determining the schedule of ruling 
amounts; and
    (ii) The IRS determines that special treatment is consistent with 
the purpose of section 468A.
    (b) Level funding limitation. (1) Except as otherwise provided in 
paragraph (b)(3) of this section, the ruling amount specified in a 
schedule of ruling amounts for any taxable year in the funding period 
(as defined in paragraph (c) of this section) shall not be less than 
the ruling amount specified in such schedule for any earlier taxable 
year.
    (2) The ruling amount specified in a schedule of ruling amounts for 
a taxable year after the end of the funding period may be less than the 
ruling amount specified in such schedule for an earlier taxable year.
    (3) The ruling amount specified in a schedule of ruling amounts for 
the last taxable year in the funding period may be less than the ruling 
amount specified in such schedule for an earlier taxable year if, when 
annualized, the amount specified for the last taxable year is not less 
than the amount specified for such earlier taxable year. The amount 
specified for the last taxable year is annualized by--
    (i) Determining the number of days between the beginning of the 
taxable year and the end of the plant's estimated useful life;
    (ii) Dividing the amount specified for the last taxable year by 
such number of days; and
    (iii) Multiplying the result by the number of days in the last 
taxable year (generally 365).
    (c) Funding period--(1) In general. For purposes of this section, 
the funding period for a nuclear decommissioning fund is the period 
that--
    (i) Begins on the first day of the first taxable year for which a 
deductible payment is made (or deemed made) to

[[Page 74181]]

such nuclear decommissioning fund (see Sec.  1.468A-2T(a) for rules 
relating to the first taxable year for which a payment may be made (or 
deemed made) to a nuclear decommissioning fund); and
    (ii) Ends on the last day of the taxable year that includes the 
last day of the estimated useful life of the nuclear power plant to 
which the nuclear decommissioning fund relates.
    (2) Estimated useful life. The last day of the estimated useful 
life of a nuclear power plant is determined under the following rules:
    (i) Except as provided in paragraph (c)(2)(ii) of this section--
    (A) The last day of the estimated useful life of a nuclear power 
plant that has been included in rate base for ratemaking purposes in 
any ratemaking proceeding that established rates for a period before 
January 1, 2006, is the date used in the first such ratemaking 
proceeding as the estimated date on which the nuclear power plant will 
no longer be included in the taxpayer's rate base for ratemaking 
purposes;
    (B) The last day of the estimated useful life of a nuclear power 
plant that is not described in paragraph (c)(2)(i)(A) of this section 
is the last day of the estimated useful life of the plant determined as 
of the date it is placed in service;
    (C) A taxpayer with an interest in the plant that is not described 
in paragraph (c)(2)(i)(A) of this section may use any reasonable method 
for determining the last day of such estimated useful life; and
    (D) A reasonable method for purposes of paragraph (c)(2)(i)(C) of 
this section may include use of the period for which a public utility 
commission has included a comparable nuclear power plant in rate base 
for ratemaking purposes.
    (ii) If it can be established that the estimated useful life of the 
nuclear power plant will end on a date other than the date determined 
under paragraph (c)(2)(i) of this section, the taxpayer may use such 
other date as the last day of the estimated useful life but is not 
required to do so. If the last day of the estimated useful life was 
determined under paragraph (c)(2)(i)(A) of this section and the most 
recent ratemaking proceeding used an alternative date as the estimated 
date on which the nuclear power plant will no longer be included rate 
base, the most recent ratemaking proceeding will generally be treated 
as establishing such alternative date as the last day of the estimated 
useful life.
    (d) Decommissioning costs allocable to a fund. The amount of 
decommissioning costs allocable to a nuclear decommissioning fund is 
determined for purposes of this section by applying the following rules 
and definitions:
    (1) General rule. The amount of decommissioning costs allocable to 
a nuclear decommissioning fund is the taxpayer's share of the total 
estimated cost of decommissioning the nuclear power plant to which the 
fund relates.
    (2) Total estimated cost of decommissioning. Under paragraph (a)(2) 
of this section, the taxpayer must demonstrate the reasonableness of 
the assumptions concerning the total estimated cost of decommissioning 
the nuclear power plant.
    (3) Taxpayer's share. The taxpayer's share of the total estimated 
cost of decommissioning a nuclear power plant equals the total 
estimated cost of decommissioning such nuclear power plant multiplied 
by the percentage of such nuclear power plant that the qualifying 
interest of the taxpayer represents (see Sec.  1.468A-1T(b)(2) for 
circumstances in which a taxpayer possesses a qualifying interest in a 
nuclear power plant).
    (e) Manner of requesting schedule of ruling amounts--(1) In 
general. (i) In order to receive a ruling amount for any taxable year, 
a taxpayer must file a request for a schedule of ruling amounts that 
complies with the requirements of this paragraph (e), the applicable 
procedural rules set forth in Sec.  601.201(e) of this chapter 
(Statement of Procedural Rules) and the requirements of any applicable 
revenue procedure that is in effect on the date the request is filed.
    (ii) A separate request for a schedule of ruling amounts is 
required for each nuclear decommissioning fund established by a 
taxpayer (see paragraph (a) of Sec.  1.468A-5T for rules relating to 
the number of nuclear decommissioning funds that a taxpayer can 
establish).
    (iii) Except as provided by Sec. Sec.  1.468A-5T(a)(1)(iv) 
(relating to certain unincorporated organizations that may be taxable 
as corporations) and 1.468A-8T (relating to a special transfer under 
section 468A(f)(1)), a request for a schedule of ruling amounts must 
not contain a request for a ruling on any other issue, whether the 
issue involves section 468A or another section of the Internal Revenue 
Code.
    (iv) In the case of an affiliated group of corporations that join 
in the filing of a consolidated return, the common parent of the group 
may request a schedule of ruling amounts for each member of the group 
that possesses a qualifying interest in the same nuclear power plant by 
filing a single submission with the IRS.
    (v) The IRS shall not provide or revise a ruling amount applicable 
to a taxable year in response to a request for a schedule of ruling 
amounts that is filed after the deemed payment deadline date (as 
defined in Sec.  1.468A-2T(c)(1)) for such taxable year. In determining 
the date when a request is filed, the principles of sections 7502 and 
7503 shall apply.
    (vi) Except as provided in paragraph (e)(1)(vii) of this section, a 
request for a schedule of ruling amounts shall be considered filed only 
if such request complies substantially with the requirements of this 
paragraph (e).
    (vii) If a request does not comply substantially with the 
requirements of this paragraph (e), the IRS will notify the taxpayer of 
that fact. If the information or materials necessary to comply 
substantially with the requirements of this paragraph (e) are provided 
to the IRS within 30 days after this notification, the request will be 
considered filed on the date of the original submission. In addition, 
the request will be considered filed on the date of the original 
submission in a case in which the information and materials are 
provided more than 30 days after the notification if the IRS determines 
that the electing taxpayer made a good faith effort to provide the 
applicable information or materials within 30 days after notification 
and also determines that treating the request as filed on the date of 
the original submission is consistent with the purposes of section 
468A. In any other case in which the information or materials necessary 
to comply substantially with the requirements of this paragraph (e) are 
not provided within 30 days after the notification, the request will be 
considered filed on the date that all information or materials 
necessary to comply with the requirements of this paragraph (e) are 
provided.
    (2) Information required. A request for a schedule of ruling 
amounts must contain the following information:
    (i) The taxpayer's name, address, and taxpayer identification 
number.
    (ii) Whether the request is for an initial schedule of ruling 
amounts, a mandatory review of the schedule of ruling amounts (see 
paragraph (f)(1) of this section), or an elective review of the 
schedule of ruling amounts (see paragraph (f)(2) of this section).
    (iii) The name and location of the nuclear power plant with respect 
to which a schedule of ruling amounts is requested.
    (iv) A description of the taxpayer's qualifying interest in the 
nuclear power plant and the percentage of such nuclear

[[Page 74182]]

power plant that the qualifying interest of the taxpayer represents.
    (v) Where applicable, an identification of each public utility 
commission that establishes or approves rates for the furnishing or 
sale by the taxpayer of electric energy generated by the nuclear power 
plant, and, for each public utility commission identified--
    (A) Whether the public utility commission has determined the amount 
of decommissioning costs to be included in the taxpayer's cost of 
service for ratemaking purposes;
    (B) The amount of decommissioning costs that are to be included in 
the taxpayer's cost of service for each taxable year under the current 
determination and amounts that otherwise are required to be included in 
the taxpayer's income under section 88 and the regulations;
    (C) A description of the assumptions, estimates and other factors 
used by the public utility commission to determine the amount of 
decommissioning costs;
    (D) A copy of such portions of any order or opinion of the public 
utility commission as pertaining to the public utility commission's 
most recent determination of the amount of decommissioning costs to be 
included in cost of service; and
    (E) A copy of each engineering or cost study that was relied on or 
used by the public utility commission in determining the amount of 
decommissioning costs to be included in the taxpayer's cost of service 
under the current determination.
    (vi) A description of the assumptions, estimates and other factors 
that were used by the taxpayer to determine the amount of 
decommissioning costs, including each of the following if applicable:
    (A) A description of the proposed method of decommissioning the 
nuclear power plant (for example, prompt removal/dismantlement, safe 
storage entombment with delayed dismantlement, or safe storage 
mothballing with delayed dismantlement).
    (B) The estimated year in which substantial decommissioning costs 
will first be incurred.
    (C) The estimated year in which the decommissioning of the nuclear 
power plant will be substantially complete (see Sec.  1.468A-5T(d)(3) 
for a definition of substantial completion of decommissioning).
    (D) The total estimated cost of decommissioning expressed in 
current dollars (that is, based on price levels in effect at the time 
of the current determination).
    (E) The total estimated cost of decommissioning expressed in future 
dollars (that is, based on anticipated price levels when expenses are 
expected to be paid).
    (F) For each taxable year in the period that begins with the year 
specified in paragraph (e)(2)(vi)(B) of this section (the estimated 
year in which substantial decommissioning costs will first be incurred) 
and ends with the year specified in paragraph (e)(2)(vi)(C) of this 
section (the estimated year in which the decommissioning of the nuclear 
power plant will be substantially complete), the estimated cost of 
decommissioning expressed in future dollars.
    (G) A description of the methodology used in converting the 
estimated cost of decommissioning expressed in current dollars to the 
estimated cost of decommissioning expressed in future dollars.
    (H) The assumed after-tax rate of return to be earned by the 
amounts collected for decommissioning.
    (I) A copy of each engineering or cost study that was relied on or 
used by the taxpayer in determining the amount of decommissioning 
costs.
    (vii) A proposed schedule of ruling amounts for each taxable year 
remaining in the funding period as of the date the schedule of ruling 
amounts will first apply.
    (viii) A description of the assumptions, estimates and other 
factors that were used in determining the proposed schedule of ruling 
amounts, including each of the following if applicable--
    (A) The funding period (as such term is defined in paragraph (c) of 
this section);
    (B) The assumed after-tax rate of return to be earned by the assets 
of the nuclear decommissioning fund;
    (C) The fair market value of the assets (if any) of the nuclear 
decommissioning fund as of the first day of the first taxable year to 
which the schedule of ruling amounts will apply;
    (D) The amount expected to be earned by the assets of the nuclear 
decommissioning fund (based on the after-tax rate of return applicable 
to the fund) over the period that begins on the first day of the first 
taxable year to which the schedule of ruling amounts will apply and 
ends on the last day of the funding period;
    (E) The amount of decommissioning costs allocable to the nuclear 
decommissioning fund (as determined under paragraph (d) of this 
section);
    (F) The total estimated cost of decommissioning (as determined 
under paragraph (d)(2) of this section); and
    (G) The taxpayer's share of the total estimated cost of 
decommissioning (as such term is defined in paragraph (d)(3) of this 
section).
    (ix) If the request is for a revised schedule of ruling amounts, 
the after-tax rate of return earned by the assets of the nuclear 
decommissioning fund for each taxable year in the period that begins 
with the date of the initial contribution to the fund and ends with the 
first day of the first taxable year to which the revised schedule of 
ruling amounts applies.
    (x) If applicable, an explanation of the need for a schedule of 
ruling amounts determined on a basis other than the rules of paragraphs 
(a) through (d) of this section and a description of an alternative 
basis for determining a schedule of ruling amounts (see paragraph 
(a)(5) of this section).
    (xi) A chart or table, based upon the assumed after-tax rate of 
return to be earned by the assets of the nuclear decommissioning fund, 
setting forth the years the fund will be in existence, the annual 
contribution to the fund, the estimated annual earnings of the fund and 
the cumulative total balance in the fund.
    (xii) If the request is for a revised schedule of ruling amounts, a 
copy of the schedule of ruling amounts that the revised schedule would 
replace.
    (xiii) If the request for a schedule of ruling amounts contains a 
request, pursuant to Sec.  1.468A-5T(a)(1)(iv), that the IRS rule 
whether an unincorporated organization through which the assets of the 
fund are invested is an association taxable as a corporation for 
Federal tax purposes, a copy of the legal documents establishing or 
otherwise governing the organization.
    (xiv) Any other information required by the IRS that may be 
necessary or useful in determining the schedule of ruling amounts.
    (3) Administrative procedures. The IRS may prescribe administrative 
procedures that supplement the provisions of paragraph (e)(1) and (2) 
of this section. In addition, the IRS may, in its discretion, waive the 
requirements of paragraph (e)(1) and (2) of this section under 
appropriate circumstances.
    (f) Review and revision of schedule of ruling amounts--(1) 
Mandatory review. (i) Any taxpayer that has obtained a schedule of 
ruling amounts pursuant to paragraph (e) of this section must file a 
request for a revised schedule of ruling amounts on or before the 
deemed payment deadline date for the 10th taxable year that begins 
after the taxable year in which the most recent schedule of ruling 
amounts was received. If the taxpayer calculated its most recent

[[Page 74183]]

schedule of ruling amounts on any basis other than an order issued by a 
public utility commission, the taxpayer must file a request for a 
revised schedule of ruling amounts on or before the deemed payment 
deadline date for the 5th taxable year that begins after the taxable 
year in which the most recent schedule of ruling amounts was received.
    (ii)(A) Any taxpayer that has obtained a formula or method for 
determining a schedule of ruling amounts for any taxable year under 
paragraph (a)(4) of this section must file a request for a revised 
schedule on or before the earlier of the deemed payment deadline for 
the 5th taxable year that begins after its taxable year in which the 
most recent formula or method was approved or the deemed payment 
deadline for the first taxable year that begins after a taxable year in 
which there is a substantial variation in the ruling amount determined 
under the most recent formula or method. There is a substantial 
variation in the ruling amount determined under the formula or method 
in effect for a taxable year if the ruling amount for the year and the 
ruling amount for any earlier year since the most recent formula or 
method was approved differ by more than 50 percent of the smaller 
amount.
    (B) Any taxpayer that has determined its ruling amount for any 
taxable year under a formula prescribed by Sec.  1.468A-6T (which 
prescribes ruling amounts for the taxable year in which there is a 
disposition of a qualifying interest in a nuclear power plant) must 
file a request for a revised schedule of ruling amounts on or before 
the deemed payment deadline for its first taxable year that begins 
after the disposition.
    (iii) A taxpayer requesting a schedule of deduction amounts for a 
nuclear decommissioning fund under Sec.  1.468A-8T must also request a 
revised schedule of ruling amounts for the fund. The revised schedule 
of ruling amounts must apply beginning with the first taxable year for 
which a deduction is allowed under the schedule of deduction amounts.
    (iv) If the operating license of the nuclear power plant to which a 
nuclear decommissioning fund relates is renewed, the taxpayer 
maintaining the fund must request a revised schedule of ruling amounts. 
The request for the revised schedule must be submitted on or before the 
deemed payment deadline for the taxable year that includes the date on 
which the operating license is renewed.
    (v) A request for a schedule of ruling amounts required by this 
paragraph (f)(1) must be made in accordance with the rules of paragraph 
(e) of this section. If a taxpayer does not properly file a request for 
a revised schedule of ruling amounts by the date provided in paragraph 
(f)(1) (i), (ii) or (iv) of this section (whichever is applicable), the 
taxpayer's ruling amount for the first taxable year to which the 
revised schedule of ruling amounts would have applied and for all 
succeeding taxable years until a new schedule is obtained shall be zero 
dollars, unless, in its discretion, the IRS provides otherwise in such 
new schedule of ruling amounts. Thus, if a taxpayer is required to 
request a revised schedule of ruling amounts under any provision of 
this section, and each ruling amount in the revised schedule would 
equal zero dollars, the taxpayer may, instead of requesting a new 
schedule of ruling amounts, begin treating the ruling amounts under its 
most recent schedule as equal to zero dollars.
    (2) Elective review. Any taxpayer that has obtained a schedule of 
ruling amounts pursuant to paragraph (e) of this section can request a 
revised schedule of ruling amounts. Such a request must be made in 
accordance with the rules of paragraph (e) of this section; thus, the 
IRS will not provide a revised ruling amount applicable to a taxable 
year in response to a request for a schedule of ruling amounts that is 
filed after the deemed payment deadline date for such taxable year (see 
paragraph (e)(1)(vi) of this section).
    (3) Determination of revised schedule of ruling amounts. A revised 
schedule of ruling amounts for a nuclear decommissioning fund shall be 
determined under this section without regard to any schedule of ruling 
amounts for such nuclear decommissioning fund that was issued prior to 
such revised schedule. Thus, a ruling amount specified in a revised 
schedule of ruling amounts for any taxable year in the funding period 
can be less than one or more ruling amounts specified in a prior 
schedule of ruling amounts for a prior taxable year.
    (g) Special rule permitting payments to a nuclear decommissioning 
fund before receipt of an initial or revised ruling amount applicable 
to a taxable year. (1) If an electing taxpayer has filed a timely 
request for an initial or revised ruling amount for a taxable year 
beginning on or after January 1, 2006, and does not receive the ruling 
amount on or before the deemed payment deadline date for such taxable 
year, the taxpayer may make a payment to a nuclear decommissioning fund 
on the basis of the ruling amount proposed in the taxpayer's request. 
Thus, under the preceding sentence, an electing taxpayer may make a 
payment to a nuclear decommissioning fund for such taxable year that 
does not exceed the ruling amount proposed by the taxpayer for such 
taxable year in a timely filed request for a schedule of ruling 
amounts.
    (2) If an electing taxpayer makes a payment to a nuclear 
decommissioning fund for any taxable year pursuant to paragraph (g)(1) 
of this section and the ruling amount that is provided by the IRS is 
greater than the ruling amount proposed by the taxpayer for such 
taxable year, the taxpayer is not allowed to make an additional payment 
to the fund for such taxable year after the deemed payment deadline 
date for such taxable year.
    (3) If the payment that an electing taxpayer makes to a nuclear 
decommissioning fund for any taxable year pursuant to paragraph (g)(1) 
of this section exceeds the ruling amount that is provided by the IRS 
for such taxable year, the following rules apply:
    (i) The amount of the excess is an excess contribution (as defined 
in Sec.  1.468A-5T(c)(2)(ii)) for such taxable year.
    (ii) The amount of the excess contribution is not deductible (see 
Sec.  1.468A-2T(b)(2)) and must be withdrawn by the taxpayer pursuant 
to the rules of Sec.  1.468A-5T(c)(2)(i).
    (iii) The taxpayer must withdraw the after-tax earnings on the 
excess contribution.
    (iv) If the taxpayer claimed a deduction for the excess 
contribution, the taxpayer should file an amended return for the 
taxable year.


Sec.  1.468A-4T  Treatment of nuclear decommissioning fund (temporary).

    (a) In general. A nuclear decommissioning fund is subject to tax on 
all of its modified gross income (as defined in paragraph (b) of this 
section). The rate of tax is 20 percent for taxable years beginning 
after December 31, 1995. This tax is in lieu of any other tax that may 
be imposed under subtitle A of the Internal Revenue Code (Code) on the 
income earned by the assets of the nuclear decommissioning fund.
    (b) Modified gross income. For purposes of this section, the term 
modified gross income means gross income as defined under section 61 
computed with the following modifications:
    (1) The amount of any payment or special transfer to the nuclear 
decommissioning fund with respect to which a deduction is allowed under 
section 468A(a) or section 468A(f) is excluded from gross income.
    (2) A deduction is allowed for the amount of administrative costs 
and

[[Page 74184]]

other incidental expenses of the nuclear decom