Nuclear Decommissioning Funds, 55185-55190 [2020-16955]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 85, Number 173 (Friday, September 4, 2020)]
[Rules and Regulations]
[Pages 55185-55190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16955]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9906]
RIN 1545-BN42


Nuclear Decommissioning Funds

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations under section 468A of 
the Internal Revenue Code of 1986 (Code) relating to deductions for 
contributions to trusts maintained for decommissioning nuclear power 
plants and the use of the amounts in those trusts to decommission 
nuclear plants. The regulations revise and clarify certain provisions 
in existing regulations to address issues that have arisen as more 
nuclear plants have begun the decommissioning process.

DATES: 

[[Page 55186]]

    Effective date: These regulations are effective on September 4, 
2020.
    Applicability Date: For date of applicability, see Sec.  1.468A-9.

FOR FURTHER INFORMATION CONTACT: Jennifer C. Bernardini, (202) 317-6853 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the income tax regulations (26 
CFR part 1) under section 468A of the Code relating to deductions for 
contributions to trusts maintained for decommissioning nuclear power 
plants and the use of the amounts in those trusts to decommission 
nuclear plants.
    Section 468A was originally enacted by section 91(c)(1) of the 
Deficit Reduction Act of 1984, Public Law 98-369 (98 Stat 604) and has 
been amended several times, most recently by section 1310 of the Energy 
Policy Act of 2005, Public Law 109-58 (119 Stat 594). Temporary 
regulations (TD 9374) under section 468A were published in the Federal 
Register on December 31, 2007 (72 FR 74175). Final regulations 
finalizing and removing the temporary regulations (TD 9512) were 
published in the Federal Register on December 23, 2010 (75 FR 80697) 
(existing regulations). A notice of proposed rulemaking (REG-112800-16) 
(proposed regulations) was published in the Federal Register (81 FR 
95929) on December 29, 2016. The proposed regulations provide 
additional guidance on deductions for contributions to trusts 
maintained for decommissioning nuclear power plants and the use of the 
amounts in those trusts to decommission nuclear plants under section 
468A.
    The Department of the Treasury (Treasury Department) and the IRS 
received several written and electronic comments in response to the 
proposed regulations. All comments are available at 
www.regulations.gov. The Treasury Department and the IRS held a public 
hearing on the proposed regulations on October 25, 2017.
    After consideration of the comments received, including comments 
made at the public hearing, the proposed regulations are adopted as 
final regulations as revised by this Treasury decision. In general, 
these final regulations follow the approach of the proposed regulations 
with some modifications based on the recommendations made in the 
comments. This preamble describes the comments received by the Treasury 
Department and the IRS and the revisions made.

Summary of Comments and Explanation of Provisions

1. Definition of Nuclear Decommissioning Costs

A. Inclusion of Amounts Related to the Storage of Spent Fuel Within 
Definition of Nuclear Decommissioning Costs
    Section 1.468A-1(b)(6) of the existing regulations defines nuclear 
decommissioning costs as including ``all otherwise deductible expenses 
to be incurred in connection with'' the disposal of nuclear assets. In 
the proposed regulations, the Treasury Department and the IRS addressed 
questions regarding whether nuclear decommissioning costs include costs 
related to an Independent Spent Fuel Storage Installation (ISFSI) for 
the construction or purchase of assets that would not necessarily 
qualify as ``otherwise deductible'' expenses under the existing 
regulations. The proposed regulations clarified the definition of 
nuclear decommissioning costs to specifically include ISFSI-related 
costs. The proposed regulations also confirmed that the requirement 
that an expense be ``otherwise deductible'' is not applicable to costs 
related to spent nuclear fuel generated by a nuclear power plant or 
plants. A commenter requested that the final regulations further 
clarify this point. The Treasury and the IRS view additional 
clarification as unnecessary and decline to adopt this suggestion.
    The existing and proposed regulations assume operators typically 
store spent fuel in an on-site ISFSI, and thus the definition of 
nuclear decommissioning costs included expenses related to fuel storage 
in on-site ISFSIs. However, the Treasury Department and the IRS 
understand that because the Department of Energy has not begun 
accepting spent fuel for disposal in a permanent geologic repository, 
on-site ISFSIs currently being used by operators of nuclear power 
plants may become overcrowded and, as a result, operators may choose to 
look to off-site ISFSIs for future storage capacity. After reviewing 
the comments, the Treasury Department and the IRS have decided to 
address this consideration by broadening the definition of nuclear 
decommissioning costs in Sec.  1.468A-1(b)(6) to include expenses 
related to spent fuel storage in ISFSIs both on-site and off-site from 
the nuclear power plant that generates such spent fuel.
B. Inclusion of Amounts Related to a Depreciable Asset and to Land 
Improvements Within Definition of Nuclear Decommissioning Costs
    In response to questions about whether a cost must be currently 
deductible for that amount to be payable currently from the Fund under 
the ``otherwise deductible'' language of Sec.  1.468A-1(b)(6) of the 
existing regulations, the proposed regulations broadened the definition 
of nuclear decommissioning costs to include the total cost of 
depreciable or amortizable assets by adding the words ``or recoverable 
through depreciation or amortization'' following ``otherwise 
deductible.''
    Commenters suggested that the term ``otherwise deductible'' be 
removed from the definition of nuclear decommissioning costs. These 
commenters asserted that the ``otherwise deductible'' requirement is 
unnecessary with respect to all decommissioning costs because 
deductibility is not required by the legislative intent or plain 
language of the Code. Nuclear decommissioning costs are broadly defined 
in Sec.  1.468A-1(b)(5) of the regulations to include expenses incurred 
before, during, and after the actual decommissioning process for the 
nuclear power plant unit that has ceased operations. This broad 
definition is consistent with Congress's recognition in enacting 
section 468A of the Code in 1984 (at the same time as section 461(h) 
relating to economic performance was enacted) that ``the establishment 
of segregated reserve funds for paying future nuclear decommissioning 
costs was of sufficient national importance that a tax deduction, 
subject to limitations, should be provided for amounts contributed to 
qualified funds.'' And further, ``[t]axpayers who do not elect this 
provision are subject to the general rules in the Act which do not 
permit accrual basis taxpayers to deduct future liabilities prior to 
the time when economic performance occurs (Code Sec 461).'' Joint 
Committee on Taxation Staff, General Explanation of the Revenue 
Provisions of the Deficit Reduction Act of 1984, 98th Cong., 2d Sess. 
270 (1984).
    Nuclear decommissioning costs must be incurred for the purposes 
intended by Congress. However, whether nuclear decommissioning costs 
are ``otherwise deductible'' are determined under other provisions of 
the Code. Costs that meet the definition of nuclear decommissioning 
costs under section 468A are not independently deductible under section 
468A. Specifically, under

[[Page 55187]]

section 468A(c)(2), these costs are deductible when economic 
performance occurs under section 461(h)(2) if the costs are deductible 
under section 162 (or are otherwise deductible under another provision 
of chapter 1 of the Code). Further, the Treasury Department and the IRS 
believe that the broader definition of nuclear decommissioning costs in 
the proposed regulations will eliminate most of the issues raised by 
commenters suggesting deletion of ``otherwise deductible,'' and thus 
the final regulations do not adopt this suggestion.
    One commenter observed that the proposed regulations can be 
interpreted to mean that an expense for property will not be deemed 
recoverable through depreciation or amortization if the property will 
be considered abandoned for purposes of section 165. The commenter 
noted that such an interpretation could lead to inconsistent results 
depending on the type of cost and whether such cost is incurred while 
the plant is still operating versus if such cost is incurred when the 
plant is already retired or decommissioned. The Treasury Department and 
the IRS do not believe that the suggested interpretation is correct. 
The definition of nuclear decommissioning costs in the proposed 
regulations should be interpreted to include costs incurred for 
depreciable assets as those costs are incurred, whether or not such 
asset will be abandoned for purposes of section 165.
    Commenters suggested that the Treasury Department and the IRS 
consider including additional types of assets, such as land 
improvements, within the definition of nuclear decommissioning costs to 
effectuate the purpose of section 468A. The Treasury Department and the 
IRS agree with this suggestion. Accordingly, the final regulations 
broaden the definition of nuclear decommissioning costs in Sec.  
1.468A-1(b)(6)(i) to include ``all land improvements and 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, whether 
that nuclear power plant will continue to produce electric energy or 
has permanently ceased to produce electric energy.''
    Commenters also noted that the use of the term ``expense'' may 
cause confusion because the common business usage of the term 
``expense'' suggests a period cost. A commenter recommended that the 
final regulations use the term ``expenditure,'' which in common 
business usage denotes an outflow of resources, as more appropriate 
than ``expense'' where the reference to a period cost is not 
specifically intended. While the Treasury Department and the IRS 
acknowledge the merits of this clarification, the term ``expense'' is 
used to describe similar concepts throughout many other sections of the 
existing regulations. Because adoption of the term ``expenditure'' in 
Sec. Sec.  1.468A-1 and 1.468A-5 may cause additional confusion and 
inconsistency with other sections of the existing regulations where the 
term ``expense'' is used for similar concepts (for example, Sec.  
1.468A-4(b)(2) Treatment of Nuclear Decommissioning Fund; Modified 
Gross Income), the final regulations do not adopt this recommendation.

2. Clarification of the Applicability of the Self-Dealing Rules to 
Transactions Between the Fund and Disqualified Persons

    The proposed regulations provided that, for purposes of the 
prohibitions against self-dealing provisions in existing Sec.  1.468A-
5(b), reimbursement of decommissioning costs by the Fund to a 
disqualified person that paid such costs is not an act of self-dealing. 
The Treasury Department and the IRS received no comments on this 
provision, and these final regulations adopt the proposed regulations 
on this point.
    The preamble to the proposed regulations further stated that no 
amount beyond what is actually paid by the disqualified person, 
including amounts such as direct or indirect overhead or a reasonable 
profit element, may be included in the reimbursement by the Fund. 
Several commenters recommended amending the language of Sec.  1.468A-
5(b) to expand the types of expenses permitted to be reimbursed as 
nuclear decommissioning costs under the self-dealing rules to include 
direct or indirect overhead and a reasonable profit element. These 
commenters assert that there is no existing statutory or regulatory 
requirement to suggest that it is not entirely appropriate for a 
contributor or its affiliate to be reimbursed for overhead of any type 
and, in addition, a reasonable profit element, if the amount of the 
charge is not excessive.
    Under Sec.  1.468A-5(b)(2)(v) of the existing regulations, the 
payment of compensation (and payment or reimbursement of expenses) by a 
Fund to a disqualified person for personal services that are 
decommissioning costs and that are reasonable and necessary to carrying 
out the exempt purposes of the Fund are not an act of self-dealing if 
such payment is purely for the compensation (and payment or 
reimbursement of expenses) of such services, but only to the extent 
such payment would ordinarily be paid for like services by like 
enterprises under like circumstances. See section 4951(d)(2)(C), 
Sec. Sec.  53.4951-1(a), 53.4941(d)-3(c), and 1.162-7. The fact that 
the total amount of such payment is more than the disqualified person's 
actual expenses paid for such personal services does not cause the 
Fund's payment to constitute an act of self-dealing, even if the 
difference is properly characterized as profit, or direct or indirect 
overhead. See Sec.  53.4941(d)-3(c)(1). In response to the comments on 
this issue, the Treasury Department and the IRS have modified the 
language of Sec.  1.468A-5(b)(2)(v) to refer to the determination of 
whether a payment is reasonable under section 4951(d)(2)(C), Sec. Sec.  
53.4951-1(a), 53.4941(d)-3(c), and 1.162-7.
    Conversely, one commenter observed there is a significant risk for 
abuse of the self-dealing rules where nuclear power plants are 
decommissioned by ``contractors'' that are also the owners of the 
nuclear power plant because the fees for their services or activities 
may also include a profit margin that is not properly reported for 
federal income tax purposes. As a result, the tax treatment of Funds 
could be exploited as a tax loophole. This commenter requested that the 
Treasury Department and the IRS either modify the proposed regulations 
to require the reporting of profits in charges paid to related entities 
(or to the taxpayers themselves) by a Fund, and/or promulgate reporting 
requirements in the implementation of the final regulations. The 
Treasury Department and the IRS decline to adopt this change because, 
as discussed above, the safeguards in place under the self-dealing 
rules are adequate to avoid the potential exploitation identified by 
the commenter.

3. Definition of ``Substantial Completion'' in Sec.  1.468A-5(d)(3)(i)

    Existing Sec.  1.468A-5(d)(3)(i) defines the substantial completion 
date as ``the date that the maximum acceptable radioactivity levels 
mandated by the Nuclear Regulatory Commission [NRC] with respect to a 
decommissioned nuclear power plant are satisfied.'' The proposed 
regulations amended this definition to provide that the substantial 
completion date is the date on which all Federal, state, local, and 
contractual decommissioning liabilities are fully satisfied. Because 
the Treasury Department and the IRS received no comments on this 
proposed

[[Page 55188]]

amendment, the final regulations adopt this change to the definition.

Effective/Applicability Date

    Section 7805(b)(1)(A) and (B) of the Code generally provides that 
no temporary, proposed, or final regulation relating to the internal 
revenue laws may apply to any taxable period ending before the earliest 
of (A) the date on which such regulation is filed with the Federal 
Register, or (B) in the case of a final regulation, the date on which a 
proposed or temporary regulation to which the final regulation relates 
was filed with the Federal Register.
    The proposed regulations provided that the regulations would apply 
to taxable years ending on or after the date of publication of the 
Treasury decision adopting the proposed rules as final regulations in 
the Federal Register. Additionally, the preamble to the proposed 
regulations provided that, notwithstanding the prospective effective 
date, taxpayers could take return positions consistent with the 
proposed regulations for taxable years ending on or after December 29, 
2016 (the date the proposed regulations were published in the Federal 
Register).
    One commenter proposed that the effective and applicability dates 
of these regulations be amended to permit taxpayers to rely on the 
provisions of the final regulations for taxable years that are open as 
of the date the proposed regulations were published in the Federal 
Register. After consideration, the Treasury Department and IRS decline 
to adopt this comment in the final regulations. As noted in the 
preceding paragraph, the preamble to the proposed regulations made 
clear that taxpayers could take return positions consistent with the 
notice of proposed rulemaking for taxable years ending on or after 
December 29, 2016 (the date the proposed regulations were published in 
the Federal Register). This allowed taxpayers to request schedules of 
ruling amounts from the IRS (as required by section 468A(d)(1) and 
Sec.  1.468A-3) with respect to costs that were treated as nuclear 
decommissioning costs under the proposed regulations and to deduct 
those amounts in taxable years ending on or after December 29, 2016. 
However, for taxpayers that have not requested and obtained a schedule 
of ruling amounts for taxable years for which the deemed payment 
deadline date (as defined in Sec.  1.468A-2(c)(1)) has passed as of 
September 4, 2020, under Sec.  1.468-3(e)(v), it is impossible to 
obtain a schedule of ruling amounts (and therefore impossible to 
contribute any amount to a qualified fund) because the request for the 
schedule of ruling amounts would be submitted to the IRS after the 
deemed payment deadline date. Accordingly, while the final regulations 
apply to taxable years ending on or after September 4, 2020, taxpayers 
may apply the rules contained in the final regulations to prior taxable 
years for which a taxpayer's deemed payment deadline has not passed 
prior to September 4, 2020. See section 7805(b)(7).

Special Analyses

    Executive Orders 12866 and 13563 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility.
    These final regulations have been designated by the Office of 
Management and Budget's (OMB) Office of Information and Regulatory 
Affairs (OIRA) as subject to review under Executive Order 12866 
pursuant to the Memorandum of Agreement (April 11, 2018) between the 
Treasury Department and OMB regarding review of tax regulations. OIRA 
has determined that the final rulemaking is significant and subject to 
review under Executive Order 12866 and section 1(b) of the Memorandum 
of Agreement.

1. Background and Need for Regulation

    Federal law requires operators of nuclear power plants to dismantle 
these plants and safely dispose of the fuel when the useful life of the 
plant has expired. Nuclear Regulatory Commission (NRC) rules require 
plant owners to demonstrate that sufficient financial resources will be 
available for decommissioning costs.\1\ Additionally, owners are 
required to report to the NRC at least every two years the status of a 
plant's decommissioning funding. The NRC rules allow for various 
methods to satisfy the requirement for dedicated decommissioning funds. 
Section 468A of the Code is intended to facilitate these requirements 
by allowing taxpayers with ownership interests in nuclear power plants 
to elect to currently deduct the future costs of decommissioning a 
nuclear power plant.\2\ Funds for which an election has been made under 
section 468A are widely used in the industry, but not all 
decommissioning funding vehicles are section 468A funds.
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    \1\ A detailed description of nuclear decommissioning and the 
various Nuclear Regulatory Commission (NRC) rules are beyond the 
scope of this document.
    \2\ See generally Joint Committee on Taxation Staff, General 
Explanation of the Revenue Provisions of the Deficit Reduction Act 
of 1984, 98th Cong. 2d Sess. 270 (1984).
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    The election is made pursuant to procedures provided in existing 
regulations under section 468A and allows taxpayers to make 
contributions to a Nuclear Decommissioning Fund (``Fund'') prior to the 
time when actual decommissioning costs are incurred.\3\ When amounts 
are actually distributed from the Fund the electing taxpayer faces a 
gross income inclusion. Generally, the income inclusion is offset with 
a corresponding deduction for the costs of decommissioning activities 
when they are actually performed. Funds are treated as separate taxable 
corporations, with investment incomes subject to a fixed 20 percent 
rate of tax.
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    \3\ Electing taxpayers are permitted to contribute to the Fund 
amounts in accordance with a schedule of ruling amounts, which 
taxpayers must request and receive from the IRS. Very generally, the 
schedule of ruling amounts should reflect the total cost for 
decommissioning the plant over the estimated useful life of the 
plant. Section 468A(d); Sec.  1.468A-3.
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    Section 468A(a) limits the purposes for which amounts can be 
considered ``nuclear decommissioning costs.'' The definition of such 
costs forms the basis for a large portion of the rulemaking that has 
been issued regarding 468A and furthermore forms the bulk of the basis 
for the final regulations.\4\ As decommissioning activity increases and 
technologies change, additional guidance is needed to address 
withdrawals from the Fund to cover new costs and cost categories that 
may arise for purposes of decommissioning. For example, the 
accumulating amounts of spent nuclear fuel and the ongoing lack of a 
Federal repository for that fuel have led plant owners to store spent 
nuclear fuel in Independent Spent Fuel Storage Installations (ISFSIs). 
The need to independently store spent fuel was not anticipated when 
previous IRS regulations were issued. The final regulations clarify 
that the costs of an ISFSI and related matters are decommissioning 
costs for purposes of section 468A.
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    \4\ Section 468A was added by the Deficit Reduction Act of 1984. 
Regulations were first promulgated in 1988 and were amended in 1992, 
1994, 2007, and 2010.
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    More generally, the final regulations provide clarifications and 
updates to existing regulations in response to industry requests for 
public guidance on this and related issues. These clarifications 
generally have already

[[Page 55189]]

been adopted by the IRS in its private letter rulings but stakeholders 
have requested that the regulations be amended to provide additional 
certainty.

2. Overview of the Final Regulations

    The regulations provide guidance on deductions for contributions to 
funds maintained for decommissioning nuclear power plants and the use 
of the amounts in those funds to decommission nuclear plants under 
section 468A. Specifically, the regulations (1) broaden the definition 
of nuclear decommissioning costs in Sec.  1.468A-1(b)(6) to include 
expenses related to spent fuel storage in ISFSIs both on-site and off-
site from the nuclear power plant that generates such spent fuel; (2) 
clarify that the definition of nuclear decommissioning costs in Sec.  
1.468A-1(b)(6) does not only include currently deductible costs by 
adding the words ``or recoverable through depreciation or 
amortization'' following ``otherwise deductible''; (3) broaden the 
definition of nuclear decommissioning costs in Sec.  1.468A-1(b)(6)(i) 
to include ``all land improvements and 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, whether that nuclear power plant 
will continue to produce electric energy or has permanently ceased to 
produce electric energy''; (4) broaden the exemption from the self-
dealing rules to include reimbursements to parties related to the 
electing taxpayer and also expand the types of expenses permitted to be 
reimbursed as nuclear decommissioning costs under the self-dealing 
rules to include direct or indirect overhead and a reasonable profit 
element; and (5) provide that the substantial completion date is the 
date on which all Federal, state, local, and contractual 
decommissioning liabilities are fully satisfied.

3. Economic Effects of the Final Regulations

A. Baseline
    The Treasury Department and the IRS have assessed the benefits and 
costs of the final regulations relative to a no-action baseline 
reflecting anticipated Federal income tax-related behavior in the 
absence of these regulations.
B. Summary of Economic Effects
    The final regulations provide certainty and clarity regarding the 
tax treatment of nuclear decommissioning costs. The Treasury Department 
and the IRS do not expect that the regulations will affect the 
decommissioning of nuclear plants in any meaningful way, including the 
mix or level of activities involved in decommissioning, because the 
management of spent nuclear fuel and related decommissioning activities 
are regulated by the NRC and governed by a wide range of non-tax 
regulations. The final regulations further do not provide any tax-based 
incentives that would affect in any substantial way the decision to 
decommission, the timing of decommissioning, or the methods chosen to 
decommission any plant or plants in general.
    In the absence of these regulations, the Treasury Department and 
the IRS expect that decommissioning would generally proceed the same. 
The Treasury Department and the IRS further note that the final 
regulations largely implement existing industry expectations for tax 
treatment of decommissioning expenses, as informed by private letter 
rulings.
    The Treasury Department and the IRS also considered whether the 
final regulations will affect decisions for owners or operators to 
plan, construct, or open new nuclear facilities. Future decommissioning 
of any new plants would take place many years from now and any issues 
regarding changes in technology can be expected to be dealt with 
through future rulemaking. Therefore, the Treasury Department and the 
IRS do not expect the final regulations to affect decisions about new 
facilities.
    The Treasury Department and the IRS welcome comments on these 
conclusions and more generally on the economic effects of these final 
regulations.

Regulatory Flexibility Act

    It is hereby certified that these regulations will not have a 
significant economic impact on a substantial number of small entities 
pursuant to the Regulatory Flexibility Act (RFA) (5 U.S.C. 601). 
Although a substantial number of small entities may be affected, the 
economic impact of this rule is unlikely to be significant.
    According to the Small Business Administration's Table of Size 
Standards (13 CFR 121), utilities, including nuclear electric power 
generation with 750 or fewer employees (NAICS Code 221113), are 
considered small entities. According to the 2016 Statistics of U.S. 
Businesses (SUSB) data, there are at least seven entities with fewer 
than 750 employees of the 27 entities in the industry, which could be 
considered a substantial number of small entities for purposes of the 
RFA.
    The economic impact of these regulations on small entities is not 
likely to be significant. Section 468A of the Code allows taxpayers 
with ownership interests in nuclear power plants to elect to currently 
deduct the future costs of decommissioning a nuclear power plant. The 
procedures for this election are set forth in existing regulations. As 
discussed earlier in these Special Analyses, the final regulations 
provide clarifications and updates to the existing regulations in 
response to industry requests for public guidance. These clarifications 
generally have already been adopted by the IRS in private letter 
rulings but stakeholders have requested that the regulations be amended 
to provide additional certainty. Because the final rule is codifying 
what is widely understood to be existing policy, the economic impact of 
this rule is not likely to be significant for any entities affected, 
regardless of size.
    Pursuant to section 7805(f) of the Code, the proposed regulations 
preceding these final regulations were submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on their 
impact on small business and no comments were received.

Paperwork Reduction Act

    There is no new collection of information contained in these 
regulations. The collection of information contained in the regulations 
under section 468A has been reviewed and approved by the Office of 
Management and Budget in accordance with the Paperwork Reduction Act of 
1995 (44 U.S.C. 3507(d)) under control number 1545-2091. 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 it displays a valid 
control number assigned by the Office of Management and Budget.
    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 section 6103 of 
the Code.

Drafting Information

    The principal author of these regulations is Jennifer C. 
Bernardini, Office of Associate Chief Counsel (Passthroughs and Special 
Industries). However, other personnel from the IRS

[[Page 55190]]

and the Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES


0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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


0
Par. 2. Section 1.468A-1 is amended by adding paragraphs (b)(6)(i) and 
(ii) to read as follows:


Sec.  1.468A-1  Nuclear decommissioning costs; general rules.

* * * * *
    (b) * * *
    (6) * * *
    (i) For the purpose of this title, the term nuclear decommissioning 
costs or decommissioning costs includes all expenses related to land 
improvements and 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, whether that nuclear power plant will continue to produce 
electric energy or has permanently ceased to produce electric energy. 
Such term includes all expenses related to land improvements and 
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. An expense is 
otherwise deductible for purposes of this paragraph (b)(6) if it would 
be deductible or recoverable through depreciation or amortization under 
chapter 1 of the Internal Revenue Code without regard to section 280B.
    (ii) The term nuclear decommissioning costs or decommissioning 
costs, as applicable to this title, also includes expenses incurred in 
connection with the construction, operation, and ultimate 
decommissioning of a facility used solely to store, pending delivery to 
a permanent repository or disposal, spent nuclear fuel generated by one 
or more nuclear power plants (for example, an Independent Spent Fuel 
Storage Installation). 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).
* * * * *

0
Par. 3. Section 1.468A-5 is amended by revising the section heading and 
paragraphs (b)(2)(i) and (v) and (d)(3)(i) to read as follows:


Sec.  1.468A-5   Nuclear decommissioning fund--miscellaneous 
provisions.

* * * * *
    (b) * * *
    (2) * * *
    (i) A payment by a nuclear decommissioning fund for the purpose of 
satisfying, in whole or in part, the liability of the electing taxpayer 
for decommissioning costs of the nuclear power plant to which the 
nuclear decommissioning fund relates, whether such payment is made to 
an unrelated party in satisfaction of the decommissioning liability or 
to the plant operator or other otherwise disqualified person as 
reimbursement solely for actual expenses paid by such person in 
satisfaction of the decommissioning liability;
* * * * *
    (v) Any act described in section 4951(d)(2)(B) or (C). Whether 
payments under section 4951(c)(2)(C) are not excessive is determined 
under Sec.  1.162-7. See Sec.  53.4941(d)-3(c)(1). The fact that the 
amount of such payments that are not excessive are also more than the 
disqualified person's actual expenses for such personal services does 
not cause the payments to constitute acts of self-dealing, even if the 
difference is properly characterized as profit, or direct or indirect 
overhead;
* * * * *
    (d) * * *
    (3) * * *
    (i) The substantial completion of the decommissioning of a nuclear 
power plant occurs on the date on which all Federal, state, local, and 
contractual decommissioning requirements are fully satisfied (the 
substantial completion date). Except as otherwise provided in paragraph 
(d)(3)(ii) of this section, the substantial completion date is also the 
termination date.
* * * * *

0
Par. 4. Section 1.468A-9 is revised to read as follows:


Sec.  1.468A-9   Applicability dates.

    (a) In general. Except as provided in paragraph (b) of this 
section, Sec. Sec.  1.468A-1 through 1.468A-8 are effective on December 
23, 2010, and apply with respect to taxable years ending after such 
date.
    (b) Special rules--(1) Taxable years ending before December 23, 
2010. Special rules that are provided for taxable years ending on or 
before December 23, 2010, such as the special rule for certain special 
transfers contained in Sec.  1.468A-8(a)(4)(ii), apply with respect to 
such taxable years. In addition, except as provided in paragraph (2) of 
this section, a taxpayer may apply the provisions of Sec. Sec.  1.468A-
1 through 1.468A-8 with respect to a taxable year ending on or before 
December 23, 2010, if all such provisions are consistently applied.
    (2) Applicability of Sec.  1.468A-1(b)(6) and Sec.  1.468A-
5(b)(2)(i), (b)(2)(v), and (d)(3)(i). The rules in Sec. Sec.  1.468A-
1(b)(6) and 1.468A-5(b)(2)(i), (b)(2)(v), and (d)(3)(i) apply to 
taxable years ending on or after September 4, 2020. Taxpayers may also 
choose to apply the rules in Sec.  1.468A-1(b)(6) and Sec.  1.468A-
5(b)(2)(i), (b)(2)(v), and (d)(3)(i) to prior taxable years for which a 
taxpayer's deemed payment deadline (as defined in Sec.  1.468A-2(c)(1)) 
has not passed prior to September 4, 2020.

Sunita Lough,
Deputy Commissioner for Services and Enforcement.

    Approved: March 5, 2020.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2020-16955 Filed 9-3-20; 8:45 am]
BILLING CODE 4830-01-P