[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Section 468A was originally enacted by section 91(c)(1) of the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