Forms: Form 1120-ND; Form SS-4
Final rules 5
(a) In general If the taxpayer elects the application of this section, there shall be allowed as a deduction for any taxable year the amount of payments made by the taxpayer to a Nuclear Decommissioning Reserve Fund (hereinafter referred to as the “Fund”) during such taxable year.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(E)(i), substituted “this section” for “this subsection”.
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(b) Limitation on amounts paid into Fund The amount which a taxpayer may pay into the Fund for any taxable year shall not exceed the ruling amount applicable to such taxable year.
Amended 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(a), reenacted heading without change and amended text of subsec. (b) generally. Prior to amendment, text read as follows: “The amount which a taxpayer may pay into the Fund for any taxable year shall not exceed the lesser of—
“(1) the amount of nuclear decommissioning costs allocable to the Fund which is included in the taxpayer’s cost of service for ratemaking purposes for such taxable year, or
“(2) the ruling amount applicable to such taxable year.”
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(c) Income and deductions of the taxpayer
(1) Inclusion of amounts distributed There shall be includible in the gross income of the taxpayer for any taxable year—
(A) any amount distributed from the Fund during such taxable year, other than any amount distributed to pay costs described in subsection (e)(4)(B), and
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(B), substituted “subsection (e)(4)(B)” for “subsection (e)(2)(B)”.
(B) except to the extent provided in regulations, amounts properly includible in gross income in the case of any deemed distribution under subsection (e)(6), any termination under subsection (e)(7), or the disposition of any interest in the nuclear powerplant.
(2) Deduction when economic performance occurs In addition to any deduction under subsection (a), there shall be allowable as a deduction for any taxable year the amount of the nuclear decommissioning costs with respect to which economic performance (within the meaning of section 461(h)(2)) occurs during such taxable year.
(d) Ruling amount For purposes of this section—
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(E)(ii), substituted “this section” for “this subsection” in introductory text.
(1) Request required No deduction shall be allowed for any payment to the Fund unless the taxpayer requests, and receives, from the Secretary a schedule of ruling amounts. For purposes of the preceding sentence, the taxpayer shall request a schedule of ruling amounts upon each renewal of the operating license of the nuclear powerplant.
Amended 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(c), inserted at end “For purposes of the preceding sentence, the taxpayer shall request a schedule of ruling amounts upon each renewal of the operating license of the nuclear powerplant.”
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(2) Ruling amount The term “ruling amount” means, with respect to any taxable year, the amount which the Secretary determines under paragraph (1) to be necessary to—
(A) fund the total nuclear decommissioning costs with respect to such power plant over the estimated useful life of such power plant, and
Amended 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(b)(2), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “fund that portion of the nuclear decommissioning costs of the taxpayer with respect to the nuclear powerplant which bears the same ratio to the total nuclear decommissioning costs with respect to such nuclear powerplant as the period for which the Fund is in effect bears to the estimated useful life of such nuclear powerplant, and”.
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(B) prevent any excessive funding of such costs or the funding of such costs at a rate more rapid than level funding, taking into account such discount rates as the Secretary deems appropriate.
(3) Review of amount The Secretary shall at least once during the useful life of the nuclear powerplant (or, more frequently, upon the request of the taxpayer) review, and revise if necessary, the schedule of ruling amounts determined under paragraph (1).
(e) Nuclear Decommissioning Reserve Fund
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(E)(iii), substituted “Reserve Fund” for “Trust Fund” in heading.
(1) In general Each taxpayer who elects the application of this section shall establish a Nuclear Decommissioning Reserve Fund with respect to each nuclear powerplant to which such election applies.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(E)(iv), substituted “this section” for “this subsection” and “Reserve Fund” for “Trust Fund”.
(2) Taxation of Fund
Amended 1986, 1992, 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(e)(2), (3), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out heading and text of former subpar. (B). Text read as follows: “For purposes of subparagraph (A), the rate set forth in this subparagraph is—
“(i) 22 percent in the case of taxable years beginning in calendar year 1994 or 1995, and
“(ii) 20 percent in the case of taxable years beginning after December 31, 1995.”
- 1992 Pub. L. 102-486 Pub. L. 102–486, § 1917(b)(2), added subpar. (B) and redesignated former subpars. (B) and (C) as (C) and (D), respectively.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(C), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “There is imposed on the gross income of the Fund for any taxable year a tax at a rate equal to the maximum rate in effect under section 11(b), except that—
“(A) there shall not be included in the gross income of the Fund any payment to the Fund with respect to which a deduction is allowable under subsection (a), and
“(B) there shall be allowed as a deduction any amount paid by the Fund described in paragraph (4)(B) (other than to the taxpayer).”
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(A) In general There is hereby imposed on the gross income of the Fund for any taxable year a tax at the rate of 20 percent, except that—
Amended 1992, 1996, 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(e)(1), substituted “rate of 20 percent” for “rate set forth in subparagraph (B)” in introductory provisions.
- 1996 Pub. L. 104-188 Pub. L. 104–188 provided that the amendment made by section 1917(b)(1) of Pub. L. 102–486 shall be applied as if “at a rate” appeared instead of “at the rate” in the material proposed to be stricken. See 1992 Amendment note below.
- 1992 Pub. L. 102-486 Pub. L. 102–486, § 1917(b)(1), which directed that subpar. (A) be amended by striking “at the rate equal to the highest rate of tax specified in section 11(b)” and inserting “at the rate set forth in subparagraph (B)”, was executed by making the substitution for “at a rate equal to the highest rate of tax specified in section 11(b)”. See 1996 Amendment note above.
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(i) there shall not be included in the gross income of the Fund any payment to the Fund with respect to which a deduction is allowable under subsection (a), and
(ii) there shall be allowed as a deduction to the Fund any amount paid by the Fund which is described in paragraph (4)(B) (other than an amount paid to the taxpayer) and which would be deductible under this chapter for purposes of determining the taxable income of a corporation.
(B) Tax in lieu of other taxation The tax imposed by subparagraph (A) shall be in lieu of any other taxation under this subtitle of the income from assets in the Fund.
Amended 1992, 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(e)(2), (3), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out heading and text of former subpar. (B). Text read as follows: “For purposes of subparagraph (A), the rate set forth in this subparagraph is—
“(i) 22 percent in the case of taxable years beginning in calendar year 1994 or 1995, and
“(ii) 20 percent in the case of taxable years beginning after December 31, 1995.”
- 1992 Pub. L. 102-486 Pub. L. 102–486, § 1917(b)(2), added subpar. (B) and redesignated former subpars. (B) and (C) as (C) and (D), respectively.
(C) Fund treated as corporation For purposes of subtitle F—
Amended 1992, 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(e)(2), (3), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out heading and text of former subpar. (B). Text read as follows: “For purposes of subparagraph (A), the rate set forth in this subparagraph is—
“(i) 22 percent in the case of taxable years beginning in calendar year 1994 or 1995, and
“(ii) 20 percent in the case of taxable years beginning after December 31, 1995.”
- 1992 Pub. L. 102-486 Pub. L. 102–486, § 1917(b)(2), added subpar. (B) and redesignated former subpars. (B) and (C) as (C) and (D), respectively.
(i) the Fund shall be treated as if it were a corporation, and
(ii) any tax imposed by this paragraph shall be treated as a tax imposed by section 11.
(3) Contributions to Fund Except as provided in subsection (f), the Fund shall not accept any payments (or other amounts) other than payments with respect to which a deduction is allowable under subsection (a).
Amended 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(d), substituted “Except as provided in subsection (f), the Fund” for “The Fund”.
(4) Use of Fund The Fund shall be used exclusively for—
(A) satisfying, in whole or in part, any liability of any person contributing to the Fund for the decommissioning of a nuclear powerplant (or unit thereof),
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(B) to pay administrative costs (including taxes) and other incidental expenses of the Fund (including legal, accounting, actuarial, and trustee expenses) in connection with the operation of the Fund, and
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(C) to the extent that a portion of the Fund is not currently needed for purposes described in subparagraph (A) or (B), making investments.
Amended 1986, 1992
- 1992 Pub. L. 102-486 Pub. L. 102–486, § 1917(a), struck out before period at end “described in section 501(c)(21)(B)(ii)”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(D), added subpar. (C).
(5) Prohibitions against self-dealing Under regulations prescribed by the Secretary, for purposes of section 4951 (and so much of this title as relates to such section), the Fund shall be treated in the same manner as a trust described in section 501(c)(21).
(6) Disqualification of Fund In any case in which the Fund violates any provision of this section or section 4951, the Secretary may disqualify such Fund from the application of this section. In any case to which this paragraph applies, the Fund shall be treated as having distributed all of its funds on the date such determination takes effect.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(E)(v), substituted “this section” for “this subsection” in two places and “this paragraph” for “this subparagraph”.
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(7) Termination upon completion Upon substantial completion of the nuclear decommissioning of the nuclear powerplant with respect to which a Fund relates, the taxpayer shall terminate such Fund.
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(f) Transfers into qualified funds
Amended 1986, 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(b)(1), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(E)(vi), substituted “For purposes of this section, the” for “The”.
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(1) In general Notwithstanding subsection (b), any taxpayer maintaining a Fund to which this section applies with respect to a nuclear power plant may transfer into such Fund not more than an amount equal to 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 subsection (d)(2)(A) as in effect immediately before the date of the enactment of this subsection.
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(2) Deduction for amounts transferred
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(A) In general Except as provided in subparagraph (C), the deduction allowed by subsection (a) for any transfer permitted by this subsection shall be allowed ratably over the remaining estimated useful life (within the meaning of subsection (d)(2)(A)) of the nuclear power plant beginning with the taxable year during which the transfer is made.
(B) Denial of deduction for previously deducted amounts No deduction shall be allowed for any transfer under this subsection of an amount for which a deduction was previously allowed to the taxpayer (or a predecessor) or a corresponding amount was not included in gross income of the taxpayer (or a predecessor). For purposes of the preceding sentence, a ratable portion of each transfer shall be treated as being from previously deducted or excluded amounts to the extent thereof.
(C) Transfers of qualified funds If—
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(i) any transfer permitted by this subsection is made to any Fund to which this section applies, and
(ii) such Fund is transferred thereafter,
any deduction under this subsection for taxable years ending after the date that such Fund is transferred shall be allowed to the transferor for the taxable year which includes such date.
(D) Special rules
(i) Gain or loss not recognized on transfers to Fund No gain or loss shall be recognized on any transfer described in paragraph (1).
(ii) Transfers of appreciated property to Fund If appreciated property is transferred in a transfer described in paragraph (1), the amount of the deduction shall not exceed the adjusted basis of such property.
(3) New ruling amount required Paragraph (1) shall not apply to any transfer unless the taxpayer requests from the Secretary a new schedule of ruling amounts in connection with such transfer.
(4) No basis in qualified funds Notwithstanding any other provision of law, the taxpayer’s basis in any Fund to which this section applies shall not be increased by reason of any transfer permitted by this subsection.
(g) Nuclear powerplant For purposes of this section, the term “nuclear powerplant” includes any unit thereof.
Amended 1986, 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(b)(1), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1807(a)(4)(A)(i), added subsec. (g).
(h) Time when payments deemed made For purposes of this section, a taxpayer shall be deemed to have made a payment to the Fund on the last day of a taxable year if such payment is made on account of such taxable year and is made within 2½ months after the close of such taxable year.
Amended 2005
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1310(b)(1), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively.