Internal Revenue Bulletin 2011-7 (PDF rendition): IRS Notices

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Bulletin No. 201
1-7
February 14, 201
1
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
T.D. 9508, page 495.
REG–132724–10, page 498.
Temporary and proposed regulations provide guidance about
the treatment of fails charges for purposes of sections 871
and 881 of the Code, which generally require gross-basis taxa-
tion of foreign persons not otherwise subject to U.S. net-basis
taxation and the withholding of such tax under sections 1441
and 1442.
T.D. 9512, page 473.
Final regulations under section 468A of the Code provide guid-
ance regarding contributions to qualified nuclear decommis-
sioning trusts, including changes made to that section by the
Energy Policy Act of 2005.
Announcement 2011–9, page 499.
This announcement contains corrections to Rev. Proc.
2011–11, 2011–4 I.R.B. 329, published January 24, 2011,
clarifying that the guidance is for calendar year 2011.
EMPLOYEE PLANS
Announcement 2011–16, page 500.
Correction to Revenue Ruling 2011–3 — 2011 covered
compensation tables; permitted disparity.Revenue Rul-
ing 2011–3 as it appears in the Internal Revenue Bulletin (IRB)
that was published on January 24, 2011 (2011–4 I.R.B. 326)
contains a typographical error in Attachment I. Revenue Ruling
2011–3 as it appears in the IRB has been corrected.
ADMINISTRATIVE
Notice 2011–11, page 497.
This notice provides temporary relief by allowing certain tax
return preparers who have made a good faith effort to obtain
a PTIN to prepare tax returns for compensation even though
they have not received a PTIN.
Announcement 2011–9, page 499.
This announcement contains corrections to Rev. Proc.
2011–11, 2011–4 I.R.B. 329, published January 24, 2011,
clarifying that the guidance is for calendar year 2011.
Announcement 2011–10, page 499.
This document contains corrections to final regulations
(T.D. 9505, 2010–48 I.R.B. 755) providing guidance relating
to certain provisions of the Code that apply to hybrid defined
benefit pension plans.
Announcement 2011–11, page 500.
This document contains a correction to proposed regulations
(REG–132554–08, 2010–48 I.R.B. 783) providing guidance
relating to certain provisions of the Code that apply to hybrid
defined benefit pension plans.
Finding Lists begin on page ii.

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Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
February 14, 20112011–7 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 468A.
—Special
Rules for Nuclear
Decommissioning Costs
26 CFR 1.468A–0: Nuclear decommissioning costs;
general rules.
T.D. 9512
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1 and 602
Nuclear Decommissioning
Funds
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains fi-
nal regulations under section 468A of
the Internal Revenue Code relating to de-
ductions for contributions to trusts main-
tained for decommissioning nuclear power
plants. These final regulations affect tax-
payers that own an interest in a nuclear
power plant and reflect recent statutory
changes. The corresponding temporary
regulations are removed.
DATES:Effective Date:These regulations
are effective on December 23, 2010.
Applicability Dates:For dates of appli-
cability, see §§1.468A–9, 1.468A–3, and
1.468A–8.
FOR FURTHER INFORMATION
CONTACT: Patrick S. Kirwan, (202)
622–3110 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these final regulations 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. The collections of informa-
tion in these final regulations are contained
in §§1.468A–3
, 1.468A–4, 1.468A–7, and
1.468A–8. Res
ponses to these collections
of informatio
narerequiredtoobtainatax
benefit.
An agency may n
ot conduct or sponsor,
and a person i
s not required to respond
to, a collect
ion of information unless the
collection o
f information displays a valid
OMB control n
umber.
Books or reco
rds relating to a collection
of informati
on must be retained as long
as their con
tents may become material in
the adminis
tration of any internal revenue
law. Genera
lly, tax returns and tax return
informatio
n are confidential, as required
by 26 U.S.C
. 6103.
Background
On December 31, 2007, the IRS and
Treasury Department issued a notice of
proposed rulemaking (REG–147290–05,
2008–1 C.B. 576 [72 FR 74213]) regard-
ing section 468A of the Internal Revenue
Code of 1986 (Code). This proposed rule-
making consisted of a general updating of
the prior regulations under section 468A
and, in particular, reflected the changes to
section 468A made by section 1310 of the
Energy Policy Act of 2005 (the Energy
Policy Act), Public Law 109–58 (119 Stat.
594).
Written, electronic, and oral comments
responding to the notice of proposed rule-
making were received. A public hearing
was held on June 17, 2008. After con-
sideration of all of the comments received
as well as those comments made at the
hearing, these final regulations generally
adopt the rules of the proposed regulations
with certain clarifications and modifica-
tions. The significant comments and mod-
ifications are discussed in this preamble.
1. Definitional Matters
A. Definition of Nuclear
Decommissioning Costs
One commentator on the proposed
regulations suggested that the definition
of “nuclear decommissioning costs” be
expanded to explicitly include two types
of costs that have generally been recog-
nized by the IRS in letter rulings to be
included with
in the ambit of nuclear de-
commissionin
g costs. Those two types
of costs are (1
) costs to decommission
structures,
systems, and components from
a nuclear pow
er plant that continues to
produce elec
tric energy; and (2) costs to
store spent n
uclear fuel pending delivery
to a permane
nt repository. The IRS and
Treasury ag
ree that changes such as those
proposed by
this commentator bring clar-
itytothefi
nal regulations. Accordingly,
§1.468A–1(
b)(6) of the final regulations
provides t
hat costs for the final decom-
missionin
g of structures, systems, and
component
s from a nuclear power plant
that conti
nues to produce electric energy
and costs
associated with facilities to store
spent nuc
lear fuel pending delivery to a
permanen
t repository are included within
the defin
ition of nuclear decommissioning
costs.
B. Estimated Useful Life
Several commentators observed that
the term “estimated useful life” was used
for two different purposes in the proposed
regulations, and that the date on which
such estimated useful life would end
might differ, depending on the purpose
for which the term was used. Estimated
useful life of a nuclear power plant is
used to calculate the schedule of ruling
amounts in §1.468A–3(c)(1). In addition,
the same term is used in §1.468A–8(b)(1)
and (c)(1) to determine the years over
which a taxpayer may deduct a special
transfer made under §1.468A–8. One
commentator suggested that the IRS add
a provision recognizing that the term is
used for more than one purpose and that
the date of the end of such period may
differ depending on the use of the term.
The IRS and Treasury agree with this sug-
gestion and have incorporated that change
in §1.468A–3(c)(2)(iii) of the final regu-
lations.
2. Matters Relating to Special Transfers
and Schedules of Deduction Amounts
A. General Comment
One commentator suggested that the
proposed requirement that a taxpayer
2011–7 I.R.B.473February 14, 2011

obtain a schedule of deduction amounts
with respect to a special transfer was not
required by the statute and indeed such
requirement constituted an impermissible
overreaching by the IRS and Treasury.
The commentator suggested that, in lieu of
a schedule of deduction amounts, the final
regulations simply provide that the IRS
will rule on the maximum special transfer
amount and allow the taxpayer to calculate
thepro rataportion of that amount over
the remaining estimated useful life of the
nuclear power plant. The commentator
expressed concern that the ruling from the
IRS might provide a schedule of deduction
amounts in excess of the actual appropriate
deductible amounts or, alternatively, that
the schedule would not allow a taxpayer
to deduct more than apro ratashare of the
amount that the taxpayer may choose to
contribute, even if that amount is less than
the maximum special transfer amount.
The IRS and Treasury do not believe that
these concerns justify a change in the reg-
ulations. Section 468A permits deduction
of the amount of a special transfer and re-
quires the taxpayer to obtain from the Sec-
retary a new schedule of ruling amounts
in connection with the transfer. The IRS
and Treasury believe that the schedule
of deduction amounts is an appropriate
adjunct to the schedule of ruling amounts
required in connection with the special
transfer. Moreover, concerns regarding
the deduction amounts provided in the
schedule of deduction amounts are unwar-
ranted. When the IRS issues a schedule of
deduction amounts, that schedule allocates
the requested special transfer amount (or
the maximum allowable special transfer
amount if the taxpayer has requested an
excessive amount) overthe remaining es-
timated useful life of the nuclear power
plant. Thus, the schedule will not pro-
vide for deductions in excess of the actual
appropriate deductible amounts. With
respect to the commentator’s alternative
concern, the IRS and Treasury believe
that the rule limiting deductions to apro
ratashare of the amount of the special
transfer (rather than apro ratashare of
the maximum amount that could have
been transferred) is consistent with section
468A(f)(2)(A), which provides that the
deduction allowed “for any transfer” shall
be allowed ratably over the remaining
useful life.
B. Deemed Payment Date for Special
Transfers
Several commentators observed that the
proposed regulations did not specify the
deemed payment date for special transfers.
While taxpayers generally assumed that
the deemed payment date for special trans-
fers was the same as that for the contri-
butions of ruling amounts, they requested
that the IRS resolve the ambiguity. The
IRS and Treasury agree that this possible
ambiguity should be resolved and, there-
fore, clarifying changes are included in
§§1.468A–7(b)(4) and 1.468A–8(a).
C. Extension of Deadline for Actual
Payment of Special Transfers
Several commentators requested that
the IRS and Treasury provide certain tran-
sitional relief for taxpayers seeking to
make special transfers relating to taxable
years in which taxpayers did not have
the benefit of the clarifications provided
in these regulations. The transitional re-
lief requested included an extension of
thetimetorequestarulingregardingthe
special transfer for a taxable year as well
as a rule allowing the special transfer to
relate back to that year. The final regu-
lations provide the requested transitional
relief. Under §1.468A–8 (d)(1) the ruling
request for a special transfer relating to
a taxable year beginning in 2006, 2007,
2008, or 2009 is timely if filed with the
IRS within 60 days after the date of pub-
lication of these final regulations in the
Federal Register. Under §1.468A–8(a),
a special transfer that the taxpayer desig-
nates as relating to such a year is deemed
made during the year provided that the
special transfer amount is transferred to
the qualified fund within 90 days after
the taxpayer receives a ruling from the
Secretary allowing such special transfer.
One commentator noted that the pro-
posed regulations do not address the case
of a taxpayer that has requested a sched-
ule of deduction amounts from the IRS
but has not received the necessary rul-
ing prior to the payment deadline. Un-
der §1.468A–3(g), a taxpayer that has re-
quested a ruling from the IRS on a sched-
ule of ruling amounts may contribute the
ruling amount proposed in its ruling re-
quest in those circumstances. The com-
mentator requested a similar rule for spe-
cial transfers. The final regulations pro-
vide such a rule for special transfers in
§1.468A–8(c).
D. Special Transfers with Respect to
Nuclear Power Plants that have been
Transferred
A commentator suggested that the
owner of a nuclear power plants that had
a qualifying percentage of less than 100
percent under pre–2005 law should be
allowed to make a special transfer so
that the entire cost of decommissioning
the plant can be covered by the qualified
fund even if the current owner purchased
the plant and was not the owner prior to
the enactment of section 468A. The final
regulations clarify that when §1.468A–6
(relating to nonrecognition of gain or loss
on certain fund transfers) applies to the
transfer of a qualified fund (or part or all
of its assets) the transferee succeeds to
the transferor’s qualifying percentage. If
§1.468A–6 does not apply to the transfer
and the transferee’s fund is treated as a
completely new fund, the transferee can-
not make a special transfer but the entire
cost of decommissioning the plant can be
funded by increasing annual deductible
contributions over the remaining useful
life of the plant through a schedule of
ruling amounts that is determined without
regard to the qualifying percentage limita-
tion that applied under pre–2005 law.
E. Special Transfer over More Than One
Year
A commentator suggested that the reg-
ulations should allow a taxpayer making a
special transfer over several years to get a
single ruling for the entire special trans-
fer. It has been the ruling policy of the
IRS to provide, in a single ruling, multiple
schedules of deduction amounts where a
taxpayer requests rulings on special trans-
fers made over several years. The final
regulations incorporate this ruling policy
in §1.468A–8(c)(2).
F. Acceleration of Special Transfer
Deduction
Although deductions for special trans-
fers 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
February 14, 20114742011–7 I.R.B.

case, the entire remaining deduction for the
special transfer is allowed in the year the
fund is transferred. This acceleration al-
lows the taxpayer to close its books on the
asset. Section 1.468A–8T(b)(3)(ii) of the
temporary regulationsprovides that, in the
case of a transfer of a qualified nuclear de-
commissioning fund to a related person,
the transferee’s ruling amounts will be ad-
justed to the extent necessary to offset the
benefit provided by the acceleration of de-
ductions. One commentator suggested that
the acceleration of the special transfer de-
ductionshouldbeviewedasonoffsetto
the timing detriment the transferor previ-
ously incurred because it was unable to
fully fund decommissioning costs under
pre–2005 law. The commentator further
suggested that transfers to affiliates should
not be treated less favorably than trans-
fers to non-affiliates. The IRS and Trea-
sury recognize that the transferor may have
incurred a timing detriment, but section
468A clearly provides that this detriment is
to be offset ratably over the remaining esti-
mated useful life of the plant rather than all
at once. While the statute provides for ac-
celeration of the deduction when the fund
is transferred, the IRS and Treasury con-
tinue to believe that such acceleration pro-
vides an inappropriate benefit to a taxpayer
that directly or indirectly retains an inter-
est in the plant and that failure to recapture
the benefit in those circumstances would
frustrate the intent of Congress in provid-
ing for the ratable deduction of the special
transfer amount. Thus, the final regula-
tions retain the limitation on the acceler-
ation of the deduction for special transfers
where the plant is transferred to an affili-
ated party.
G. Basis of Property Contributed in a
Special Transfer
Taxpayers may make special trans-
fers of property other than cash. Section
468A(f)(2)(D) provides that no gain or
loss is recognized on the transfer and that
for transfers of appreciated property the
amount of the deduction shall not exceed
the adjusted basis of the property. 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 trans-
ferred (carryover) basis in such prop-
erty. Correspondingly, a taxpayer’s
deduction (over the estimated life of
the powerplant) is to be based on the
adjusted tax basis of the property con-
tributed rather than the fair market
value of such property.
Although the legislative history does not
distinguish between appreciated property
andpropertywithavaluelessthanitsbasis
(built-in loss property), the statutory lan-
guage makes it clear that the rule basing
the deduction on the property’s adjusted
tax basis applies only to appreciated prop-
erty. Accordingly, the proposed regula-
tions provided that the deduction for prop-
erty contributed in a special transfer is lim-
ited to the lesser of fair market value or
the transferor’s adjusted basis in the prop-
erty. One commentator disagreed with
this rule and recommended that the reg-
ulations allow a deduction equal to ba-
sis for contributions of built-in loss prop-
erty. The commentator noted that sec-
tion 362, a nonrecognition provision simi-
lar to section 468A, provides for a stepped-
down basis in the hands of the transferee
for built-in loss property. The commenta-
tor argued for adoption of rules similar to
those in section 362 so that the transferor
would get a deduction of its adjusted ba-
sis in the property and the qualified fund
would get a “stepped-down” basis of the
fair market value at the time of transfer.
The commentator also noted the unfairness
of limiting the deduction for built-in loss
property to fair market value where the
transferee is taxed at a higher rate than the
qualified fund.
The IRS and Treasury recognize that
the transferor and the fund could achieve
generally the same result as the commen-
tator proposes by selling the loss prop-
erty and contributing the proceeds to the
qualified fund which could use the pro-
ceeds to repurchase the property. To elim-
inate the need for such transactions, the fi-
nal regulations provide that the transferor
may deduct the adjusted basis of built-in
loss property contributed to a fund if the
fund elects to treat the fair market value of
the property as its adjusted basis. Further,
the final regulations provide that this elec-
tion may be made and a deduction equal
to basis will be allowed for built-in loss
property contributed before December 23,
2010. In such cases, the election may be
made and the deduction equal to basis may
beclaimedbyfilinganamendedtaxreturn.
H. Miscellaneous Special Transfer Issues
(i) One commentator noted that the
schedule of deduction amounts is calcu-
lated based on the “pre–2005 nonquali-
fying amount” and recommends that this
be changed to the pre–2006 nonqualifying
amount. The commentator correctly notes
that, while the changes to section 468A
were made by the Energy Policy Act of
2005, those changes were effective for
tax years beginning after December 31,
2005. The modifier “pre–2005” refers
to the state of section 468A prior to the
changes made by the Energy Policy Act
of 2005. The pre–2005 nonqualifying
amount referred to in the proposed regula-
tions was fixed years before and was not
determined by reference to the effective
date of the Energy Policy Act of 2005.
Thus, the modifier “pre–2005 nonqual-
ifying amount” is retained in the final
regulations.
(ii) Section 1.468A–3(f)(1)(iii) of the
proposed regulations requires that a tax-
payer request a new schedule of ruling
amounts when requesting a schedule of de-
duction amounts. 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. One commentator suggested that
the new schedule of ruling amounts should
not apply until the following year because
the special transfer may actually occur at
any time during the first taxable year in
which a deduction is allowed under the
schedule of deduction amounts (and un-
der the deemed payment rules may oc-
cur during the first two-and-a-half months
of the following taxable year). Section
1.468A–3(f)(1)(iii) of the final regulations
adopts this suggestion.
(iii) Section 1.468A–8(a)(2) of the pro-
posed regulations provides that the present
value of estimated future decommission-
ing costs is determined as of the first day
of the taxable year of the taxpayer in which
the special transfer is made. One commen-
tator noted that the special transfer may be
made after the first day of the taxable year
and suggested that the regulations permit
determinations of present value as of an al-
ternative date. The final regulations per-
mit the use of an alternative date that is
2011–7 I.R.B.475February 14, 2011

not later than the date on which the spe-
cial transfer is made if the taxpayer es-
tablishes that the determination of present
value as of such date is reasonable and con-
sistent with the principles and provisions
of §1.468A–8.
3. Transfers of Nuclear Power Plants and
their Associated Qualified Funds
A. Ambiguity Relating to a Plant that has
Ceased Producing Electric Energy
The proposed regulations, at
§1.468A–6(a), provide that, for purposes
of determining the tax consequences of
the transfer of a qualified fund associ-
ated with a nuclear power plant, a nuclear
power plant includes a plant that previ-
ously qualified as a nuclear power plant
but that has permanently ceased producing
electric energy. One commentator notes
that this provision apparently allows the
tax-free transfer of a qualified fund asso-
ciated with a plant that has permanently
ceased producing electric energy if all
the other requirements of §1.468A–6 are
satisfied. That was the intended effect of
the provision and it is retained in the final
regulations.
B. Tax-Free Transfer of a Qualified Fund
The proposed regulations, at
§1.468A–6(b)(3)(i), require that, in order
to qualify as a tax-free transfer of a quali-
fied fund, the transferee of a nuclear power
plant and its associated qualified fund
must acquire that portion of the qualified
fund equal to the proportionate amount
of the nuclear power plant acquired. One
commentator expressed disagreement with
this rule, arguing that the rule as it ex-
ists requires a choice between potential
disqualification of the entire fund and
over-funding the qualified fund.
The commentator’s position would al-
low for the removal of assets at transfer
when their value is high and perhaps leave
the fund without sufficient assets to pro-
vide for decommissioning. This is con-
trary to the general rule of section 468A,
which does not permit withdrawals from
a qualified fund except to pay for decom-
missioning and the cost of administering
the fund. The IRS and Treasury believe
a primary purpose of section 468A is to
ensure that adequate assets will be avail-
able to decommission the nuclear power
plant. Given the long life of nuclear power
plants and the variability of investment re-
turns, what may appear to be overfunding
in one decade may be inadequate in the
next. Moreover, the IRS and Treasury be-
lieve that overfunding can be adequately
addressed by reducing future payments to
the qualified funds.
4. Miscellaneous Matters
A. Minor Changes in Wording to Reflect
Deregulation in Certain Jurisdictions
Theproposedregulations,
in§§1.468A–3(a)(2)(i)and
1.468A–3(e)(2)(vi)(H), refer to “amounts
collected for” the qualified fund. One
commentator noted that in certain juris-
dictions that have undergone deregulation,
amounts are no longer collected for the
qualified funds. The final regulations re-
fer, instead, to the “assets of” the qualified
fund.
B. New Schedule of Ruling Amounts
When License is Extended
Section 1.468A–3(f)(1)(iv) of the pro-
posed regulations requires that a tax-
payer request a revised schedule of ruling
amounts by the deemed payment deadline
for the year in which the operating license
for the nuclear power plant is extended
by the Nuclear Regulatory Commission
(NRC). One commentator requested that
the deadline for requesting a revised
schedule of ruling amounts be extended to
the deemed payment deadline for the year
following the year in which the operating
license is extended by the NRC. The com-
mentator argued that the NRC could act
late in the year and give the taxpayer little
time to prepare the request for the revised
schedule of ruling amounts. The IRS and
Treasury believe that the deadline in the
proposed regulations provides sufficient
time to prepare and submit a request for a
revised schedule of ruling amounts and it
is retained in the final regulations.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory 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 Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. It
is hereby certified that this regulation will
not have a significant economic impact on
a substantial number of small entities. The
proposed regulations do not impose a col-
lection of information on small entities.
Accordingly, a regulatory flexibility anal-
ysis is not required. Pursuant to section
7805(f) of the Code, the notice of pro-
posed rulemaking preceding these regula-
tions was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on their impact
on small business.
Drafting Information
The principal author of these regula-
tions is Patrick S. Kirwan, Office of As-
sociate Chief Counsel (Passthroughs and
Special Industries). However, other per-
sonnel from the IRS and Treasury Depart-
ment participated in their development.
*****
Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
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 * * *
Section1.468A–5alsoissuedunder
26 U.S.C. 468A(e)(5). * * *
§§1.468A–0T through 1.468A–9T
[Removed]
Par. 2. Sections 1.468A–0T through
1.468A–9T are removed.
Par. 3. Sections 1.468A–0 through
1.468A–9 are added to read as follows:
§1.468A–0 Nuclear decommissioning
costs; table of contents.
This section lists the paragraphs con-
tained in §§1.468A–1 through 1.468A–9.
§1.468A–1 Nuclear decommissioning
costs; general rules.
(a) Introduction.
(b) Definitions.
February 14, 20114762011–7 I.R.B.

(c) Special rules applicable to certain
experimental nuclear facilities.
§1.468A–2 Treatment of electing taxpayer.
(a) In general.
(b) Limitation on payments to a nuclear
decommissioning fund.
(1) In general.
(2) Excess contributions not deductible.
(c) Deemed payment rules.
(1) In general.
(2) Cash payment by customer.
(d) Treatment of distributions.
(1) In general.
(2) Exceptions to inclusion in gross in-
come.
(i) Payment of administrative costs and
incidental expenses.
(ii) Withdrawals of excess contribu-
tions.
(iii) Actual distributions of amounts in-
cluded in gross income as deemed distri-
butions.
(e) Deduction when economic perfor-
mance occurs.
§1.468A–3 Ruling amount.
(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 decommis-
sioning.
(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 re-
ceipt of an initial or revised ruling amount
applicable to a taxable year.
§1.468A–4 Treatment of nuclear
decommissioning fund.
(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 pur-
poses of subtitle F.
§1.468A–5 Nuclear decommissioning
fund—miscellaneous provisions.
(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 decom-
missioning 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 decommis-
sioning fund upon substantial completion
of decommissioning.
(1) In general.
(2) Additional rules.
(3) Substantial completion of decom-
missioning defined.
§1.468A–6Dispositionofaninterestina
nuclear power plant.
(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 rul-
ing 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) Examples.
(f) Anti-abuse provision.
§1.468A–7 Manner of and time for making
election.
(a) In general.
(b) Required information.
§1.468A–8 Special transfers to qualified
funds pursuant to section 468A(f).
(a) General rule.
(1) In general.
(2) Pre–2005 nonqualifying amount.
(i) In general.
(ii) Pre–2005 nonqualifying amount of
transferee.
(3) Transfers in multiple years.
(4) Deemed payment rules.
(i) In general.
(ii) Special rule for certain transfers.
(b) Deduction for amounts transferred.
(1) In general.
(2) Amount of deduction.
(i) General Rule.
(ii) Election.
(A) In general.
(B)Mannerofmakingelection.
(C) Election allowed for property trans-
ferred prior to December 23, 2010.
(3) Denial of deduction for previously
deducted amounts.
(4) Transfers of qualified nuclear de-
commissioning funds.
(5) Special rules.
(i) Gain or loss not recognized on trans-
fers to fund.
(ii) Taxpayer basis in fund.
(iii) Fund basis in transferred property.
(A) In general.
(B) Basis in case of election.
(c) Schedule of deductions required.
(1) In general.
(2) Transfers in multiple taxable years.
(3) Transfer of partial interest in fund.
(4) Special transfer permitted before re-
ceipt of schedule.
(d) Manner of requesting schedule of
deduction amounts.
(1) In general.
(2) Information required.
(3) Statement required.
(4) Administrative procedures.
2011–7 I.R.B.477February 14, 2011

§1.468A–9 Effective/applicability date.
§1.468A–1 Nuclear decommissioning
costs; general rules.
(a)Introduction. Section 468A pro-
vides an elective method for taking into ac-
count nuclear decommissioning costs for
Federal income tax purposes. In general,
an eligible taxpayer that elects the applica-
tion of section 468A pursuant to the rules
contained in §1.468A–7 is allowed a de-
duction (as determined under §1.468A–2)
for the taxable year in which the taxpayer
makes a cash payment to a nuclear de-
commissioning fund. Taxpayers using an
accrual method of accounting that do not
elect the application of section 468A are
not allowed a deduction for nuclear de-
commissioning costs prior to the taxable
year in which economic performance oc-
curs with respect to such costs (see section
461(h)).
(b)Definitions. The following terms
are defined for purposes of section 468A
and §§1.468A–1 through 1.468A–9:
(1) The termeligible taxpayermeans
any taxpayer that possesses a qualifying
interest in a nuclear power plant (includ-
ing a nuclear power plant that is under con-
struction).
(2) The termqualifying 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 nu-
clear decommissioning fund with respect
to such portion of the nuclear power plant.
(3) The termdirect ownership interest
includes an interest held as a tenant in com-
mon 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 nu-
clear power plant, the election under sec-
tion 468A must be made by the partner-
ship and not by the partners. In the case of
an unincorporated organization described
in §1.761–2(a)(3) that elects under section
761(a) to be excluded from the applica-
tion 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 termsnuclear decommissioning
fundandqualified nuclear decommission-
ing fundmean a fund that satisfies the re-
quirements of §1.468A–5. The termnon-
qualified fundmeans a fund that does not
satisfy those requirements.
(5) The termnuclear power plant
means any nuclear power reactor that is
used predominantly in the trade or busi-
ness 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 termnuclear
power plantalso includes the portion of
the common facilities of a multi-unit site
allocable to a unit on that site.
(6) The termnuclear decommissioning
costsordecommissioning costsincludes
all otherwise deductible expenses to be
incurred in connection with the entomb-
ment, 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 en-
ergy or has permanently ceased to produce
electric energy. Such term includes all
otherwise deductible expenses to be in-
curred in connection with the preparation
for decommissioning, such as engineer-
ing and other planning expenses, and all
otherwise deductible expenses to be in-
curred with respect to the plant after the
actual decommissioning occurs, such as
physical security and radiation monitoring
expenses. Such term also includes costs
incurred in connection with the construc-
tion, operation, and ultimate decommis-
sioningofafacilityusedsolelytostore,
pending acceptance by the government for
permanent storage or disposal, spent nu-
clear fuel generated by the nuclear power
plant or plants located on the same site as
the storage facility. Such term does not in-
clude otherwise deductible expenses to be
incurred in connection with the disposal of
spent nuclear fuel under the Nuclear Waste
Policy Act of 1982 (Public Law 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 termpublic utility commission
means any State or political subdivision
thereof, any agency, instrumentality or ju-
dicial body of the United States, or any ju-
dicial 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 termratemaking 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 in-
cludes a generic proceeding that applies
to two or more taxpayers that are subject
to the jurisdiction of a single public utility
commission.
(9) The termspecial transfermeans
any transfer of funds to a qualified nu-
clear decommissioning fund pursuant to
§1.468A–8.
(c)Special rules applicable to certain
experimental nuclear facilities.(1)The
owner of a qualifying interest in an exper-
imental nuclear facility possesses a quali-
fying interest in a nuclear power plant for
purposes of paragraph (b) of this section if
such person is engaged in the trade or busi-
ness of the furnishing or sale of electric en-
ergy.
(2) An owner of stock in a corpora-
tion that owns an experimental nuclear fa-
cility possesses a qualifying interest in a
nuclear power plant for purposes of para-
graph (b)(1) of this section if—
(i) Such stockholder satisfies the con-
ditions 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 elec-
tric energy.
(3) For purposes of this paragraph (c),
an experimental nuclear facility is a nu-
clear power reactor that is used predom-
inantly for the purpose of conducting ex-
perimentation and research.
§1.468A–2 Treatment of electing taxpayer.
(a)In general. An eligible taxpayer that
elects the application of section 468A pur-
suant to the rules contained in §1.468A–7
(an electing taxpayer) is allowed a deduc-
tion for the taxable year in which the tax-
payer 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
February 14, 20114782011–7 I.R.B.

a special transfer described in §1.468A–8.
The amount of the deduction for any tax-
able year equals the total amount of cash
payments made (or deemed made) by the
electing taxpayer to a nuclear decommis-
sioning 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 spe-
cial transfer described in §1.468A–8. The
amount of a special transfer permitted un-
der §1.468A–8 is not treated as a cash pay-
ment 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 decom-
missioning fund relates has commenced.
(2) A ruling amount is applicable to
the nuclear decommissioning fund (see
§1.468A–3).
(b)Limitation on payments to a nu-
clear decommissioning fund—(1)In gen-
eral. For purposes of paragraph (a) of this
section, the maximum amount of cash pay-
ments made (or deemed made) to a nu-
clear decommissioning fund under para-
graph (a) of this section during any taxable
year shall not exceed the ruling amount ap-
plicable to the nuclear decommissioning
fund for such taxable year (as determined
under §1.468A–3).
(2)Excess contributions not deductible.
If the amount of cash payments made (or
deemed made) to a nuclear decommission-
ing fund during any taxable year exceeds
the limitation of paragraph (b)(1) of this
section, the excess is not deductible by the
electing taxpayer. Inaddition, see para-
graph (c) of §1.468A–5 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 decommis-
sioning fund during any taxable year ex-
ceeds the limitation of paragraph (b)(1) of
this section.
(3)Special transfer disregarded.The
amount of a special transfer permitted un-
der §1.468A–8 is not treated as a cash pay-
ment for purposes of this paragraph (b).
(c)Deemed payment rules—(1)In gen-
eral. The amount of any cash payment
made by an electing taxpayer to a nu-
clear 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 des-
ignates the amount as relating to such
taxable year on its timely filed Federal
income tax return for such taxable year
(see §1.468A–7(b)(4)(iii) and (iv) for rules
relating to such designation).
(2)Cash payment by customer.The
amount of any cash payment made by a
customer of an electing taxpayer to a nu-
clear decommissioning fund of such elect-
ing taxpayer shall be deemed made by the
electing taxpayer if the amount is included
in the gross income of the electing tax-
payer in the manner prescribed by section
88 and §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 distri-
bution 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 prop-
erty on the date of the distribution. See
§1.468A–5(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)Tosatisfy,inwholeorinpart,the
liability of the electing taxpayer for de-
commissioning 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 in-
come—(i)Payment of administrative costs
and incidental expenses. The amount of
any payment by a nuclear decommission-
ing fund for administrative costs or other
incidental expenses of such fund (as de-
fined in §1.468A–5(a)(3)(ii)) shall not be
included in the gross income of the elect-
ing 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 un-
der section 61).
(ii)Withdrawals of excess contri-
butions. The amount of a withdrawal
of an excess contribution (as defined
in §1.468A–5(c)(2)(ii)) by an elect-
ing taxpayer pursuant to the rules of
§1.468A–5(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 in-
cluded in gross income as deemed distri-
butions. If the amount of a deemed distri-
bution 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 actu-
ally distributed by a nuclear decommis-
sioning fund as the first actual distributions
are made by the nuclear decommissioning
fund on or after the date of the deemed dis-
tribution.
(e)Deduction when economic per-
formance occurs. Anelectingtaxpayer
using an accrual method of accounting
is allowed a deduction for nuclear de-
commissioning costs no earlier than the
taxable year in which economic perfor-
mance 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 de-
termined without regard to section 280B
(see §1.468A–1(b)(6)). A deduction is al-
lowed under this paragraph (e) whether or
not a deduction was allowed with respect
to such costs under section 468A(a) and
paragraph (a) of this section for an earlier
taxable year.
§1.468A–3 Ruling amount.
(a)In general. (1) Except as other-
wise provided in paragraph (g) of this sec-
tion or in §1.468A–8 (relating to deduc-
tions for special transfers into a nuclear
decommissioning fund),anelectingtax-
payer is allowed a deduction under sec-
tion 468A(a) for the taxable year in which
the taxpayer makes a cash payment (or
2011–7 I.R.B.479February 14, 2011

is deemed to make a cash payment) to a
nuclear decommissioning fund only if the
taxpayer has received a schedule of rul-
ing amounts for the nuclear decommis-
sioning 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 §601.201(a)(2) of this chapter) specify-
ing the annual payments (ruling amounts)
that, over the taxable years remaining in
the funding period as of the date the sched-
ule first applies, will result in a projected
balance of the nuclear decommissioning
fund as of the last day of the funding pe-
riod equal to (and in no event greater than)
the amount of decommissioning costs allo-
cable to the fund. The projected balance of
a nuclear decommissioning fund as of the
last day of the funding period shall be cal-
culated by taking into account the fair mar-
ket 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 §1.468A–5(a)(3)(ii)),
including all Federal, State and local in-
come 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 de-
commissioning 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 concern-
ing—
(i) The after-tax rate of return to be
earned by the assets of the qualified nu-
clear decommissioning fund;
(ii) The total estimated cost of decom-
missioning the nuclear power plant (see
paragraph (d)(2) of this section); and
(iii) The frequency of contributions to
a nuclear decommissioning fund for a tax-
able 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 con-
nection 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 consis-
tent 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 pro-
visions and is based on reasonable assump-
tions.
(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 currentlyapplicable 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 assump-
tions used by the public utility commission
in its most recent order. In addition, a tax-
payer 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 pro-
posed 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 in-
dustry standards, such as the assumptions
underlying the taxpayer’s most recent fi-
nancial assurance filing with the NRC, are
an alternative means of demonstrating that
the taxpayer has calculated its proposed
schedule of ruling amounts on a reason-
able 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 spec-
ifying a dollar amount for each taxable
year)iftheformulaormethodisconsis-
tent with the principles and provisions of
this section and is based on reasonable as-
sumptions. 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, pro-
vide a schedule of ruling amounts that is
determined on a basis other than the rules
of paragraphs (a) through (d) of this sec-
tion 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 determin-
ing 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 tax-
able 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 speci-
fied in such schedule for an earlier taxable
year.
(3) The ruling amount specified in a
schedule of ruling amounts for the last tax-
able 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 tax-
able year is annualized by—
(i) Determining the number of days be-
tween 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 num-
ber of days in the last taxable year (gener-
ally 365).
(c)Funding period—(1)In general.
For purposes of this section, the funding
period for a nucleardecommissioning
fund is the period that—
February 14, 20114802011–7 I.R.B.

(i) Begins on the first day of the
first taxable year for which a deductible
payment is made (or deemed made) to
such nuclear decommissioning fund (see
§1.468A–2(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 es-
timated useful life of the nuclear power
plant to which the nuclear decommission-
ing fund relates.
(2)Estimated useful life. The last day
of the estimated useful life of a nuclear
power plant is determined under the fol-
lowing rules:
(i) Except as provided in paragraph
(c)(2)(ii) of this section—
(A) The last day of the estimated use-
ful life of a nuclear power plant that has
been included in ratebase for ratemak-
ing purposes in any ratemaking proceed-
ing that established rates for a period be-
fore January 1, 2006, is the date used in the
first such ratemaking proceeding as the es-
timated date on which the nuclear power
plant will no longer be included in the tax-
payer’s rate base for ratemaking purposes;
(B) The last day of the estimated use-
ful 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 use-
ful life of the plant determined as of the
date it is placed in service;
(C) A taxpayer with an interest in a
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 es-
timated 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 es-
timated useful life but is not required to
do so. If the last day of the estimated
useful life was determined under para-
graph (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 re-
cent ratemaking proceeding will generally
be treated as establishing such alternative
date as the last day of the estimated useful
life.
(iii) The estimated useful life of a nu-
clear power plant determined for purposes
of paragraph (c)(1) of this section may
end on a different date from the estimated
useful life of a nuclear power plant de-
termined for purposes of §1.468A–8(b)(1)
and (c)(1).
(d)Decommissioning costs allocable to
afund. The amount of decommissioning
costs allocable to a nuclear decommission-
ing fund is determined for purposes of this
section by applying the following rules and
definitions:
(1)General rule. The amount of de-
commissioning costs allocable to a nuclear
decommissioning fund is the taxpayer’s
share of the total estimated cost of de-
commissioning the nuclear power plant to
which the fund relates.
(2)Total estimated cost of decommis-
sioning. Under paragraph (a)(2) of this
section, the taxpayer must demonstrate
the reasonableness of the assumptions
concerning the total estimated cost of de-
commissioning the nuclear power plant.
(3)Taxpayer’s share. The taxpayer’s
share of the total estimated cost of decom-
missioning a nuclear power plant equals
the total estimated cost of decommission-
ing such nuclear power plant multiplied by
the percentage of such nuclear power plant
that the qualifying interest of the taxpayer
represents. (See §1.468A–1(b)(2) for cir-
cumstances 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)Inor-
der to receive a ruling amount for any tax-
able 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
§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 §1.468A–5
for rules relating to the number of nuclear
decommissioning funds that a taxpayer
can establish.)
(iii) Except as provided by
§§1.468A–5(a)(1)(iv) (relating to certain
unincorporated organizations that may be
taxable as corporations) and 1.468A–8
(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 sub-
mission with the IRS.
(v) The IRS will not provide or revise
a ruling amount applicable to a taxable
year in response to a request for a sched-
ule of ruling amounts that is filed after the
deemed payment deadline date (as defined
in §1.468A–2(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 con-
sidered filed only if such request complies
substantially with the requirements of this
paragraph (e).
(vii) If a request does not comply sub-
stantially with the requirements of this
paragraph (e), the IRS will notify the
taxpayer of that fact. If the information
or materials necessary to comply sub-
stantially 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 ef-
fort to provide the applicable information
or materials within 30 days after notifi-
cation 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
2011–7 I.R.B.481February 14, 2011

necessary to comply substantially with the
requirements of this paragraph (e) are not
provided within 30 days after the notifica-
tion, 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 sec-
tion).
(iii) The name and location of the nu-
clear 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
power plant that the qualifying interest of
the taxpayer represents.
(v) Where applicable, an identification
of each public utility commission that es-
tablishes or approves rates for the furnish-
ing or sale by the taxpayer of electric en-
ergy generated by the nuclear power plant,
and, for each publicutility commission
identified—
(A) Whether the public utility commis-
sion has determined the amount of decom-
missioning costs to be included in the tax-
payer’s cost of service for ratemaking pur-
poses;
(B) The amount of decommissioning
costs that are to be included in the tax-
payer’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 thereunder;
(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 or-
der or opinion of the public utility commis-
sion as pertain to the public utility com-
mission’s most recent determination of the
amount of decommissioning costs to be in-
cluded in cost of service; and
(E) A copy of each engineering or cost
studythatwasreliedonorusedbythe
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 re-
moval/dismantlement, safe storage en-
tombment with delayed dismantlement,
or safe storage mothballing with delayed
dismantlement).
(B) The estimated year in which sub-
stantial decommissioning costs will first
be incurred.
(C) The estimated year in which the
decommissioning of the nuclear power
plant will be substantially complete (see
§1.468A–5(d)(3) for a definition of sub-
stantial completion of decommissioning).
(D) The total estimated cost of decom-
missioning 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 decom-
missioning 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 para-
graph (e)(2)(vi)(B) ofthis section (the es-
timated year in which substantial decom-
missioning 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 decom-
missioning expressed in future dollars.
(G) A description of the methodology
used in converting the estimated cost of de-
commissioning expressed in current dol-
lars to the estimated cost of decommission-
ing expressed in future dollars.
(H) The assumed after-tax rate of return
to be earned by the assets of the qualified
nuclear decommissioning fund.
(I) A copy of each engineering or cost
study that was relied on or used by the
taxpayer in determining the amount of de-
commissioning 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, 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 tax-
able year to which the schedule of ruling
amounts will apply;
(D) The amount expected to be earned
by the assets of the nuclear decommission-
ing fund (based on the after-tax rate of re-
turn applicable to the fund) over the period
that begins on the first day of the first tax-
able 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 decommis-
sioning fund (as determined under para-
graph (d) of this section);
(F) The total estimated cost of decom-
missioning (as determined under para-
graph (d)(2) of this section); and
(G) The taxpayer’s share of the total es-
timated cost of decommissioning (as such
term is defined in paragraph (d)(3) of this
section).
(ix) If the request is for a revised sched-
ule of ruling amounts, the after-tax rate
of return earned by the assets of the nu-
clear decommissioning fund for each tax-
able 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 tax-
able year to which the revised schedule of
ruling amounts applies.
(x) If applicable, an explanation of the
need for a schedule of ruling amounts de-
termined 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 as-
sumed after-tax rate of return to be earned
by the assets of the nuclear decommission-
ing fund, setting forth the years the fund
will be in existence, the annual contribu-
tion to the fund, the estimated annual earn-
February 14, 20114822011–7 I.R.B.

ings 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, pur-
suant to §1.468A–5(a)(1)(iv), that the IRS
rule whether an unincorporated organiza-
tion 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 use-
ful in determining the schedule of ruling
amounts.
(3)Administrative procedures.TheIRS
may prescribe administrative procedures
that supplement the provisions of para-
graph (e)(1) and (2) of this section. In ad-
dition, the IRS may, in its discretion, waive
the requirements of paragraph (e)(1) and
(2)ofthissectionunderappropriatecir-
cumstances.
(f)Review and revision of schedule
of ruling amounts—(1)Mandatory re-
view. (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 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)(5) of this section
must file a request for a revised schedule
on or before the earlier of the deemed pay-
ment deadline for the 5th taxable year that
begins after its taxable year in which the
most recent formula or method was ap-
proved or the deemed payment deadline
for the first taxable year that begins after
a taxable year in which there is a substan-
tial variation in the ruling amount deter-
mined 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 ap-
proved differ by more than 50 percent of
the smaller amount.
(B) Any taxpayer that has determined
its ruling amount for any taxable year un-
der a formula prescribed by §1.468A–6
(which prescribes ruling amounts for the
taxable year in which there is a disposi-
tion of a qualifying interest in a nuclear
power plant) must file a request for a re-
vised schedule of ruling amounts on or be-
fore the deemed payment deadline for its
first taxable year that begins after the dis-
position.
(iii) A taxpayer requesting a schedule
of deduction amounts for a nuclear decom-
missioning fund under §1.468A–8 must
also request a revised schedule of ruling
amounts for the fund. The revised sched-
ule of ruling amounts must apply begin-
ning with the first taxable year follow-
ingthefirstyearinwhichadeductionis
allowed under the schedule of deduction
amounts.
(iv) If the operating license of the nu-
clear power plant to which a nuclear de-
commissioning fund relates is renewed,
the taxpayer maintaining the fund must re-
quest a revised schedule of ruling amounts.
The request for the revised schedule must
be submitted on or before the deemed pay-
ment deadline for the taxable year that in-
cludes the date on which the operating li-
cense 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 tax-
payer 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 ap-
plicable), the taxpayer’s ruling amount for
the first taxable year to which the revised
schedule of ruling amounts would have ap-
plied 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 sched-
ule 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 re-
vised 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 decom-
missioning fund shall be determined under
this section without regard to any sched-
ule of ruling amounts for such nuclear de-
commissioning fund that was issued prior
to such revised schedule. Thus, a rul-
ing amount specified in a revised sched-
ule 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 tax-
able year.
(g)Special rule permitting payments to
a nuclear decommissioning fund before re-
ceipt of an initial or revised ruling amount
applicable to a taxable year.(1)Ifan
electing taxpayer has filed a timely request
for an initial or revised ruling amount for
a taxable year beginning on or after Jan-
uary 1, 2006, and doesnot receive the rul-
ing amount on or before the deemed pay-
ment deadline date for such taxable year,
the taxpayer may make a payment to a
nuclear decommissioning fund on the ba-
sis of the ruling amount proposed in the
taxpayer’s request. Thus, under the pre-
ceding sentence, an electing taxpayer may
make a payment to a nuclear decommis-
sioning fund for such taxable year that
does not exceed the ruling amount pro-
posed 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 pay-
ment to a nuclear decommissioning fund
2011–7 I.R.B.483February 14, 2011

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 tax-
payer for such taxable year, the taxpayer
is not allowed to make an additional pay-
ment to the fund for such taxable year after
the deemed payment deadline date for such
taxable year.
(3)Ifthepaymentortransferthatan
electing taxpayer makes to a nuclear de-
commissioning 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 fol-
lowing rules apply:
(i) The amount of the excess is
an excess contribution (as defined in
§1.468A–5(c)(2)(ii)) for such taxable year.
(ii) The amount of the excess
contribution is not deductible (see
§1.468A–2(b)(2)) and must be withdrawn
by the taxpayer pursuant to the rules of
§1.468A–5(c)(2)(i).
(iii) The taxpayer must withdraw the af-
ter-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 tax-
able year.
§1.468A–4 Treatment of nuclear
decommissioning fund.
(a)In general. A nuclear decommis-
sioning fund is subject to tax on all of its
modified gross income (as defined in para-
graph (b) of this section). The rate of tax is
20 percent for taxable years beginning af-
ter 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 pur-
poses of this section, the termmodified
gross incomemeans gross income as de-
fined under section 61 computed with the
following modifications:
(1) The amount of any payment or spe-
cial transfer to the nuclear decommission-
ingfundwithrespecttowhichadeduc-
tion is allowed under section 468A(a) or
section 468A(f) is excluded from gross in-
come.
(2) A deduction is allowed for the
amount of administrative costs and other
incidental expenses of the nuclear decom-
missioning fund (including taxes, legal
expenses, accounting expenses, actuarial
expenses and trustee expenses, but not
including decommissioning costs) that
are otherwise deductible and that are paid
by the nuclear decommissioning fund to
any person other than the electing tax-
payer. An expense is otherwise deductible
for purposes of this paragraph (b)(2) if it
would be deductible under chapter 1 of the
Code in determining the taxable income of
a corporation. For example, because Fed-
eral income taxes are not deductible under
chapter 1 of the Code in determining the
taxable income of a corporation, the tax
imposed by section 468A(e)(2) and para-
graph (a) of this section is not deductible
in determining the modified gross income
of a nuclear decommissioning fund. Sim-
ilarly, because certain expenses allocable
to tax-exempt interest income are not de-
ductible under section 265 in determining
the taxable income of a corporation, such
expenses are not deductible in determining
the modified gross income of a nuclear
decommissioning fund.
(3) A deduction is allowed for the
amount of an otherwise deductible loss
that is sustained by the nuclear decommis-
sioning fund in connection with the sale,
exchange or worthlessness of any invest-
ment. A loss is otherwise deductible for
purposes of this paragraph (b)(3) if such
loss would be deductible by a corporation
under section 165(f) or (g) and sections
1211(a) and 1212(a).
(4) A deduction is allowed for the
amount of an otherwise deductible net op-
erating loss of the nuclear decommission-
ing fund. For purposes of this paragraph
(b), the net operating loss of a nuclear
decommissioning fund for a taxable year
is the amount by which the deductions
allowable under paragraphs (b)(2) and (3)
of this section exceed the gross income of
the nuclear decommissioning fund com-
puted with the modification described in
paragraph (b)(1) of this section. A net
operating loss is otherwise deductible for
purposes of this paragraph (b)(4) if such a
net operating loss would be deductible by
a corporation under section 172(a).
(c)Special rules—(1)Period for com-
putation of modified gross income.The
modified gross income of a nuclear de-
commissioning fund must be computed on
the basis of the taxable year of the electing
taxpayer. If an electing taxpayer changes
its taxable year, each nuclear decommis-
sioning fund of the electing taxpayer must
change to the new taxable year. See sec-
tion 442 and §1.442–1 for rules relating to
the change to a new taxable year.
(2)Gain or loss upon distribution of
property by a fund. A distribution of
property by a nuclear decommissioning
fund (whether an actual distribution or a
deemed distribution) shall be considered
a disposition of property by the nuclear
decommissioning fund for purposes of
section 1001. In determining the amount
of gain or loss from such disposition, the
amount realized by the nuclear decommis-
sioning fund shall be the fair market value
of the property on the date of disposition.
(3)Denial of credits against tax.The
tax imposed on the modified gross income
of a nuclear decommissioning fund under
paragraph (a) of this section is not to be
reduced or offset by any credits against
tax provided by part IV of subchapter A of
chapter 1 of the Code other than the credit
provided by section 31(c) for amounts
withheld under section 3406 (back-up
withholding).
(4)Other corporate taxes inapplicable.
Although the modified gross income of
a nuclear decommissioning fund is sub-
ject to tax at the rate specified by section
468A(e)(2) and paragraph (a) of this sec-
tion, a nuclear decommissioning fund is
not subject to the other taxes imposed on
corporations under subtitle A of the Code.
For example, a nuclear decommissioning
fund is not subject to the alternative mini-
mum tax imposed by section 55, the accu-
mulated earnings tax imposed by section
531, the personal holding company tax im-
posed by section 541, and the alternative
tax imposed on a corporation under section
1201(a).
(d)Treatment as corporation for pur-
poses of subtitle F. For purposes of subtitle
F of the Code and §§1.468A–1 through
1.468A–9, a nuclear decommissioning
fund is to be treated as if it were a cor-
poration and the tax imposed by section
468A(e)(2) and paragraph (a) of this sec-
tion is to be treated as a tax imposed by
section 11. Thus, for example, the follow-
ing rules apply:
(1) A nuclear decommissioning fund
must file a return with respect to the tax
February 14, 20114842011–7 I.R.B.

imposedbysection468A(e)(2)andpara-
graph (a) of this section for each taxable
year (or portion thereof) that the fund is
in existence even though no amount is in-
cluded in the gross income of the fund for
such taxable year. The return is to be made
on Form 1120–ND in accordance with the
instructions relating to such form. For pur-
poses of this paragraph (d)(1), a nuclear
decommissioning fund is in existence for
the period that—
(i) Begins on the date that the first de-
ductible payment is actually made to such
nuclear decommissioning fund; and
(ii) Ends on the date of termination (see
§1.468A–5(d)), the date that the entire
fund is disqualified (see §1.468A–5(c)),
or the date that the electing taxpayer dis-
poses of its entire qualifying interest in
the nuclear power plant to which the nu-
clear decommissioning fund relates (other
than in connection with the transfer of the
entire fund to the person acquiring such
interest), whichever is applicable.
(2) For each taxable year of the nu-
clear decommissioning fund, the return de-
scribed in paragraph (d)(1) of this section
must be filed on or before the 15th day
of the third month following the close of
such taxable year unless the nuclear de-
commissioning fund is granted an exten-
sion of time for filing under section 6081.
If such an extension is granted for any tax-
able year, the return for such taxable year
must be filed on or before the extended due
date for such taxable year.
(3) A nuclear decommissioning fund
must provide its employer identification
number on returns, statements and other
documents as required by the forms and in-
structions relating thereto. The employer
identification number is obtained by filing
a Form SS–4,Application for Employer
Identification Number, in accordance with
the instructions relating thereto.
(4) A nuclear decommissioning fund
must deposit all payments of tax imposed
by section 468A(e)(2) and paragraph (a)
of this section (including any payments
of estimated tax) with an authorized gov-
ernment depositary in accordance with
§1.6302–1.
(5) A nuclear decommissioning fund is
subjecttotheadditiontotaximposedby
section 6655 in case of a failure to pay esti-
mated income tax. For purposes of section
6655 and this section—
(i) The tax with respect to which the
amount of the underpayment is computed
in the case of a nuclear decommission-
ing fund is the tax imposed by section
468A(e)(2) and paragraph (a) of this sec-
tion; and
(ii) The taxable income with respect to
which the nuclear decommissioning fund’s
status as a large corporation is measured
is modified gross income (as defined by
paragraph (b) of this section).
§1.468A–5 Nuclear decommissioning fund
qualification requirements; prohibitions
against self-dealing; disqualification
of nuclear decommissioning fund;
termination of fund upon substantial
completion of decommissioning.
(a)Qualification requirements—(1)In
general. (i) A nuclear decommissioning
fund must be established and maintained
at all times in the United States pursuant
to an arrangement that qualifies as a trust
under State law. Such trust must be estab-
lished for the exclusive purpose of provid-
ing funds for the decommissioning of one
or more nuclear power plants, but a sin-
gle trust agreement may establish multiple
funds for such purpose. Thus, for exam-
ple—
(A) Two or more nuclear decommis-
sioning funds can be established and main-
tained pursuant to a single trust agreement;
and
(B) One or more funds that are to be
used for the decommissioning of a nuclear
power plant and that do not qualify as nu-
clear decommissioning funds under this
paragraph (a) can be established and main-
tained pursuant to a trust agreement that
governs one or more nuclear decommis-
sioning funds.
(ii) A separate nuclear decommission-
ing fund is required for each electing tax-
payer and for each nuclear power plant
with respect to which an electing taxpayer
possesses a qualifying interest. The In-
ternal Revenue Service (IRS) will issue a
separate schedule of ruling amounts with
respect to each nuclear decommissioning
fund, and each nuclear decommissioning
fund must file a separate income tax re-
turn even if other nuclear decommission-
ing funds or nonqualified funds are es-
tablished and maintained pursuant to the
trust agreement governing such fund or
the assets of other nuclear decommission-
ing funds or nonqualified funds are pooled
with the assets of such fund.
(iii) An electing taxpayer can main-
tain only one nuclear decommissioning
fund for each nuclear power plant with
respect to which the taxpayer elects the
application of section 468A. If a nuclear
power plant is subject to the ratemaking
jurisdiction of two or more public utility
commissions and any such public utility
commission requires a separate fund to be
maintained for the benefit of ratepayers
whose rates are established or approved by
the public utility commission, the separate
funds maintained for such plant (whether
or not established and maintained pursuant
to a single trust agreement) shall be con-
sidered a single nuclear decommissioning
fund for purposes of section 468A and
§§1.468A–1 through 1.468A–4, this sec-
tion and §§1.468A–7 through 1.468A–9.
Thus, for example, the IRS will issue one
schedule of ruling amounts with respect
to such nuclear power plant, the nuclear
decommissioning fund must file a single
income tax return (see §1.468A–4(d)(1)),
and, if the IRS disqualifies the nuclear
decommissioning fund, the assets of each
separate fund are treated as distributed on
the date of disqualification (see paragraph
(c)(3) of this section).
(iv) If assets of a nuclear decommis-
sioning fund are (or will be) invested
through an unincorporated organization,
within the meaning of §301.7701–2 of this
chapter, the IRS will rule, if requested,
whether the organization is an association
taxable as a corporation for Federal tax
purposes. A request for this ruling may be
made by the electing taxpayer as part of its
request for a schedule of ruling amounts
or as part of a request under §1.468A–8
for a schedule of deduction amounts.
(2) Limitation on contributions. Ex-
cept as otherwise provided in §1.468A–8
(relating to special transfers under section
468A(f)), a nuclear decommissioning fund
is not permitted to accept any contribu-
tions in cash or property other than cash
payments with respect to which a deduc-
tion is allowed under section 468A(a) and
§1.468A–2(a). Thus, for example, ex-
cept in the case of a special transfer pur-
suant to §1.468A–8, securities may not be
contributed to a nuclear decommissioning
fund even if the taxpayer or a fund es-
tablished by the taxpayer previously held
such securities for the purpose of provid-
2011–7 I.R.B.485February 14, 2011

ing funds for the decommissioning of a nu-
clear power plant.
(3)Limitation on use of fund—(i)In
general. The assets of a nuclear decom-
missioningfundaretobeusedexclu-
sively—
(A) To satisfy, in whole or in part, the
liability of the electing taxpayer for de-
commissioning costs of the nuclear power
plant to which the nuclear decommission-
ing fund relates;
(B) To pay administrative costs and
other incidental expenses of the nuclear
decommissioning fund; and
(C) To the extent that the assets of the
nuclear decommissioning fund are not cur-
rently required for the purposes described
in paragraph (a)(3)(i)(A) or (B) of this sec-
tion, to make investments.
(ii)Definition of administrative costs
and expenses. For purposes of paragraph
(a)(3)(i) of this section, the termadminis-
trative costs and other incidental expenses
of a nuclear decommissioning fundmeans
all ordinary and necessary expenses in-
curred in connection with the operation of
the nuclear decommissioning fund. Such
term includes the tax imposed by section
468A(e)(2) and §1.468A–4(a), any State
or local tax imposed on the income or
the assets of the fund, legal expenses, ac-
counting expenses, actuarial expenses and
trustee expenses. Such term does not in-
clude decommissioning costs or the pay-
ment of insurance premiums on a policy to
pay for the nuclear decommissioning costs
of a nuclear power plant. Such term also
does not include the excise tax imposed on
the trustee or other disqualified person un-
der section 4951 or the reimbursement of
any expenses incurred in connection with
the assertion of such tax unless such ex-
penses are considered reasonable and nec-
essary under section 4951(d)(2)(C) and it
is determined that the trustee or other dis-
qualified person is not liable for the excise
tax.
(4)Trust provisions. Each quali-
fied nuclear decommissioning fund trust
agreement must provide that assets in
the fund must be used as authorized by
section 468A and §§1.1468A–1 through
1.1468A–9 and that the agreement may
not be amended so as to violate section
468A or §§1.468A–1 through 1.468A–9.
(b)Prohibitions against self-deal-
ing—(1)In general. Except as otherwise
provided in this paragraph (b), the excise
taxes imposed by section 4951 shall ap-
ply to each act of self-dealing between a
disqualified person and a nuclear decom-
missioning fund.
(2)Self-dealing defined. For purposes
of this paragraph (b), the termself-deal-
ingmeans any act described in section
4951(d), except—
(i) A payment by a nuclear decommis-
sioning fund for the purpose of satisfying,
in whole or in part, the liability of the elect-
ing taxpayer for decommissioning costs of
the nuclear power plant to which the nu-
clear decommissioning fund relates;
(ii) A withdrawal ofan excess contri-
bution by the electing taxpayer pursuant to
the rules of paragraph (c)(2) of this section;
(iii) A withdrawal by the electing tax-
payer of amounts that have been treated as
distributed under paragraph (c)(3) of this
section;
(iv) A payment of amounts remaining
in a nuclear decommissioning fund to the
electing taxpayer after the termination of
such fund (as determined under paragraph
(d)ofthissection);
(v) Any act described in section
4951(d)(2)(B) or (C);
(vi) Any act that is described in
§53.4951–1(c) of this chapter and is
undertaken to facilitate the temporary
investment of assets or the payment of
reasonable administrative expenses of the
nuclear decommissioning fund; or
(vii) A payment by a nuclear decom-
missioning fund for the performance of
trust functions and certain general banking
services by a bank or trust company that
is a disqualified person if the banking ser-
vices are reasonable and necessary to carry
out the purposes of the fund and the com-
pensation paid to the bank or trust com-
pany for such services, taking into account
the fair interest rate for the use of the funds
by the bank or trust company, is not exces-
sive.
(3)Disqualified person defined.For
purposes of this paragraph (b), the term
disqualified personincludes each per-
son described in section 4951(e)(4) and
§53.4951–1(d).
(4)General banking services.The
general banking services allowed by para-
graph (b)(2)(vii) of this section are—
(i) Checking accounts, as long as the
bank does not charge interest on any over-
withdrawals;
(ii) Savings accounts, as long as the
fund may withdraw its funds on no more
than 30 days’ notice without subjecting it-
self to a loss of interest on its money for
the time during which the money was on
deposit; and
(iii) Safekeeping activities (see
§53.4941(d)–3(c)(2),Example 3,ofthis
chapter).
(c)Disqualification of nuclear decom-
missioning fund—(1)In general—(i)Dis-
qualification events. Except as otherwise
provided in paragraph (c)(2) of this sec-
tion, the IRS may, in its discretion, disqual-
ify all or any portion of a nuclear decom-
missioning fund if at any time during a tax-
able year of the fund—
(A) The fund does not satisfy the re-
quirements of paragraph (a) of this section;
or
(B) The fund and a disqualified person
engage in an act of self-dealing (as defined
in paragraph (b)(2) of this section).
(ii)Date of disqualification.(A)Ex-
cept as otherwise provided in this para-
graph (c)(1)(ii), the date on which a dis-
qualification under this paragraph (c) will
take effect (date of disqualification) is the
date that the fund does not satisfy the re-
quirements of paragraph (a) of this section
or the date on which the act of self-dealing
occurs, whichever is applicable.
(B) If the IRS determines, in its discre-
tion, that the disqualification should take
effect on a date subsequent to the date
specified in paragraph (c)(1)(ii)(A) of this
section, the date of disqualification is such
subsequent date.
(iii)Notice of disqualification.TheIRS
will notify the electing taxpayer of the dis-
qualification of a nuclear decommission-
ing fund and the date of disqualification
by registered or certified mail to the last
known address of the electing taxpayer
(the notice of disqualification). For fur-
ther guidance regarding the definition of
last known address, see §301.6212–2 of
this chapter.
(2)Exception to disqualification—(i)In
general. A nuclear decommissioning fund
will not be disqualified under paragraph
(c)(1) of this section by reason of an excess
contribution or the withdrawal of such ex-
cess contribution by an electing taxpayer
if the amount of the excess contribution is
withdrawn by the electing taxpayer on or
before the date prescribed by law (includ-
ing extensions) for filing the return of the
February 14, 20114862011–7 I.R.B.

nuclear decommissioning fund for the tax-
able year to which the excess contribution
relates. In the case of an excess contribu-
tion that is the result of a payment made
pursuant to §1.468A–3(g)(1), a nuclear de-
commissioning fund will not be disquali-
fied under paragraph (c)(1) of this section
if the amount of the excess contribution is
withdrawn by the electing taxpayer on or
before the later of—
(A) The date prescribed by law (includ-
ing extensions) for filing the return of the
nuclear decommissioning fund for the tax-
able year to which the excess contribution
relates; or
(B) The date that is 30 days after the
date that the taxpayer receives the ruling
amount for such taxable year.
(ii)Excess contribution defined.For
purposes of this section, an excess con-
tribution is the amount by which cash
payments made (or deemed made) to a
nuclear decommissioning fund during any
taxable year exceed the payment limi-
tation contained in section 468A(b) and
§1.468A–2(b). The amount of a special
transfer permitted under §1.468A–8 is not
treated as a cash payment for this purpose.
(iii)Taxation of income attributable to
an excess contribution. The income of a
nuclear decommissioning fund attribut-
able to an excess contribution is required
to be included in the gross income of
the nuclear decommissioning fund under
§1.468A–4(b).
(3)Disqualification treated as distribu-
tion. If all or any portion of a nuclear
decommissioning fund is disqualified un-
der paragraph (c)(1) of this section, the
portion of the nuclear decommissioning
fund that is disqualified is treated as dis-
tributed to the electing taxpayer on the
date of disqualification. Such a distribu-
tion shall be treated for purposes of sec-
tion 1001 as a disposition of property held
by the nuclear decommissioning fund (see
§1.468A–4(c)(2)). In addition, the elect-
ing taxpayer must include in gross income
for the taxable year that includes the date
of disqualification an amount equal to the
fair market value of the distributable assets
of the nuclear decommissioning fund mul-
tiplied by the fraction of the nuclear de-
commissioning fund that was disqualified
under paragraph (c)(1) of this section. For
this purpose, the fair market value of the
distributable assets of the nuclear decom-
missioning fund is equal to the fair market
value of the assets of the fund determined
as of the date of disqualification, reduced
by—
(i) The amount of any excess contribu-
tion that was not withdrawn before the date
of disqualification if no deduction was al-
lowed with respect to such excess contri-
bution;
(ii) The amount of any deemed distri-
bution that was not actually distributed be-
fore the date of disqualification (as deter-
mined under §1.468A–2(d)(2)(iii)) if the
amount of the deemed distribution was in-
cluded in the gross income of the electing
taxpayer for the taxable year in which the
deemed distribution occurred; and
(iii) The amount of any tax that—
(A) Is imposed on the income of the
fund;
(B) Is attributable to income taken into
account before the date of disqualification
or as a result of the disqualification; and
(C) Has not been paid as of the date of
disqualification.
(4)Further effects of disqualification.
Contributions made to a disqualified fund
after the date of disqualification are not
deductible under section 468A(a) and
§1.468A–2(a), or, if the fund is disqual-
ified only in part, are deductible only to
the extent provided in the notice of dis-
qualification. In addition, if any assets of
the fund that are deemed distributed under
paragraph (c)(3) of this section are held by
the fund after the date of disqualification
(or if additional assets are acquired with
nondeductible contributions made to the
fund after the date of disqualification), the
income earned by such assets after the date
of disqualification must be included in the
gross income of the electing taxpayer (see
section 671) to the extent that such income
is otherwise includible under chapter 1 of
the Internal Revenue Code (Code). An
electing taxpayer can establish a nuclear
decommissioning fund to replace a fund
that has been disqualified in its entirety
only if the IRS specifically consents to
the establishment of a replacement fund
in connection with the issuance of an ini-
tial schedule of ruling amounts for such
replacement fund.
(d)Termination of nuclear decommis-
sioning fund upon substantial comple-
tion of decommissioning—(1)In general.
Upon substantial completion of the de-
commissioning of a nuclear power plant
to which a nuclear decommissioning fund
relates, such nuclear decommissioning
fund shall be considered terminated and
treated as having distributed all of its as-
sets on the date the termination occurs
(the termination date). Such a distribution
shall be treated for purposes of section
1001 as a disposition of property held by
the nuclear decommissioning fund (see
§1.468A–4(c)(2)). In addition, the elect-
ing taxpayer shall include in gross income
for the taxable year in which the termi-
nation occurs an amount equal to the fair
market value of the assets of the fund
determined as of the termination date, re-
duced by—
(i) The amount of any deemed distribu-
tion that was not actually distributed be-
fore the termination date if the amount of
the deemed distribution was included in
the gross income of the electing taxpayer
for the taxable year in which the deemed
distribution occurred; and
(ii) The amount of any tax that—
(A) Is imposed on the income of the
fund;
(B) Is attributable to income taken into
account before the termination date or as a
result of the termination; and
(C) Has not been paid as of the termi-
nation date.
(2)Additional rules. Contributions
made to a nuclear decommissioning
fund after the termination date are not
deductible under section 468A(a) and
§1.468A–2(a). In addition, if any assets
are held by the fund after the termination
date,theincomeearnedbysuchassets
after the termination date must be included
in the gross income of the electing tax-
payer (see section 671) to the extent that
such income is otherwise includible un-
der chapter 1 of the Code. Finally, under
§1.468A–2(e), an electing taxpayer us-
ing an accrual method of accounting is
allowed a deduction for nuclear decom-
missioning costs that are incurred during
any taxable year even if such costs are
incurred after substantial completion of
decommissioning (for example, expenses
incurred to monitor or safeguard the plant
site).
(3)Substantial completion of decom-
missioning and termination date.(i)The
substantial completion of the decommis-
sioning of a nuclear power plant occurs
on the date that the maximum acceptable
radioactivity levels mandated by the Nu-
clear Regulatory Commission with respect
2011–7 I.R.B.487February 14, 2011

to a decommissioned nuclear power plant
are satisfied (the substantial completion
date). Except as otherwise provided in
paragraph (d)(3)(ii) of this section, the sub-
stantial completion date is also the termi-
nation date.
(ii) If a significant portion of the total
estimated decommissioning costs with re-
spect to a nuclear power plant are not in-
curred on or before the substantial com-
pletion date, an electing taxpayer may re-
quest, and the IRS will issue, a ruling that
designates a date subsequent to the sub-
stantial completion date as the termination
date. The termination date designated in
the ruling will not be later than the last day
of the third taxable year after the taxable
year that includes the substantial comple-
tion date. The request for a ruling under
this paragraph (d)(3)(ii) must be filed dur-
ing the taxable year that includes the sub-
stantial completion date and must comply
with the procedural rules in effect at the
time of the request.
§1.468A–6 Disposition of an interest in a
nuclear power plant.
(a)In general. This section describes
the Federal income tax consequences of a
transfer of the assets of a nuclear decom-
missioning fund (Fund) within the mean-
ing of §1.468A–1(b)(4) in connection with
a sale, exchange, or other disposition by a
taxpayer (transferor) of all or a portion of
its qualifying interest in a nuclear power
plant to another taxpayer (transferee). This
section also explains how a schedule of
ruling amounts will be determined for the
transferor and transferee. For purposes of
this section, a nuclear power plant includes
a plant that previously qualified as a nu-
clear power plant and that has permanently
ceased to produce electricity.
(b)Requirements. This section applies
if—
(1) Immediately before the disposition,
the transferor maintained a Fund with re-
spect to the interest disposed of;
(2) Immediately after the disposition—
(i) The transferee maintains a Fund with
respect to the interest acquired;
(ii) The interest acquired is a qualify-
ing interest of the transferee in the nuclear
power plant;
(3) In connection with the disposition,
either—
(i) The transferee acquires part or all of
the transferor’s qualifying interest in the
plant and a proportionate amount of the as-
sets of the transferor’s Fund (all such assets
if the transferee acquires the transferor’s
entire qualifying interest in the plant) is
transferred to a Fund of the transferee; or
(ii) The transferee acquires the trans-
feror’s entire qualifying interest in the
plant and the transferor’s entire Fund is
transferred to the transferee; and
(4) The transferee continues to satisfy
the requirements of §1.468A–5(a)(1)(iii),
which permits an electing taxpayer to
maintain only one Fund for each plant.
(c)Tax consequences. A disposition
that satisfies the requirements of paragraph
(b) of this section will have the following
tax consequences at the time it occurs:
(1)The transferor and its Fund.(i)
Except as provided in paragraph (c)(1)(ii)
of this section, neither the transferor nor
the transferor’s Fund will recognize gain
or loss or otherwise take any income or
deduction into account by reason of the
transfer of a proportionate amount of the
assets of the transferor’s Fund to the trans-
feree’s Fund (or by reason of the transfer
of the transferor’s entire Fund to the
transferee). For purposes of §§1.468A–1
through 1.468A–9, this transfer (or the
transfer of the transferor’s Fund) will not
be considered a distribution of assets by
the transferor’s Fund.
(ii) Notwithstanding paragraph (c)(1)(i)
of this section, if the transferor has made
a special transfer under §1.468A–8 prior
to the transfer of the Fund or Fund as-
sets, any deduction with respect to that
special transfer allowable under section
468A(f)(2) for a taxable year ending af-
ter the date of the transfer of the Fund
or Fund assets (the unamortized special
transfer deduction) is allowed under sec-
tion 468A(f)(2)(C) for the taxable year
that includes the date of the transfer of
the Fund or Fund assets. If the taxpayer
transfers only a portion of its interest in a
nuclear power plant, only the correspond-
ing portion of the unamortized special
transfer deduction qualifies for the accel-
eration under section 468A(f)(2)(C).
(2)The transferee and its Fund. Neither
the transferee nor the transferee’s Fund
will recognize gain or loss or otherwise
take any income or deduction into account
by reason of the transfer of a proportionate
amount of the assets of the transferor’s
Fund to the transferee’s Fund (or by rea-
son of the transfer of the transferor’s
Fund to the transferee). For purposes
of §§1.468A–1 through 1.468A–9, this
transfer (or the transfer of the transferor’s
Fund) will not constitute a payment or a
contribution of assets by the transferee to
its Fund.
(3)Basis. Transfers of assets of a Fund
to which this section applies do not af-
fect basis. Thus, the transferee’s Fund will
have a basis in the assets received from the
transferor’s Fund that is the same as the ba-
sis of those assets in the transferor’s Fund
immediately before the disposition.
(d)Determination of proportionate
amount. For purposes of this section, a
transferor of a qualifying interest in a nu-
clear power plant is considered to transfer
a proportionate amount of the assets of
its Fund to a Fund of a transferee of the
interest if, on the date of the transfer of the
interest, the percentage of the fair market
value of the Fund’s assets attributable to
the assets transferred equals the percent-
age of the transferor’s qualifying interest
that is transferred.
(e)Calculation of schedule of rul-
ing amounts and schedule of deduction
amounts for dispositions described in this
section—(1)Transferor. If a transferor
disposes of all or a portion of its qualifying
interest in a nuclear power plant in a trans-
action to which this section applies, the
transferor’s schedule of ruling amounts
with respect to the interests disposed of
and retained (if any) and, if applicable,
the amount allowable as a deduction for a
special transfer under §1.468A–8 will be
determined under the following rules:
(i)Taxable year of disposition; ruling
amount. If the transferor does not file a
request for a revised schedule of ruling
amounts on or before the deemed payment
deadline for the taxable year of the trans-
feror in which the disposition of its interest
in the nuclear power plant occurs (that is,
the date that is two and one-half months af-
ter the close of that year), the transferor’s
ruling amount with respect to that plant for
that year will equal the sum of—
(A) The ruling amount contained in
the transferor’s current schedule of ruling
amounts with respect to that plant for that
taxable year multiplied by the portion of
the qualifying interest that is retained (if
any); and
February 14, 20114882011–7 I.R.B.

(B) The ruling amount contained in
the transferor’s current schedule of ruling
amounts with respect to that plant for that
taxable year multiplied by the product
of—
(1) The portion of the transferor’s qual-
ifying interest that is disposed of; and
(2) A fraction, the numerator of which
is the number of days in that taxable year
that precede the date of disposition, and
the denominator of which is the number of
days in that taxable year.
(ii)Taxable year of disposition; deduc-
tion under §1.468A–8. If the transferor has
elected to make a special transfer under
section 468A(f), the amount allowable as a
deduction under §1.468A–8 for the taxable
year in which it transfers a portion of its in-
terest in the nuclear plant is equal to the de-
duction amount for that taxable year from
its existing schedule of deduction amounts
multiplied by the percentage of its inter-
est that it retains. This deduction is in ad-
dition to the deduction described in para-
graph (c)(1)(ii) of this section.
(iii)Taxable years after the year of
disposition. A transferor that retains a
qualifying interest in a nuclear power
plant must file a request for a revised
schedule of ruling amounts (and, if ap-
plicable, a revised schedule of deduc-
tion amounts) with respect to that in-
terest on or before the deemed payment
deadline for the first taxable year of the
transferor beginning after the disposi-
tion. See §§1.468A–3(f)(1)(ii)(B) and
1.468A–8(c)(3). If the transferor does
nottimelyfilesucharequest,thetrans-
feror’s ruling amount and the transferor’s
deduction amount under §1.468A–8 with
respect to that interest for the affected year
or years will be zero, unless the Internal
Revenue Service (IRS) waives the appli-
cation of this paragraph (e)(1)(iii) upon a
showing of good cause for the delay.
(2)Transferee. If a transferee acquires
all or a portion of a transferor’s qualify-
ing interest in a nuclear power plant in a
transaction to which this section applies,
the transferee’s schedule of ruling amounts
with respect to the interest acquired will be
determined under the following rules:
(i)Taxable year of disposition.Ifthe
transferee does not file a request for a
schedule of ruling amounts on or before
the deemed payment deadline for the tax-
able year of the transferee in which the
disposition occurs (that is, the date that is
two and one-half months after the close of
that year), the transferee’s ruling amount
with respect to the interest acquired in the
nuclear power plant for that year is equal
to the amount contained in the transferor’s
current schedule of ruling amounts for that
plant for the taxable year of the transferor
in which the disposition occurred, multi-
plied by the product of—
(A) The portion of the transferor’s qual-
ifying interest that is transferred; and
(B) A fraction, the numerator of which
is the number of days in the taxable year of
the transferor including and following the
date of disposition, and the denominator of
which is the number of days in that taxable
year.
(ii)Taxable years after the year of
disposition. A transferee of a qualifying
interest in a nuclear power plant must file
a request for a revised schedule of ruling
amounts with respect to that interest on
or before the deemed payment deadline
for the first taxable year of the trans-
feree beginning after the disposition. See
§1.468A–3(f)(1)(ii)(B). If the transferee
does not timely file such a request, the
transferee’s ruling amount with respect to
that interest for the affected year or years
will be zero, unless the IRS waives the ap-
plication of this paragraph (e)(2)(ii) upon
a showing of good cause for the delay.
(3)Examples. The following examples
illustrate the provisions of this paragraph
(e):
Example 1. (i) X Corporation is a calendar year
taxpayer engaged in the sale of electric energy gen-
erated by a nuclear power plant. The plant is owned
entirely by X. On May 27, 2010, X transfers a 60-per-
cent qualifying interest in the plant to Y Corpora-
tion, a calendar year taxpayer. Before the transfer, X
had received a schedule of ruling amounts containing
an annual ruling amount of $10 million for the tax-
able years 2005 through 2025. For 2010, neither X
nor Y files a request for a revised schedule of ruling
amounts.
(ii) Under paragraph (e)(1)(i) of this section,
X’s ruling amount for 2010 is calculated as fol-
lows: ($10,000,000 x .40) + ($10,000,000 x .60 x
146/365)=$6,400,000. Under paragraph (e)(2)(i) of
this section, Y’s ruling amount for 2010 is calculated
as follows: $10,000,000 x .60 x 219/365=$3,600,000.
Under paragraphs (e)(1)(iii) and (e)(2)(ii) of this sec-
tion, X and Y must file requests for revised schedules
of ruling amounts by March 15, 2012.
Example 2. Y Corporation, the sole owner of a
nuclear power plant, is a calendar year taxpayer. In
year 1, Y elects to make a special transfer under sec-
tion 468A(f)(1) to the nuclear decommissioning fund
Y maintains with respect to the plant. The amount of
the special transfer is $100x, and the remaining useful
life of the plant is 20 years. Y obtains a schedule of
deduction amounts under §1.468A–8T(c) permitting
a $5x deduction each year over the 20-year remain-
ing useful life, and deducts$5x of the special transfer
amount in year 1, year 2, year 3, and year 4. On the
first day of year 5, Y transfers a 25% interest in the
plant to an unrelated party. Under paragraph (c)(1)(ii)
of this section, Y may deduct in Year 5 the unamor-
tized special transfer deduction corresponding to the
portion of the plant transferred (25 percent of $80x
or $20x). In addition, under paragraph (e)(1)(ii) of
this section, Y may deduct the portion of the deduc-
tion amount for year 5 from the schedule of deduction
amounts corresponding to its retained interest in the
plant (75 percent of $5x or $3.75x). Pursuant to para-
graph (e)(1)(iii) of this section, Y must file a request
for a revised schedule of ruling amounts by March 15
of year 7.
(f)Anti-abuse provision.TheIRSmay
treat a disposition as satisfying the require-
ments of this section if the IRS determines
that this treatment is necessary or appro-
priate to carry out the purposes of section
468A and §§1.468A–1 through 1.468A–9.
§1.468A–7 Manner of and time for making
election.
(a)In general. An eligible taxpayer is
allowed a deduction for the taxable year
in which the taxpayer makes a cash pay-
ment (or is deemed to make a cash pay-
ment) to a nuclear decommissioning fund
or for a special transfer under §1.468A–8
only if the taxpayer elects the application
of section 468A. A separate election is re-
quired for each nuclear decommissioning
fund and for each taxable year with respect
to which payments are to be deducted un-
der section 468A or a special transfer is
made under §1.468A–8. In the case of an
affiliated group of corporations that join in
the filing of a consolidated return for a tax-
able year, the common parent must make a
separate election on behalf of each mem-
ber whose payments to a nuclear decom-
missioning fund during such taxable year
are to be deducted under section 468A and
each member that makes a special trans-
fer under §1.468A–8 with respect to such
year. The election under section 468A for
any taxable year is irrevocable and must
be made by attaching a statement (Elec-
tion Statement) and a copy of the schedule
of ruling amounts provided pursuant to the
rules of §1.468A–3 to the taxpayer’s Fed-
eral income tax return (or, in the case of an
affiliated group of corporations that join in
the filing of a consolidated return, the con-
solidated return) for such taxable year. The
return to which the Election Statement and
a copy of the schedule of ruling amounts
2011–7 I.R.B.489February 14, 2011

is attached must be filed on or before the
time prescribed by law (including exten-
sions) for filing the return for the taxable
year with respect to which payments are to
be deducted under section 468A.
(b)Required information. The Election
Statement must include the following in-
formation:
(1) The legend “Election Under Section
468A” typed or legibly printed at the top of
the first page.
(2) The electing taxpayer’s name, ad-
dress and taxpayer identification number
(or, in the case of an affiliated group of cor-
porations that join in the filing of a consol-
idated return, the name, address and tax-
payer identification number of each elect-
ing taxpayer).
(3) The taxable year for which the elec-
tion is made.
(4) For each nuclear decommissioning
fund for which an election is made—
(i) The name and location of the nuclear
power plant to which the fund relates;
(ii) The name and employer identifica-
tion number of the nuclear decommission-
ing fund;
(iii) The total amount of actual cash
payments made to the nuclear decommis-
sioning fund during the taxable year that
were not treated as deemed cash payments
under §1.468A–2(c)(1) for a prior taxable
year;
(iv) The total amount of cash payments
deemed made to the nuclear decommis-
sioning fund under §1.468A–2(c)(1) for
the taxable year;
(v) The total amount of any special
transfers (whether in cash or property)
made to the nuclear decommissioning fund
under §1.468A–8 during the taxable year
that were not treated as deemed transfers
under §1.468A–8(a)(4) for a prior taxable
year;
(vi) The total amount of any special
transfers (whether in cash or property)
deemed made to the nuclear decommis-
sioning fund under §1.468A–8(a)(4) for
the taxable year; and
(vii) For each item of property included
in the amounts described in paragraph
(b)(4)((v) or (vi) of this section, the amount
of the item of property and whether the
basis of the item of property is deter-
mined under §1.468A–8(b)(5)(iii)(A) or
§1.468A–8(b)(5)(iii)(B).
§1.468A–8 Special transfers to qualified
funds pursuant to section 468A(f).
(a)General rule—(1)In general.Un-
der section 468A(f), a taxpayer maintain-
ing a qualified nucleardecommissioning
fund with respect to a nuclear power plant
may transfer cash or property into the fund
(a special transfer). The special transfer
is not subject to the ruling amount limita-
tion in section 468A(b) and is not treated
as a cash payment for purposes of that
limitation. Thus, a taxpayer may, in the
same taxable year, pay the ruling amount
and make a special transfer into the fund.
A special transfer may be made in cash,
property, or both cash and property. The
amount of a special transfer (that is, the
amount of cash and the fair market value
of property transferred) may not exceed
the present value of the pre–2005 nonqual-
ifying amount of nuclear decommission-
ing costs with respect to the nuclear power
plant. The taxpayer is entitled to a deduc-
tion against income for a special transfer,
as described in paragraph (b) of this sec-
tion. A special transfer may not be made
to a nuclear decommissioning fund before
the first taxable year in which a deduction
amount is applicable to the nuclear decom-
missioning fund (see paragraph (c) of this
section).
(2)Pre–2005nonqualifying
amount—(i)In general. The present value
of the pre–2005 nonqualifying amount
of nuclear decommissioning costs with
respect to a nuclear power plant is the
amount equal to the pre–2005 nonqualify-
ing percentage of the present value of the
estimated future decommissioning costs
(as defined in §1.468A–1(b)(6)) with
respect to the nuclear power plant as of the
first day of the taxable year of the taxpayer
in which the special transfer is made or
deemed made (or a later date that is on or
before the date on which the special trans-
fer is expected to be made if the taxpayer
establishes to the satisfaction of the IRS
that the determination of present value as
of such date is reasonable and consistent
with the principles and provisions of this
section). For this purpose, the pre–2005
nonqualifying percentage for the plant is
100 percent reduced by the sum of—
(A) The qualifying percentage (within
the meaning of §1.468A–3(d)(4) as in ef-
fect on December 31, 2005) used in de-
termining the taxpayer’s last schedule of
ruling amounts for the nuclear decommis-
sioning fund under the law in effect before
the enactment of the Energy Policy Act of
2005 (that is, the percentage of the plant’s
total nuclear decommissioning costs that
were permitted to be funded through the
fund under the law in effect before the en-
actment of the Energy Policy Act of 2005);
and
(B) The percentage of decommission-
ing costs transferred in any previous spe-
cial transfer (that is, the amount transferred
as a percentage of the present value of the
estimated future costs of decommissioning
as of the first day of the taxable year in
which such previous transfer was made).
(ii)Pre–2005 nonqualifying amount
of transferee. Ifthereisatransferofa
nuclear decommissioning fund or part or
all of its assets and §1.468A–6 applies to
the transfer, the pre–2005 nonqualifying
amount determined with respect to the
transferee is equal to the pre–2005 non-
qualifying amount (or a proportionate part
of the pre–2005 nonqualifying amount)
that would have been determined with re-
spect to the transferor but for such transfer.
(3)Transfers in multiple years.Atax-
payer making a special transfer is not
required to transfer the entire eligible
amount in a single year. The requirements
of paragraph (c) of this section apply sep-
arately to each year in which a special
transfer is made. In calculating the amount
of any subsequent transfer, the taxpayer
must reduce the pre–2005 nonqualifying
percentage under paragraph (a)(2) of this
section to take into account all previous
transfers. For example, if a taxpayer has
a pre–2005 nonqualifying percentage of
40 percent, and transfers half of the el-
igible amount in a special transfer, any
subsequent transfer must be calculated
on the basis of a pre–2005 nonqualifying
percentage of 20 percent.
(4)Deemed payment rules—(i)In gen-
eral. The amount of any special transfer
(whether in cash or property) described in
§1.468A–8 and made by an electing tax-
payer to a nuclear decommissioning fund
on or before the 15th day of the third cal-
endar 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 in-
come tax return for such taxable year or,
February 14, 20114902011–7 I.R.B.

in the case of special transfers described in
paragraph (a)(4)(ii) of this section, on an
amended return for such taxable year (see
§1.468A–7(b)(4)(v) and (vi) for rules re-
lating to such designation).
(ii)Special rule for certain special
transfers. Special transfers that the elect-
ing taxpayer designates as relating to a
taxable year beginning after December 31,
2005, and ending before January 1, 2010,
whichareactuallymadewithin90days
after the electing taxpayer receives a
ruling from the Secretary relating to the
special transfer are deemed made during
the taxable year designated as the year to
which the special transfer relates.
(b)Deduction for amounts trans-
ferred—(1)In general. (i) Except as
provided in this paragraph (b), the deduc-
tion for any special transfer is allowed
ratably over the remaining useful life of
the nuclear power plant. The amount of
the deduction for any taxable year is the
deduction amount for such year specified
in the schedule of deduction amounts re-
quired under paragraph (c) of this section.
(ii) For purposes of this paragraph (b),
the remaining useful life of the nuclear
power plant is the period beginning on the
first day of the taxable year during which
the transfer is made and ending on the last
day of the taxable year that includes the
last day of the estimated useful life of the
nuclear power plant. The last day of the
estimated useful life of the nuclear power
plant is determined for this purpose under
the rules of §1.468A–3(c)(2).
(2)Amount of deduction.(i)General
rule. Except as provided in this para-
graph (b)(2), the deduction for property
contributed in a special transfer is limited
to the lesser of the fair market value of the
property contributed or the taxpayer’s ba-
sis in that property.
(ii)Election—(A)In general.Ifthefair
market value of the property contributed
is less than the taxpayer’s adjusted basis
in such property as of the date the prop-
erty is contributed and the fund elects to
treat the fair market value of the property
as its adjusted basis in the property, the tax-
payer may deduct an amount equal to the
adjusted basis of the contributed property.
(B)Manner of making election.
The election described in paragraph
(b)(2)(ii)(A) of this section is made for
property contributedin a special transfer
by attaching a description of the property
and a statement that the fund is making an
election under §1.468A–8(b)(2)(ii) with
respect to the property to the return of
the fund for the taxable year in which the
property is contributed to the fund.
(C)Election allowed for property
transferred prior to December 23, 2010.
The election described in paragraph
(b)(2)(ii)(A) of this section may be made
and a deduction equalto adjusted basis
will be allowed for property contributed
in a special transfer prior to December 23,
2010. The election in such a case may be
made on an amended return of the fund for
the taxable year in which the property is
contributed to the fund and the transferor
may amend previously filed returns to
claim a deduction calculated by reference
to the adjusted basis of the property.
(3)Denial of deduction for previously
deducted amounts. If a deduction (other
than a deduction under section 468A)
has been allowed to the taxpayer (or a
predecessor) on account of expected de-
commissioning costs for a nuclear power
plant (a nonconforming deduction) or an
amount otherwise includible in income has
been excluded from the gross income of
the taxpayer (or a predecessor) on account
of such expected decommissioning costs
(a nonconforming exclusion), the deduc-
tion allowed for a special transfer to the
nuclear decommissioning fund maintained
with respect to the plant is reduced. In
the case of a single special transfer of the
full eligible amount, the reduction is equal
to the aggregate amount of all noncon-
forming deductions and nonconforming
exclusions. In the case of a transfer of less
than the full eligible amount, the reduc-
tion is a ratable portion of such aggregate
amount.
(4)Transfers of qualified nuclear de-
commissioning funds. (i) If a special trans-
fer is made to any qualified nuclear de-
commissioning fund, there is a subsequent
transfer of the fund or the assets of the fund
(a fund transfer), and §1.468–6 applies to
the fund transfer, any amount of the de-
duction under paragraph (b) of this section
allocable to taxable years ending after the
date of the fund transfer will be allowed
as a current deduction to the transferor for
the taxable year that includes the date of
the fund transfer. See §468A–6(c) for ad-
ditional rules concerning transfers of de-
commissioning funds, including the trans-
ferofaportionofthetaxpayer’sinterestin
a nuclear power plant. If a taxpayer trans-
fers only part of the fund or the fund’s as-
sets, the rules in this paragraph (b)(4) ap-
ply only to the corresponding portion of
the deduction under paragraph (b) of this
section.
(ii) If a deduction is allowed to the
transferor under paragraph (b)(4)(i) of this
section and the transferee is related to the
transferor, the Internal Revenue Service
(IRS) will not approve the transferee’s
schedule of ruling amounts for taxable
years beginning after the date of the trans-
fer unless the ruling amounts are deferred
in a manner that results in recapture of the
acceleration amount. For this purpose—
(A) The acceleration amount is the dif-
ference between the deduction allowed un-
der this paragraph (b)(4) and the present
value as of the beginning of the accelera-
tion period of the deductions that, but for
the transfer, would have been allowed un-
der this paragraph (b) for taxable years dur-
ing the acceleration period;
(B) The acceleration amount is recap-
tured if the aggregate present value of the
ruling amounts at the beginning of the ac-
celeration period is equal to the amount by
which the aggregate present value of the
ruling amounts that would have been ap-
proved but for this paragraph (b)(4)(ii) ex-
ceeds the acceleration amount;
(C) The acceleration period is the pe-
riod from the first day of the transferor’s
first taxable year beginning after the date
of the transfer until the end of the plant’s
remaining useful life;
(D) Present values will be determined
using the assumptions that are used in de-
termining the transferee’s first schedule of
ruling amounts; and
(E) A transferor and a transferee are re-
lated if their relationship is specified in
section 267(b) or section 707(b)(1) or they
are treated as a single taxpayer under sec-
tion 41(f)(1)(A) or (B).
(5)Special rules—(i)Gain or loss not
recognized on transfers to fund.Nogain
or loss will be recognized on any special
transfer.
(ii)Taxpayer basis in fund.Notwith-
standing any other provision of the Inter-
nal Revenue Code (Code) and regulations,
the taxpayer’s basis in the fund is not in-
creased by reason of the special transfer.
(iii)Fund basis in transferred prop-
erty—(A)In general. Except as provided
in paragraph (b)(5)(iii)(B) of this section,
2011–7 I.R.B.491February 14, 2011

the fund’s basis in any property transferred
in a special transfer is the same as the
transferor’s basis in the property immedi-
ately before the transfer.
(B)Basis in case of election.Ifafund
makes the election described in paragraph
(b)(2)(ii) of this section, the fund’s basis in
the property transferred is the fair market
value of the property on the date of trans-
fer.
(c)Schedule of deductions re-
quired—(1)In general. A taxpayer may
not make a special transfer to a quali-
fied nuclear decommissioning fund unless
the taxpayer requests from the IRS a
schedule of deduction amounts in con-
nection with such transfer. A schedule of
deduction amounts for a nuclear decom-
missioning fund (schedule of deduction
amounts) is a ruling (within the meaning
of §601.201(a)(2) of this chapter) spec-
ifying the annual deductions (deduction
amounts) that, over the taxable years in
the remaining useful life of the nuclear
power plant, will result in the deduction of
the entire amount of the special transfer.
Such a request may be combined with a
request for a schedule of ruling amounts
under §1.468A–3(a). In the case of a com-
bined request, the schedule of deduction
amounts requested under this paragraph
(c)(1) must be stated separately from the
schedule of ruling amounts requested un-
der §1.468A–3(a) and approval of the
schedule of deduction amounts under this
section will constitute a separate ruling.
A request for a schedule of deduction
amounts must comply with all provisions
of paragraph (d) of this section.
(2)Transfers in multiple taxable years.
A taxpayer making a special transfer in
more than one taxable year pursuant to
paragraph (a)(3) of this section must re-
quest a separate schedule of deduction
amounts in connection with each special
transfer. More than one schedule of deduc-
tion amounts can be requested in a single
ruling request to the Secretary and the
Secretary will provide, in a single ruling,
separate schedules of deduction amounts
for each of a series of special transfers
provided that each request for a separate
schedule of deduction amounts complies
with all requirements of this paragraph.
(3)Transfer of partial interest in fund.
If a taxpayer transfers part of a fund or a
fund’s assets and is allowed a deduction
under paragraph (b)(3) of this section, the
taxpayer must request a new schedule of
deduction amounts in connection with the
transfer.
(4)Special transfer permitted before re-
ceipt of schedule. Ifanelectingtaxpayer
has filed a timely request for a schedule
of deduction amounts in connection with
a special transfer for a taxable year and
does not receive the schedule of deduction
amounts before the deemed payment dead-
line for such taxable year, the taxpayer
may make a special transfer to the nuclear
decommissioning fund on the basis of the
special transfer amount proposed in the
taxpayer’s request. If the schedule of de-
duction amounts provided by the Secretary
is based on a special transfer amount that
differs from the special transfer amount
proposed in the taxpayer’s request, rules
similar to the rules of §1.468A–3(g)(2) and
(3) shall apply.
(d)Manner of requesting schedule of
deduction amounts—(1)In general.(i)In
order to receive a deduction amount for
any taxable year, a taxpayer must file a re-
quest for a schedule of deduction amounts
that complies with the requirements of this
paragraph (d), the applicable procedural
rules set forth in §601.201(e) of this chap-
ter (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 deduction amounts is required for each
nuclear decommissioning fund established
by a taxpayer (see §1.468A–5(a) for rules
relating to the number of nuclear decom-
missioning funds that a taxpayer can estab-
lish).
(iii) Except as provided by
§1.468A–5(a)(1)(iv) (relating to certain
unincorporated organizations that may be
taxable as corporations) and §1.468A–3
(relating to a request for a schedule of
ruling amounts), a request for a schedule
of deduction amounts must not contain
a request for a ruling on any other issue,
whether the issue involves section 468A
or another section of the 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
deduction 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) Except as provided in paragraph
(d)(1)(vi) of this section, the IRS will
not provide or revise a deduction amount
applicable to a taxable year in response
to a request for a schedule of deduction
amounts that is filed after the deemed
payment deadline date (as defined in
paragraph (a)(4) of this section) for such
taxable year.
(vi) For special transfers relating to tax-
able years beginning after December 31,
2005, and before January 1, 2010, the IRS
will not provide a deduction amount in re-
sponse to a request for a schedule of deduc-
tion amounts that is filed after February 22,
2011.
(vii) Except as provided in paragraph
(d)(1)(viii) of this section, a request for
a schedule of deduction amounts shall be
considered filed only if such request com-
plies substantially with the requirements of
this paragraph (d). In determining the date
when a request is filed, the principles of
sections 7502 and 7503 shall apply.
(viii) If a request does not comply sub-
stantially with the requirements of this
paragraph (d), the IRS will notify the
taxpayer of that fact. If the information
or materials necessary to comply sub-
stantially with the requirements of this
paragraph (d) 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 ef-
fort to provide the applicable information
or materials within 30 days after notifi-
cation 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 (d) are not
provided within 30 days after the notifica-
tion, the request will be considered filed on
the date that all information or materials
necessary to comply with the requirements
of this paragraph (d) are provided.
(2)Information required. A request for
a schedule of deduction amounts must con-
tain the following information:
February 14, 20114922011–7 I.R.B.

(i) The taxpayer’s name, address and
taxpayer identification number.
(ii) Whether the request is for an initial
schedule of deduction amounts or a sched-
ule of deduction amounts for a subsequent
special transfer.
(iii) The name and location of the nu-
clear power plant with respect to which
a schedule of deduction amounts is re-
quested.
(iv) A description of the taxpayer’s
qualifying interest in the nuclear power
plant and the percentage of such nuclear
power plant that the qualifying interest of
the taxpayer represents.
(v) The present value of the estimated
future decommissioning costs (as defined
in §1.468A–1(b)(6)) with respect to the
taxpayer’s qualifying interest in the nu-
clear power plant as of the first day of the
taxable year of the taxpayer in which a
transfer is made under this section.
(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 re-
moval/dismantlement, safe storage en-
tombment with delayed dismantlement,
or safe storage mothballing with delayed
dismantlement).
(B) The estimated year in which sub-
stantial decommissioning costs will first
be incurred.
(C) The estimated year in which the
decommissioning of the nuclear power
plant will be substantially complete (see
§1.468A–5(d)(3) for a definition of sub-
stantial completion of decommissioning).
(D) The total estimated cost of decom-
missioning 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 decom-
missioning 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 para-
graph (d)(2)(vi)(B) ofthis section (the es-
timated year in which substantial decom-
missioning costs will first be incurred) and
ends with the year specified in paragraph
(d)(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 decom-
missioning expressed in future dollars.
(G) A description of the methodology
used in converting the estimated cost of de-
commissioning expressed in current dol-
lars to the estimated cost of decommission-
ing 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 de-
commissioning costs.
(vii) The taxpayer’s pre–2005 nonqual-
ifying percentage (as defined in paragraph
(a)(2) of this section).
(viii) The estimated useful life of the
nuclear power plant (as such term is de-
fined in paragraph (b)(1)(ii) or (iii) of this
section).
(ix) If the request is for a subse-
quent schedule of deduction amounts, the
amount of the previous special transfer
and the present value of the estimated
future decommissioning costs (as defined
in §1.468A–1(b)(6)) with respect to the
taxpayer’s qualifying interest in the nu-
clear power plant as of the first day of the
taxable year of the taxpayer in which the
previous special transfer was made.
(x) If the request is for a subsequent
schedule of deduction amounts, a copy of
all schedules of deduction amounts that re-
late to the nuclear power plant to which the
request relates and that were previously is-
sued to the taxpayer making the request.
(xi) If the request for a schedule of de-
duction amounts contains a request, pur-
suant to §1.468A–5(a)(1)(iv), that the IRS
rule whether an unincorporated organiza-
tion 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.
(xii) Any other information required by
the IRS that may be necessary or useful
in determining the schedule of deduction
amounts.
(3)Statement required. A taxpayer re-
questing a schedule of deduction amounts
under this paragraph (d) must submit a
statement that any nonconforming deduc-
tions and nonconforming exclusions have
reduced the deduction allowed for the spe-
cial transfer in accordance with paragraph
(b)(2) of this section.
(4)Administrative procedures.TheIRS
may prescribe administrative procedures
that supplement the provisions of para-
graphs (d)(1) and (2) of this section. In ad-
dition, the IRS may, in its discretion, waive
the requirements of paragraphs (d)(1) and
(2) of this section under appropriate cir-
cumstances.
§1.468A–9 Effective/applicability date.
Sections 1.468A–1 through 1.468A–8
are effective on December 23, 2010 and
apply with respect to taxable years end-
ing after such date. Special rules that are
provided for taxableyearsendingonor
before such date, such as the special rule
for certain special transfers contained in
§1.468A–8(a)(4)(ii), apply with respect to
such taxable years. In addition, a taxpayer
may apply the provisions of §§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.
PART 602—OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION
ACT
Par. 4. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 5. In §602.101, paragraph (b) is
amended as follows:
1. The following entries to the table are
removed:
§602.101 OMB Control numbers.
*****
(b) * * *
2011–7 I.R.B.493February 14, 2011

CFR part or section where
identified and described
Current OMB
Control No.
*****
1.468A–3T...........................................................
1545–1269
1545–1378
1545–1511
*****
1.468A–4T...........................................................
1545–0954
*****
1.468A–7T...........................................................
1545–0954
1545–1511
*****
1.468A–3T(h),
1.468A–7T, and
1.468A–8T(d)
...........................................................
1545–2091
*****
2. The following entries are revised in
the table:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
Control No.
*****
1.468A–7...........................................................
1545–0954
1545–1511
*****
3. The following entry is added in nu-
merical order to the table:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
Control No.
*****
1.468A–3(h), 1.468A–7,
and 1.468A–8(d)
...........................................................
1545–2091
*****
Steven T.
Miller,
Deputy Co
mmissioner for
Services
and Enforcement.
Approved
November 1, 2010.
Michael M
undaca,
Assistan
t Secretary of
the Treas
ury(TaxPolicy).
(Filed by
the Office of the Federal Register on December 22,
2010, 8:45 a.m., and published in the issue of the Federal
Register for December 23, 2010, 75 F.R. 80697)
February 14, 20114942011–7 I.R.B.

Section 863.—Special
Rules for Determining
Source
26 CFR 1.863–10T: Source of income from a quali-
fied fails charge (temporary).
T.D. 9508
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Source of Income from
Qualified Fails Charges
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary Regulations.
SUMMARY: This document contains
temporary regulations which set forth the
source of income attributable to qualified
fails charges. The temporary regulations
provide guidance about the treatment of
fails charges for purposes of sections
871 and 881, which generally require
gross-basis taxation of foreign persons
not otherwise subject to U.S. net-basis
taxation and the withholding of such tax
under sections 1441 and 1442. The text
of the temporary regulations also serves
as the text of the proposed regulations
(REG–132724–10) set forth in the notice
of proposed rulemaking on this subject in
this issue of the Bulletin.
DATES:Effective Date:These regulations
are effective on December 8, 2010.
Applicability Date:These regulations
apply to qualified fails charges paid or ac-
crued on or after December 8, 2010.
FOR FURTHER INFORMATION
CONTACT: Sheila Ramaswamy or
Anthony J. Marra, Office of Associate
Chief Counsel (International) (202)
622–3870 (not a toll free call).
SU
PPLEMENTARY INFORMATION:
Background
In response to persistent delivery fail-
ures in delivery-versus-payment transac-
tions involving U.S. Treasury securities
(Treasury securities), a trading practice
governing failed deliveries of Treasury
securitieswaspublishedin2008bythe
Treasury Market Practices Group (TMPG)
and the Securities Industry and Financial
Markets Association (SIFMA). This trad-
ing practice, which was recommended by
the Federal Reserve Bank of New York
in addition to TMPG and SIFMA, has
subsequently been voluntarily adopted by
almost every participant in the Treasury se-
curities market. Transactions that involve
delivery-versus-payment include a sale,
a purchase, a sale and repurchase trans-
action (commonly known as a “repo”),
a securities lending transaction, and an
option.
The trading practice addresses the prob-
lem that in certain situations, including
a low interest rate environment, a party
to a delivery-versus-payment transaction
may lack the economic incentive to de-
liver Treasury securities in a timely man-
ner. Under the trading practice, the parties
to a contract that provides for delivery-ver-
sus-payment of Treasury securities agree
that if one party fails to deliver Treasury
securities at the time specified in the con-
tract, the failing party will pay an amount
(a “fails charge”) to the party entitled to
receive the Treasury securities. The fails
charge is calculated using a formula that
takes into account current interest rates and
trade proceeds, and accrues each day that
the failure to deliver continues. The trad-
ing practice is generally expected to im-
pose a fails charge whenever the interest
rate on a repo that can be settled with any
of a variety of securities (referred to in
the market as the “general collateral rate”)
falls below a certain level.
As noted in this preamble, the deliv-
ery-versus-payment market encompasses
a variety of transactions, each of which
can generate a fails charge. Some transac-
tions, such as a repo, where delivery is re-
quired both at inception and at settlement,
can produce more than one fails charge.
In back-to-back transactions, it can also be
difficult to determine whether a party that
incurs a fails charge is acting as an inter-
mediary or a principal. As a result, there
is considerable uncertainty about the treat-
ment of fails charges for purposes of sec-
tions 871 and 881, which generally impose
gross-basis taxation at a rate of 30 percent
on certain U.S. source income of foreign
persons that is not effectively connected
with the conduct of a trade or business in
the United States and the withholding of
such tax under sections 1441 and 1442.
Notice 2009–61, 2009–32 I.R.B. 181,
issued in July, 2009, addressed the issue
temporarily by providing that the Internal
Revenue Service (IRS) will not challenge
the position taken by a taxpayer or a with-
holding agent that a fails charge that is paid
on or before December 31, 2010 is not
subject to U.S. gross-basis taxation. No-
tice 2009–61 further announced that the
Treasury Department and the IRS were
considering issuing prospective guidance
on the circumstances, if any, that would
cause a fails charge to be subject to U.S.
gross-basis taxation. These temporary reg-
ulations provide further guidance on the
treatment of fails charges. The text of the
temporary regulations also serves as the
text of the proposed regulations set forth in
the notice of proposed rulemaking on this
subject in this issue of the Bulletin. See
§601.601(d)(2).
Explanation of Provisions
In order to provide certainty and consis-
tency in the treatment of fails charges for
purposes of sections 871, 881, 1441 and
1442, these temporary regulations estab-
lish source rules for qualified fails charges
that arise in the delivery-versus-payment
market for Treasury securities. The tem-
porary regulations provide that the source
of income from a qualified fails charge
is generally determined by reference to
the residence of the taxpayer that is the
recipient of the qualified fails charge in-
come, with two exceptions. Qualified fails
charge income earned by a qualified busi-
ness unit (QBU) of a taxpayer is sourced
to the country in which the QBU is en-
gaged in a trade or business, and quali-
fied fails charge income that arises from a
transaction that is effectively connected to
a United States trade or business is sourced
in the United States and treated as effec-
tively connected to the conduct of a United
States trade or business.
The temporary regulations provide a
source rule only for income from a quali-
fied fails charge. In order to be a qualified
fails charge, the fails charge must satisfy
two requirements. First, it must be paid
pursuant to a trading practice or similar
guidance approved by a U.S. government
agency or the Treasury Market Practices
Group (which is sponsored by the Federal
2011–7 I.R.B.495February 14, 2011

Reserve Bank of New York), or published
in separate guidance by the IRS. Second,
the transaction that generates the fails
charge must be with respect to a bill, note,
or other evidence of indebtedness issued
by the United States Treasury Depart-
ment. These temporary regulations do not
address the source of any other type of
damages payment, including a fails charge
that is not a qualified fails charge.
Although there is not currently a fails
charge trading practice relating to secu-
rities other than Treasury securities, one
may be considered in the future for agency
securities (including mortgage-backed se-
curities). If a fails charge trading practice
pertaining to agencysecurities is endorsed
by the Treasury Market Practices Group or
an agency of the United States government
and widely adopted, the Treasury Depart-
ment and the IRS will consider whether
fails charges paid with respect to such a
trading practice should be sourced under
these regulations.
Effective/Applicability Date
These regulations apply to qualified
fails charges paid or accrued on or after
December 8, 2010.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations, and
because these regulations do not impose
a collection of information on small enti-
ties, the provisions of the Regulatory Flex-
ibility Act (5 U.S.C. chapter 6) do not ap-
ply. Pursuant to section 7805(f) of the
Internal Revenue Code, these temporary
regulations will be submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small business.
Drafting Information
The principal authors of these reg-
ulations are Sheila Ramaswamy and
Anthony J. Marra, Office of the Associate
Chief Counsel (International). However,
other persons from the Office of Associate
Chief Counsel (International) and the
Treasury Department have participated in
their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1— INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 863(a) and 7805
***
Par. 2. Section 1.863–10T is added to
read as follows:
§1.863–10T Source of income from a
qualified fails charge (temporary).
(a)In general. Unless paragraph (b) or
(c) of this section applies, the source of in-
come from a qualified fails charge shall be
determined by reference to the residence of
the taxpayer as determined under section
988(a)(3)(B)(i).
(b)Qualified business unit exception.
The source of income from a qualified fails
charge shall be determined by reference to
the residence of a qualified business unit
of a taxpayer if—
(1) The taxpayer’s residence, deter-
mined under section 988(a)(3)(B)(i), is the
United States;
(2) The qualified business unit’s
residence, determined under section
988(a)(3)(B)(ii), is outside the United
States;
(3) The qualified business unit is en-
gaged in the conduct of a trade or business
in the country where it is a resident; and
(4) The transaction to which the qual-
ified fails charge relates is attributable to
the qualified business unit. A transaction
will be treated as attributable to a qualified
business unit if it satisfies the principles of
§1.864–4(c)(5)(iii) (substituting “qualified
business unit” for “U.S. office”).
(c)Effectively connected income excep-
tion. Income from a qualified fails charge
that arises from a transaction that under the
principles described in §1.864–4(c) is ef-
fectively connected with a United States
trade or business shall be sourced in the
United States and the income from the
qualified fails charge shall be treated as
effectively connected to the conduct of a
United States trade or business to the same
extent as the transaction from which it
arises.
(d)Definitions.—(1)Qualified fails
charge. For purposes of this section, a
qualified fails charge is a payment that
(i) Compensates a party to a transaction
that provides for delivery of a Treasury
security in exchange for the payment of
cash (delivery-versus-payment settlement)
for another party’s failure to deliver the
specified Treasury security on the settle-
ment date specified in the relevant agree-
ment; and
(ii) Is made pursuant to:
(A) A trading practice or similar guid-
ance approved or adopted by either an
agency of the United States government or
the Treasury Market Practices Group, or
(B) Any trading practice, program, pol-
icyorprocedureapprovedbytheCommis-
sioner in guidance published in the Internal
Revenue Bulletin.
(2)Treasury security. For purposes of
this section, a Treasury security is any bill,
note, or other evidence of indebtedness is-
sued by the United States Treasury Depart-
ment.
(e)Effective/applicability date.This
section applies to qualified fails charges
paid or accrued on or after December 8,
2010.
(f)Expiration date. This section ex-
pires on December 6, 2013.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved December 2, 2010.
Michael Mundaca,
Assistant Secretary
of the Treasury.
(Filed by the Office of the Federal Register on December 7,
2010, 8:45 a.m., and published in the issue of the Federal
Register for December 8, 2010, 75 F.R. 76262)
February 14, 20114962011–7 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Relief for Tax Return
Preparers Who Have Pending
PTIN Applications
Notice 2011–11
All individuals who are compensated
for preparing, or assisting in the prepara-
tion of, all or substantially all of a tax re-
turn or claim for refund of tax must have a
preparer tax identification number (PTIN)
pursuant to section 1.6109–2. Notice
2011–6, 2011–3 I.R.B. 315, 316, provides
that, unless otherwise provided in Notice
2011–6 or other guidance, all tax returns,
claims for refund, and other tax forms
submitted to the IRS are considered tax
returns or claims for refund for purposes
of section 1.6109–2. The IRS expects tax
return preparers to comply with the new
requirement to obtain a preparer tax iden-
tification number as soon as possible. Tax
return preparers who use the new online
application system available through the
IRS website athttp://www.irs.gov/taxpros
generally will receive their PTIN number
when the application process has been
completed. The IRS estimates that tax re-
turn preparers who apply for a PTIN using
the paper Form W–12,IRSPaidPreparer
Tax Identification Number (PTIN) Appli-
cation, generally will receive their PTIN
four to six weeks after the application and
payment is received.
The IRS recognizes, however, that
some tax return preparers are experiencing
or may experience difficulty in obtaining a
PTIN. If tax return preparers using the on-
line system are unsuccessful in obtaining a
PTIN, the IRS system will notify them that
their application was not processed and
provide appropriate instructions. Com-
plying with these instructions prior to the
preparation of a tax return or claim for
refund for compensation will establish
that these individuals are making a good
faith effort to comply with the new PTIN
requirement.
Taxreturnpreparerswhoappliedfor
a PTIN using paper Form W–12 prior to
the date of publication of this notice in
the Internal Revenue Bulletin and have not
received a PTIN generally will receive a
PTIN or an acknowledgment of receipt of
the PTIN application within six weeks of
the IRS’ receipt of the PTIN application
or within six weeks of the date of pub-
lication of this notice, whichever is later.
Tax return preparers who apply for a PTIN
using paper Form W–12 after the date of
this notice generally will receive a PTIN
or an acknowledgment of receipt of the
PTIN application within six weeks from
the date the application is submitted. For
individuals who do not attempt to submit a
PTIN application via the online system, the
submission of a processable paper Form
W–12 and payment generally constitutes a
good faith attempt to comply with the re-
quirement to obtain a PTIN.
Accordingly, the IRS will permit any
tax return preparer receiving (1) notice
from the IRS that the IRS was unable to
process their online PTIN application or
(2) an acknowledgment of receipt of the
paper PTIN application to prepare and
file tax returns or claims for refund for
compensation after the tax return preparer
complies with all instructions provided in
the notification or acknowledgment letter.
These tax return preparers may use a PTIN
issued before September 28, 2010 (or their
social security number if the tax return
preparer does not have a previously issued
PTIN), as their preparer tax identification
number during the 2011 filing season or
until they receive a new PTIN, whichever
is earlier. Once a new PTIN is obtained,
the new PTIN must be used. Tax return
preparers who rely on the relief provided
by this notice to prepare tax returns or
claims for refund for compensation will
be required to pay the $64.25 PTIN appli-
cation fee for the 2011 filing season even
though the processing of the application
may be delayed. Payment must be sub-
mitted as instructed by the IRS. Tax return
preparers who rely on the relief provided
by this notice are required to keep a copy
of the notification or acknowledgement
letter as documentation of their good faith
effort in the event that the preparer is con-
tacted by the IRS during the 2011 filing
season or in the future.
The relief provided for in this notice
only applies during the 2011 filing season
and does not apply to individuals who en-
gage in conduct that constitutes a willful
violation of the applicable duties and re-
strictions prescribed in Circular 230 or dis-
reputable conduct under section 10.51 of
Circular 230.
The principal author of this no-
tice is Matthew D. Lucey of the
Office of Associate Chief Counsel
(Procedure & Administration). For further
information regarding this notice, contact
Matthew D. Lucey at (202) 622–4940 (not
a toll-free call).
2011–7 I.R.B.497February 14, 2011

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking by
Cross-Refere
nce to
Temporary Re
gulations
Source of Inc
ome From
Qualified Fa
ils Charges
REG–132724–10
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tions.
SUMMARY: In this issue of the Bulletin,
the IRS and the Treasury Department are
issuing temporary regulations (T.D. 9508)
undersection863(a)oftheInternalRev-
enue Code. These regulations set forth the
source of income attributable to qualified
fails charges. This action is necessary to
provide guidance about the treatment of
fails charges for purposes of sections 871
and 881, which generally require gross-ba-
sis taxation of foreign persons not other-
wise subject to U.S. net-basis taxation and
the withholding of such tax under sections
1441 and 1442. The text of the temporary
regulations also serves as the text of these
proposed regulations.
DATES: Written or electronic comments
and requests for a public hearing must be
received by March 8, 2011.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR(REG–132724–10),
Room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may
be hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–132724–10),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW,
Washington, DC, or sent electronically,
via the Federal eRulemaking Portal
athttp://www.regulations.gov(IRS
REG–132724–10).
FOR
FURTHER INFORMATION
CON
TACT: Concerning the proposed
regulations,
Sheila Ramaswamy or An-
thony J. Marra
, Office of Associate Chief
Counsel (Inte
rnational) (202) 622–3870;
concerning su
bmissions of comments or a
request for a p
ublic hearing, Richard Hurst
at (202) 622–
7180.
Background a
nd Explanation of
Provisions
The temporar
y regulations published in
this issue of
the Bulletin provide guidance
for the treat
ment of fails charges for pur-
poses of sec
tions 871, 881, 1441 and 1442
by establis
hing source rules for qualified
fails charg
es that arise in the delivery-ver-
sus-paymen
t market for Treasury securi-
ties. The t
ext of those temporary regula-
tions also
serves as the text of these pro-
posed regu
lations. The preamble to the
temporary
regulations explains the tempo-
rary regu
lations and these proposed regu-
lations.
Special A
nalyses
It has bee
n determined that this notice
of propos
ed rulemaking is not a significant
regulato
ry action as defined in Executive
Order 128
66. Therefore, a regulatory as-
sessmen
t is not required. It has also been
determi
ned that section 553(b) of the Ad-
ministr
ative Procedure Act (5 U.S.C. chap-
ter5)do
es not apply to these regulations,
and beca
use these regulations do not im-
pose a c
ollection of information on small
entiti
es, the provisions of the Regulatory
Flexib
ility Act (5 U.S.C. chapter 6) do not
apply.
Pursuant to section 7805(f) of the
Intern
al Revenue Code, this notice of pro-
posed
rulemaking will be submitted to the
Chief
Counsel for Advocacy of the Small
Busin
ess Administration for comment on
its im
pact on small business.
Comme
nts and Requests for a Public
Heari
ng
Befor
e these proposed regulations are
adopt
ed as final regulations, considera-
tion
will be given to any written (a signed
orig
inal and eight (8) copies) or electronic
comm
ents that are submitted timely to the
IRS.
In addition to the specific requests
for c
omments made elsewhere in this pre-
amb
le or the preamble to the temporary
regulations,
the IRS and the Treasury De-
partment requ
est comments on the clarity
of the propose
d regulations and how they
can be made eas
ier to understand. A public
hearing may be
scheduled if requested in
writing by an
y person who timely submit-
ted written c
omments. If a public hearing
is scheduled
, notice of the date, time, and
place of the h
earing will be published in
theFederal
Register.
Drafting In
formation
The princip
al authors of these regula-
tions are Sh
eila Ramaswamy and Anthony
J. Marra, Of
fice of the Associate Chief
Counsel (In
ternational). However, other
persons fr
om the Office of Associate Chief
Counsel (I
nternational) and the Treasury
Departmen
t have participated in their de-
velopment
.
*****
Proposed Amendment to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1— INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 863(a) and 7805
***
Par. 2. Section 1.863–10 is added to
read as follows:
§1.863–10 Source of income from a
qualified fails charge.
[The text of proposed §1.863–10 is the
same as the text of §1.863–10T published
elsewhere in this issue of the Bulletin].
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed b
y the Office of the Federal Register on December 7,
2010, 8:45 a.m., and published in the issue of the Federal
Register for December 8, 2010, 75 F.R. 76321)
February 14, 20114982011–7 I.R.B.

Correction to Revenue
Procedure 2011–11;
Maximum Vehicle Values
Announcement 2011–9
Revenue Procedure 2011–11 as pub-
lished on January 24, 2011 (2011–4 I.R.B.
329) contains an error in Section 1. Pur-
pose. Revenue Procedure 2011–11 pro-
vides guidance for the maximum values
of employer-provided vehicles first made
available for personal use in calendar year
2011. This announcement corrects section
1.01 of Rev. Proc. 2011–11.
This correction clarifies that the maxi-
mum vehicle values set forth in Rev. Proc.
2011–11 are for the calendar year 2011.
Section 1.01 of Rev. Proc. 2011–11
now reads as follows:
This revenue procedure provides (1)
the maximum value of employer-pro-
vided vehicles first made available to
employees for personal use in calen-
dar year 2011 for which the vehicle
cents-per-mile valuation rule provided
under section 1.61–21(e) of the Income
Tax Regulations may be applicable is
$15,300 for a passenger automobile
and $16,200 for a truck or van; (2) the
maximum value of employer-provided
vehicles first made available to em-
ployees for personal use in calendar
year 2011 for which the fleet-average
valuation rule provided under section
1.61–21(d) of the regulations may be
applicable is $20,300 for a passenger
automobile and $21,200 for a truck or
van.
Drafting Information
The principal author of this announce-
ment is Don M. Parkinson of the Of-
fice of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities). For further information regard-
ing this announcement, please contact
Don M. Parkinson at (202) 622–6040 (not
a toll-free call).
Hybrid Retirement Plans;
Correction
Announcement 2011–10
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendment.
SUMMARY: This document contains cor-
rections to final regulations (T.D. 9505,
2010–48 I.R.B. 755) that were published
in theFederal Registeron Tuesday,
October 19, 2010 (75 FR 64123) providing
guidance relating to certain provisions of
the Internal Revenue Code that apply to
hybrid defined benefit pension plans.
DATES: This correction is effective on De-
cember 28, 2010, and is applicable on Oc-
tober 19, 2010.
FOR FURTHER INFORMATION
CONTACT:NeilS.Sandhu,
Lauson C. Green, or Linda S. F. Marshall
at (202) 622–6090 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations (T.D. 9505) that
are the subject of this document are under
section 411 of the Internal Revenue Code.
Need for Correction
As published, the final regulations
(T.D. 9505) contain errors that may prove
to be misleading and are in need of clarifi-
cation.
*****
Correction of Publication
Accordingly, 26 CFR part 1 is cor-
rected by making the following correcting
amendments:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.411(b)(5)–1 is
amended by:
1. Revising the paragraph (b)(1)(ii)(A).
2. Revising the first sentence of para-
graph (b)(1)(iv)Example 4.(iii).
3. Revising the first sentence of para-
graph (c)(5)Example 2.(iv).
4. Revising the third sentence of para-
graph (c)(5)Example 3.(i).
5. Revising the paragraph (d)(1)(iii).
6. Revising the first sentence of para-
graph (f)(2)(iii).
The revisions read as follows:
§1.411(b)(5)–1 Reduction in rate of
benefit accrual under a defined benefit
plan.
*****
(b) * * *
(1) * * *
(ii) * * * (A)In general. Except as
provided in paragraphs (b)(1)(ii)(B), (C),
and (D) of this section, the safe harbor
provided by section 411(b)(5)(A) and
paragraph (b)(1)(i) of this section is avail-
able with respect to an individual only if
the individual’s accumulated benefit un-
der the plan is expressed in terms of only
one safe-harbor formula measure and no
similarly situated, younger individual who
is or could be a participant has an accumu-
lated benefit that is expressed in terms of
any measure other than that same safe-har-
bor formula measure. Thus, for example,
if a plan provides that the accumulated
benefit of participants who are age 55 or
over is expressed under the terms of the
plan as a life annuity payable at normal
retirement age (or current age, if later) as
described in paragraph (b)(1)(i)(A) of this
section and the plan provides that the ac-
cumulated benefit of participants who are
younger than age 55 is expressed as the
current balance of a hypothetical account
as described in paragraph (b)(1)(i)(B) of
this section, then the safe harbor described
in section 411(b)(5)(A) and paragraph
(b)(1)(i) of this section does not apply to
individuals who are or could be partici-
pants who are age 55 or over.
*****
(iv)***
Example 4. ***
(iii) * * * If, instead of the facts in paragraph (i) of
thisExample 4, the plan had been amended to provide
only participants who have not yet attained age 55
by January 1, 2012, with a benefit that is the greater
of the benefit under the average annual compensation
formula and a benefit that is based on the balance of
a hypothetical account, then the safe harbor would
not be satisfied with respect to individuals who have
attained age 55 by January 1, 2012. * * *
*****
2011–7 I.R.B.499February 14, 2011

(c) * * *
(5)***
Example 2. ***
(iv) * * * The plan provides that, as of a partic-
ipant’s annuity starting date, the plan will determine
whether the benefit attributable to the opening hypo-
thetical account balance payable in the particular op-
tional form of benefit selected is equal to or greater
than the benefit accrued under the plan through the
date of conversion and payable in the same general-
ized optional form of benefit with the same annuity
startingdate. ***
****
Example 3.***(i)***Underthetermsof
Plan
E, the benefit attributable to A’s opening hypothetical
account balance is increased so that A’s straight life
annuity commencing on January 1, 2015
, is $1,000
per month. * * *
****
(d)***
(1)***
(iii)Market rate of return for single rates. Except
as otherwise provided in this paragraph (d)(1), an in-
terest crediting rate is not in excess of a market rate of
return only if the plan terms provide that the interest
credit for each plan year is determined using one of
the following specified interest crediting rates:
****
(f) * * *
(2)***
(iii) * * * For the periods after the statutory effec-
tive date set forth in paragraph (f)(1) of this section
and before the regulatory effective date set forth in
paragraph (f)(2)(i) of this section, the safe harbor and
other relief of section 411(b)(5) apply and the mar-
ket rate of return and other requirements of section
411(b)(5) must be satisfied. * * *
Guy R. Traynor,
Acting Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on December 27,
2010, 8:45 a.m., and published in the issue of the Federal
Register for December 28, 2010, 75 F.R. 81456)
Additional Rules Regarding
Hybrid Retirement Plans;
Correction
Announcement 2011–11
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to a notice of pro-
posed rulemaking.
SUMMARY: This document contains a
correction to a notice of proposed rulemak-
ing (REG–132554–08, 2010–48 I.R.B.
783) that was published in theFederal
Registeron Tuesday, October 19, 2010
(75 FR 64197) providing guidance relat-
ing to certain provisions of the Internal
Revenue Code that apply to hybrid defined
benefit pension plans.
FOR FURTHER INFORMATION
CONTACT:NeilS.Sandhu,
Lauson C. Green, or Linda S. F. Marshall
at (202) 622–6090 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The correction notice that is the subject
of this document is under section 411 of
the Internal Revenue Code.
Need for Correction
As published, the notice of proposed
rulemaking (REG–132554–08) contains
an error that may prove to be misleading
and is in need of clarification.
Correction of Publication
Accordingly, the publication of
the notice of proposed rulemaking
(REG–132554–08), which was the subject
of FR Doc. 2010–25942, is corrected as
follows:
§1.411(b)(5)–1 [Corrected]
On page 64214, column 3,
§1.411(b)(5)–1(e)(2)(iii)(A), line 19, the
language “change the rate of interest
crediting” is corrected to read “change the
interest crediting rate”.
Guy R. Traynor,
Acting Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on December 27,
2010, 8:45 a.m., and published in the issue of the Federal
Register for December 28, 2010, 75 F.R. 81543)
Correction to Revenue
Ruling 2011–3 — 2011
Covered Compensation
Tables; Permitted Disparity
Announcement 2011–16
Revenue Ruling 2011–3 as it appears
in the Internal Revenue Bulletin (IRB)
that was published on January 24, 2011
(2011–4 I.R.B. 326) contains a typo-
graphical error in Attachment I. The error
appears in the third column of Attachment
I that provides the 2011 Covered Com-
pensation Table II. The dollar amount in
column three for the 1966 Calendar Year
of Birth is $100,220; the correct dollar
amount for 1966 is $101,220. Revenue
Ruling 2011–3 as it appears in the IRB
has been corrected and can be accessed at
www.irs.gov.
Drafting Information
The principal author of this an-
nouncement is Kathleen Herrmann
of the Employee Plans, Tax Exempt
and Government Entities Division.
For further information regarding this
announcement, please contact the
Employee Plans taxpayer assistance
answering service at 1–877–829–5500 (a
toll-free number) or e-mail Ms. Herrmann
atRetirementPlanQuestions@irs.gov.
February 14, 20115002011–7 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2011–7 I.R.B.iFebruary 14, 2011

Numerical Finding List
1
Bulletin 2011–1 through 2011–7
Announcements:
2011-1, 2011-2 I.R.B.304
2011-2, 2011-3 I.R.B.324
2011-3, 2011-3 I.R.B.324
2011-4, 2011-4 I.R.B.424
2011-5, 2011-4 I.R.B.430
2011-6, 2011-4 I.R.B.433
2011-7, 2011-5 I.R.B.446
2011-8, 2011-5 I.R.B.446
2011-9, 2011-7 I.R.B.499
2011-10, 2011-7 I.R.B.499
2011-11, 2011-7 I.R.B.500
2011-16, 2011-7 I.R.B.500
Notices:
2011-1, 2011-2 I.R.B.259
2011-2, 2011-2 I.R.B.260
2011-3, 2011-2 I.R.B.263
2011-4, 2011-2 I.R.B.282
2011-5, 2011-3 I.R.B.314
2011-6, 2011-3 I.R.B.315
2011-7, 2011-5 I.R.B.437
2011-9, 2011-6 I.R.B.459
2011-10, 2011-6 I.R.B.463
2011-11, 2011-7 I.R.B.497
Proposed Regulations:
REG-149335-08, 2011-6 I.R.B.468
REG-124018-10, 2011-2 I.R.B.301
REG-132724-10, 2011-7 I.R.B.498
Revenue Procedures:
2011-1, 2011-1 I.R.B.1
2011-2, 2011-1 I.R.B.90
2011-3, 2011-1 I.R.B.111
2011-4, 2011-1 I.R.B.123
2011-5, 2011-1 I.R.B.167
2011-6, 2011-1 I.R.B.195
2011-7, 2011-1 I.R.B.233
2011-8, 2011-1 I.R.B.237
2011-9, 2011-2 I.R.B.283
2011-10, 2011-2 I.R.B.294
2011-11, 2011-4 I.R.B.329
2011-12, 2011-2 I.R.B.297
2011-13, 2011-3 I.R.B.318
2011-14, 2011-4 I.R.B.330
2011-15, 2011-3 I.R.B.322
2011-16, 2011-5 I.R.B.440
2011-17, 2011-5 I.R.B.441
2011-18, 2011-5 I.R.B.443
2011-19, 2011-6 I.R.B.465
Revenue Rulings:
2011-1, 2011-2 I.R.B.251
2011-2, 2011-2 I.R.B.256
2011-3, 2011-4 I.R.B.326
2011-4, 2011-6 I.R.B.448
Treasury Decisions:
9507, 2011-3 I.R.B.305
9508, 2011-7 I.R.B.495
9509, 2011-6 I.R.B.450
9510, 2011-6 I.R.B.453
9511, 2011-6 I.R.B.455
9512, 2011-7 I.R.B.473
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin
2010–52, dated December 27, 2010.
February 14, 2011ii2011–7 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2011–1 through 2011–7
Announcements:
85-88
Obsoleted by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
2008-11
Modified by
Ann. 2011-6, 2011-4 I.R.B.433
2009-62
Obsoleted by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
Notices:
2010-59
Modified by
Notice 2011-5, 2011-3 I.R.B.314
2010-71
Modified and superseded by
Notice 2011-9, 2011-6 I.R.B.459
2010-79
Clarified and modified by
Notice 2011-4, 2011-2 I.R.B.282
Proposed Regulations:
REG-132554-08
Corrected by
Ann. 2011-11, 2011-7 I.R.B.500
Revenue Procedures:
72-50
Modified and superseded by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
76-34
Modified and supersed by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
83-23
Modified and superseded by
Rev. Proc. 2011-15, 2011-3 I.R.B.322
94-17
Modified and superseded by
Rev. Proc. 2011-15, 2011-3 I.R.B.322
97-27
Clarified and modified by
Rev. Proc. 2011-4, 2011-1 I.R.B.330
2001-10
Modified by
Rev. Proc. 2011-4, 2011-4 I.R.B.330
Revenue Procedures— Continued:
2002-28
Modified by
Rev. Proc. 2011-4, 2011-4 I.R.B.330
2003-21
Modified and superseded by
Rev. Proc. 2011-15, 2011-3 I.R.B.322
2004-34
Modified by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
Modified and clarified by
Rev. Proc. 2011-18, 2011-5 I.R.B.443
2006-44
Modified by
Ann. 2011-6, 2011-4 I.R.B.433
2006-56
Modified by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
2008-52
Modified by
Notice 2011-4, 2011-2 I.R.B.282
Rev. Proc. 2011-17, 2011-5 I.R.B.441
Superseded in part by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
2009-39
Superseded in part by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
2009-44
Modified by
Ann. 2011-6, 2011-4 I.R.B.433
2010-1
Superseded by
Rev. Proc. 2011-1, 2011-1 I.R.B.1
2010-2
Superseded by
Rev. Proc. 2011-2, 2011-1 I.R.B.283
2010-3
Superseded by
Rev. Proc. 2011-3, 2011-1 I.R.B.111
2010-4
Superseded by
Rev. Proc. 2011-4, 2011-1 I.R.B.123
2010-5
Superseded by
Rev. Proc. 2011-5, 2011-1 I.R.B.167
2010-6
Superseded by
Rev. Proc. 2011-6, 2011-1 I.R.B.195
2010-7
Superseded by
Rev. Proc. 2011-7, 2011-1 I.R.B.233
Revenue Procedures— Continued:
2010-8
Superseded by
Rev. Proc. 2011-8, 2011-1 I.R.B.237
2010-9
Superseded by
Rev. Proc. 2011-9, 2011-2 I.R.B.283
2010-15
Updated by
Rev. Proc. 2011-13, 2011-3 I.R.B.318
2011-1
Corrected by
Ann. 2011-7, 2011-5 I.R.B.446
2011-8
Corrected by
Ann. 2011-8, 2011-5 I.R.B.446
2011-11
Corrected by
Ann. 2011-9, 2011-7 I.R.B.499
Revenue Rulings:
81-100
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2004-67
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2008-40
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2011-3
Corrected by
Ann. 2011-16, 2011-7 I.R.B.500
Treasury Decisions:
9505
Corrected by
Ann. 2011-10, 2011-7 I.R.B.499
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin 2010–52, dated December 27,
2010.
2011–7 I.R.B.iiiFebruary 14, 2011

February 14, 20112011–7 I.R.B.

INTERNAL REVENUE BULLETIN
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