[Code of Federal Regulations]
[Title 26, Volume 6]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.468A-6]

[Page 360-362]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 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 decommissioning 
fund (Fund) within the meaning of Sec. 1.468A-1(b)(3) 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.
    (b) Requirements. This section applies if--
    (1) Immediately before the disposition, the transferor maintained a 
Fund with respect to the interest disposed of; and
    (2) Immediately after the disposition--
    (i) The transferee maintains a Fund with respect to the interest 
acquired;
    (ii) The interest acquired is a qualifying interest of the 
transferee in the nuclear power plant;
    (iii) Either a proportionate amount (which could include all) of the 
assets of the transferor's Fund is transferred to a Fund of the 
transferee, or the transferor's entire Fund is transferred to the 
transferee, provided in the latter case (or if the transferee receives 
all of the assets in the transferor's Fund, but not the transferor's 
Fund) that the transferee acquires the transferor's entire qualifying 
interest in the plant; and
    (iv) The transferee continues to satisfy the requirements of Sec. 
1.468A-5(a)(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. 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 
transferee's Fund (or by reason of the transfer of the transferor's 
entire Fund to the transferee). For purposes of the regulations under 
section 468A, this transfer (or the transfer of the transferor's Fund) 
will not be considered a distribution of assets by the transferor's 
Fund.
    (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 reason of the transfer of the transferor's Fund 
to the transferee). For purposes of the regulations under section 468A, 
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 affect 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 basis 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 nuclear 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 that are transferred equals the percentage of the 
transferor's qualifying interest that is transferred.
    (e) Calculation of schedule of ruling 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 
accordance with this section, the transferor's schedule of ruling 
amounts with respect to the interests disposed

[[Page 361]]

of and retained (if any) will be determined in accordance with 
paragraphs (e)(1) (i) and (ii) of this section.
    (i) Taxable year of disposition. If a 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 transferor in which the 
disposition of its interest in the nuclear power plant occurs (that is, 
the date that is two and one-half months after 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
    (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 qualifying 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 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 with respect to that 
interest on or before the deemed payment deadline for the first taxable 
year of the transferor beginning after the disposition. See Sec. 
1.468A-3(i)(1)(ii)(B). If the transferor does not timely file such a 
request, the transferor's ruling amount with respect to that interest 
for the affected year or years will be zero, unless the Internal Revenue 
Service waives the application of this paragraph (e)(1)(ii) upon a 
showing of good cause for the delay.
    (2) Transferee. If a transferee acquires all or a portion of a 
transferor's qualifying interest in a nuclear power plant under this 
section, the transferee's schedule of ruling amounts with respect to the 
interest acquired will be determined under paragraphs (e)(2) (i) and 
(ii) of this section.
    (i) Taxable year of disposition. If a transferee does not file a 
request for a schedule of ruling amounts on or before the deemed payment 
deadline for the taxable 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 the amount 
described in the following sentence. This amount is 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, multiplied by the product of--
    (A) The portion of the transferor's qualifying 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 
transferee beginning after the disposition. See Sec. 1.468A-
3(i)(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 Internal Revenue Service 
waives the application of this paragraph (e)(2)(ii) upon a showing of 
good cause for the delay.
    (3) Example. The following example illustrates the provisions of 
this paragraph (e).

    Example. (i) X Corporation is a calendar year taxpayer engaged in 
the sale of electric energy generated by a nuclear power plant. The 
plant is owned entirely by X. On May 27, 1995, X transfers a 60 percent 
qualifying interest in the plant to Y Corporation, 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 
taxable years 1993 through

[[Page 362]]

2013. For 1995, 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 1995 is calculated as follows: ($10,000,000x40%) + 
($10,000,000x60%x146/365)=$6,400,000. Under paragraph (e)(2)(i) of this 
section, Y's ruling amount for 1995 is calculated as follows: 
$10,000,000x60%x219/365=$3,600,000. Under paragraphs (e)(1)(ii) and 
(e)(2)(ii) of this section, X and Y must file requests for revised 
schedules of ruling amounts by March 15, 1997.

    (f) Calculation of the qualifying percentage after dispositions 
described in this section--(1) In general. If a transferee acquires an 
interest in a nuclear power plant in a transaction that satisfies the 
requirements of this section, the transferee's qualifying percentage 
(within the meaning of Sec. 1.468A-3(d)(4)) for the interest acquired 
is the transferor's qualifying percentage for that interest immediately 
before the disposition. If the Internal Revenue Service has not approved 
a qualifying percentage for the transferor with respect to the interest 
transferred, the qualifying percentage for that interest is determined 
under Sec. 1.468A-3(d)(4).
    (2) Special rule. The Internal Revenue Service may, in its 
discretion, determine a qualifying percentage for an interest in a 
nuclear power plant acquired by a transferee on a basis other than the 
rule set forth in paragraph (f)(1) of this section if--
    (i) In connection with its first request for a schedule of ruling 
amounts after the disposition, the transferee requests special 
treatment, explains the need for such treatment, and sets forth an 
alternative basis for determining the qualifying percentage; and
    (ii) The Internal Revenue Service determines that the special 
treatment is consistent with the purposes of section 468A.
    (g) Other--(1) Anti-abuse provision. The Internal Revenue Service 
may treat a disposition occurring on or after December 27, 1994 as 
satisfying the requirements of this section if the Internal Revenue 
Service determines that this treatment is necessary or appropriate to 
carry out the purposes of section 468A and the regulations thereunder.
    (2) Relief provision. Upon request of the electing taxpayer, the 
Internal Revenue Service may treat a disposition occurring after July 
17, 1984, and before December 27, 1994 as satisfying the requirements of 
this section if the Internal Revenue Service determines that this 
treatment is necessary or appropriate to carry out the purposes of 
section 468A and the regulations thereunder.
    (h) Effective date. Section 1.468A-6 is effective for a disposition 
of an interest in a nuclear power plant on or after December 27, 1994.

[T.D. 8580, 59 FR 66474, Dec. 27, 1994]