Decommissioning Funds: Snagged on Tax Law?

Deck: 
How outdated rules could deny tax deductions to nuclear plant owners.
Fortnightly Magazine - April 1 2001
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1 1999 TNT 204-24 PECO Energy's Testimony at Finance Hearing on Tax Issues of Electric Power Industry. (Hereinafter, "PECO Energy Testimony.")

2 Treas. Reg. 1.468A (c)(2). For a more detailed explanation, see Nuclear Energy Institute Policy Briefs, "Why Tax Treatment of Decommissioning Trust Funds Must Be Updated to Reflect New Business Conditions," http://www.nei.org/doc.asp?catnum=3&catid=221.

3 1999 TNT 204-21 Public Power Group's Testimony at Finance Panel Hearing on Tax Issues related to Electric Power Industry, Oct. 19, 1999. (Hereinafter "Public Power Testimony.")

4 Some taxpayers in fact may have set aside funds for decommissioning and claimed a tax deduction before passage of section 468A. See, Joint Committee on Taxation, "Federal Tax Issues Relating to Restructuring of the Electric Power Industry," Oct. 15, 1999, No. JCX-72-99 (Hereinafter "Joint Committee Report.") For that reason, federal and state regulators may occasionally deem it necessary to require utilities to designate funds for decommissioning purposes in excess of the deductible amounts allowed specifically under section 468A. Such funds are referred to as nonqualified funds, and are not eligible for the special rules that apply to qualified funds as per sec. 468A.

5 Treas. Reg. sec. 1.468A-2(b)

6 Treas. Reg. sec. 1.468A-3.

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