26 U.S.C. § 468 — Special rules for mining and solid waste

Page 1627 TITLE 26—INTERNAL REVENUE CODE § 468 ‘‘(iii) during— ‘‘(I) the first 5 years of the lease, at least 9 per- cent of the rents payable by the lessee under the agreement are paid, and ‘‘(II) the second 5 years of the lease, at least 16.25 percent of the rents payable by the lessee under the agreement are paid. Paragraph (3)(B)(ii)(II) shall apply for purposes of clauses (ii) and (iii) of subparagraph (C), as if, as of the beginning of the last stage, the separate agree- ments were treated as 1 single agreement relating to all property covered by the agreements, includ- ing any property placed in service before the prop- erty to which the agreement for the last stage re- lates. If the lessor under the agreement described in subparagraph (C) leases the property from another person, this exception shall also apply to any agree- ment between the lessor and such person which is integrally related to, and entered into at the same time as, such agreement, and which calls for com- parable payments of rent over the primary term of the agreement. ‘‘(3) SCHEDULE OF DEEMED RENTAL PAYMENTS.— ‘‘(A) IN GENERAL.—In any case to which paragraph (2)(B) applies, for purposes of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the lessor shall be treated as having received or accrued (and the lessee shall be treated as having paid or incurred) rents equal to the greater of— ‘‘(i) the amount of rents actually paid under the agreement during the taxable year, or ‘‘(ii) the amount of rents determined in accord- ance with the schedule under subparagraph (B) for such taxable year. ‘‘(B) SCHEDULE.— ‘‘(i) IN GENERAL.—The schedule under this sub- paragraph is as follows: ‘‘Portion of lease term: Cumulative percentage of total rent deemed paid: 1st 1⁄5 ............................................... 10 2nd 1⁄5 .............................................. 25 3rd 1⁄5 ............................................... 45 4th 1⁄5 .............................................. 70 Last 1⁄5 ............................................ 100. ‘‘(ii) OPERATING RULES.—For purposes of this schedule— ‘‘(I) the rent allocable to each taxable year within any portion of a lease term described in such schedule shall be a level pro rata amount properly allocable to such taxable year, and ‘‘(II) any agreement relating to property which is to be placed in service in 2 or more stages shall be treated as 2 or more separate agreements. ‘‘(C) PARAGRAPH NOT TO APPLY.—This paragraph shall not apply to any agreement if the sum of the present values of all payments under the agreement is greater than the sum of the present value of all the payments deemed to be paid or received under the schedule under subparagraph (B). For purposes of computing any present value under this subpara- graph, the annual discount rate shall be equal to 12 percent, compounded semiannually.’’ PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. § 468. Special rules for mining and solid waste reclamation and closing costs (a) Establishment of reserves for reclamation and closing costs (1) Allowance of deduction If a taxpayer elects the application of this section with respect to any mining or solid waste disposal property, the amount of any de- duction for qualified reclamation or closing costs for any taxable year to which such elec- tion applies shall be equal to the current rec- lamation or closing costs allocable to— (A) in the case of qualified reclamation costs, the portion of the reserve property which was disturbed during such taxable year, and (B) in the case of qualified closing costs, the production from the reserve property during such taxable year. (2) Opening balance and adjustments to re- serve (A) Opening balance The opening balance of any reserve for its first taxable year shall be zero. (B) Increase for interest A reserve shall be increased each taxable year by an amount equal to the amount of interest which would have been earned dur- ing such taxable year on the opening balance of such reserve for such taxable year if such interest were computed— (i) at the Federal short-term rate or rates (determined under section 1274) in ef- fect, and (ii) by compounding semiannually. (C) Reserve to be charged for amounts paid Any amount paid by the taxpayer during any taxable year for qualified reclamation or closing costs allocable to portions of the reserve property for which the election under paragraph (1) was in effect shall be charged to the appropriate reserve as of the close of the taxable year. (D) Reserve increased by amount deducted A reserve shall be increased each taxable year by the amount allowable as a deduction under paragraph (1) for such taxable year which is allocable to such reserve. (3) Allowance of deduction for excess amounts paid There shall be allowed as a deduction for any taxable year the excess of— (A) the amounts described in paragraph (2)(C) paid during such taxable year, over (B) the closing balance of the reserve for such taxable year (determined without re- gard to paragraph (2)(C)). (4) Limitation on balance as of the close of any taxable year (A) Reclamation reserves In the case of any reserve for qualified rec- lamation costs, there shall be included in gross income for any taxable year an amount equal to the excess of— (i) the closing balance of the reserve for such taxable year, over Page 1628 TITLE 26—INTERNAL REVENUE CODE § 468 (ii) the current reclamation costs of the taxpayer for all portions of the reserve property disturbed during any taxable year to which the election under paragraph (1) applies. (B) Closing costs reserves In the case of any reserve for qualified closing costs, there shall be included in gross income for any taxable year an amount equal to the excess of— (i) the closing balance of the reserve for such taxable year, over (ii) the current closing cost of the tax- payer with respect to the reserve property, determined as if all production with re- spect to the reserve property for any tax- able year to which the election under para- graph (1) applies had occurred in such tax- able year. (C) Order of application This paragraph shall be applied after all adjustments to the reserve have been made for the taxable year. (5) Income inclusions on completion or disposi- tion Proper inclusion in income shall be made upon— (A) the revocation of an election under paragraph (1), or (B) completion of the closing, or disposi- tion of any portion, of a reserve property. (b) Allocation for property where election not in effect for all taxable years If the election under subsection (a)(1) is not in effect for 1 or more taxable years in which the reserved property is disturbed (or production oc- curs), items with respect to the reserve property shall be allocated to the reserve in such manner as the Secretary may prescribe by regulations. (c) Revocation of election; separate reserves (1) Revocation of election (A) In general The taxpayer may revoke an election under subsection (a)(1) with respect to any property. Such revocation, once made, shall be irrevocable. (B) Time and manner of revocation Any revocation under subparagraph (A) shall be made at such time and in such man- ner as the Secretary may prescribe. (2) Separate reserves required If a taxpayer makes an election under sub- section (a)(1), the taxpayer shall establish with respect to the property for which the election was made— (A) a separate reserve for qualified rec- lamation costs, and (B) a separate reserve for qualified closing costs. (d) Definitions and special rules relating to rec- lamation and closing costs For purposes of this section— (1) Current reclamation and closing costs (A) Current reclamation costs The term ‘‘current reclamation costs’’ means the amount which the taxpayer would be required to pay for qualified reclamation costs if the reclamation activities were per- formed currently. (B) Current closing costs (i) In general The term ‘‘current closing costs’’ means the amount which the taxpayer would be required to pay for qualified closing costs if the closing activities were performed currently. (ii) Costs computed on unit-of-production or capacity method Estimated closing costs shall— (I) in the case of the closing of any mine site, be computed on the unit-of- production method of accounting, and (II) in the case of the closing of any solid waste disposal site, be computed on the unit-of-capacity method. (2) Qualified reclamation or closing costs The term ‘‘qualified reclamation or closing costs’’ means any of the following expenses: (A) Mining reclamation and closing costs Any expenses incurred for any land rec- lamation or closing activity which is con- ducted in accordance with a reclamation plan (including an amendment or modifica- tion thereof)— (i) which— (I) is submitted pursuant to the provi- sions of section 511 or 528 of the Surface Mining Control and Reclamation Act of 1977 (as in effect on January 1, 1984), and (II) is part of a surface mining and rec- lamation permit granted under the pro- visions of title V of such Act (as so in ef- fect), or (ii) which is submitted pursuant to any other Federal or State law which imposes surface mining reclamation and permit re- quirements substantially similar to the re- quirements imposed by title V of such Act (as so in effect). (B) Solid waste disposal and closing costs (i) In general Any expenses incurred for any land rec- lamation or closing activity in connection with any solid waste disposal site which is conducted in accordance with any permit issued pursuant to— (I) any provision of the Solid Waste Disposal Act (as in effect on January 1, 1984) requiring such activity, or (II) any other Federal, State, or local law which imposes requirements sub- stantially similar to the requirements imposed by the Solid Waste Disposal Act (as so in effect). (ii) Exception for certain hazardous waste sites Clause (i) shall not apply to that portion of any property which is disturbed after the property is listed in the national con- tingency plan established under section 105 of the Comprehensive Environmental Re- sponse, Compensation, and Liability Act of 1980. Page 1629 TITLE 26—INTERNAL REVENUE CODE § 468A (3) Property The term ‘‘property’’ has the meaning given such term by section 614. (4) Reserve property The term ‘‘reserve property’’ means any property with respect to which a reserve is es- tablished under subsection (a)(1). (Added Pub. L. 98–369, div. A, title I, § 91(b)(1), July 18, 1984, 98 Stat. 601; amended Pub. L. 99–514, title XVIII, §§ 1807(a)(3)(A), (C), 1899A(14), Oct. 22, 1986, 100 Stat. 2811, 2959; Pub. L. 101–508, title XI, § 11802(c), Nov. 5, 1990, 104 Stat. 1388–529.) Editorial Notes REFERENCES IN TEXT The Surface Mining Control and Reclamation Act of 1977, referred to in subsec. (d)(2)(A), is Pub. L. 95–87, Aug. 3, 1977, 91 Stat. 445. Title V of that Act is classified generally to subchapter V (§ 1251 et seq.) of chapter 25 of Title 30, Mineral Lands and Mining. Sections 511 and 528 of that Act are classified to sections 1261 and 1278, respectively, of Title 30. For complete classification of this Act to the Code, see Short Title note set out under section 1201 of Title 30 and Tables. The Solid Waste Disposal Act, referred to in subsec. (d)(2)(B)(i), is title II of Pub. L. 89–272, Oct. 20, 1965, 79 Stat. 997, as amended generally by Pub. L. 94–580, § 2, Oct. 21, 1976, 90 Stat. 2795, which is classified generally to chapter 82 (§ 6901 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 6901 of Title 42 and Tables. Section 105 of the Comprehensive Environmental Re- sponse, Compensation, and Liability Act of 1980, re- ferred to in subsec. (d)(2)(B)(ii), is classified to section 9605 of Title 42. AMENDMENTS 1990—Subsec. (a)(2)(B). Pub. L. 101–508 amended sub- par. (B) generally, substituting present provisions for provisions providing for increase for interest and a phase-in of interest rates for taxable years ending be- fore 1987. 1986—Subsec. (a)(1). Pub. L. 99–514, § 1807(a)(3)(C), sub- stituted ‘‘this section’’ for ‘‘this subsection’’. Subsec. (a)(2)(D). Pub. L. 99–514, § 1807(a)(3)(A), added subpar. (D). Subsec. (d)(2)(B)(ii). Pub. L. 99–514, § 1899A(14), sub- stituted ‘‘Comprehensive Environmental Response, Compensation, and Liability Act of 1980’’ for ‘‘Com- prehensive Environmental, Compensation, and Liabil- ity Act of 1980’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 1807(a)(3)(A), (C) of Pub. L. 99–514 effective, except as otherwise provided, as if in- cluded in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment re- lates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. EFFECTIVE DATE Section effective July 18, 1984, with respect to taxable years ending after such date, except as otherwise pro- vided, see section 91(g)(4) of Pub. L. 98–369, as amended, set out as an Effective Date of 1984 Amendment note under section 461 of this title. SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. § 468A. Special rules for nuclear decommis- sioning costs (a) In general If the taxpayer elects the application of this section, there shall be allowed as a deduction for any taxable year the amount of payments made by the taxpayer to a Nuclear Decommissioning Reserve Fund (hereinafter referred to as the ‘‘Fund’’) during such taxable year. (b) Limitation on amounts paid into Fund The amount which a taxpayer may pay into the Fund for any taxable year shall not exceed the ruling amount applicable to such taxable year. (c) Income and deductions of the taxpayer (1) Inclusion of amounts distributed There shall be includible in the gross income of the taxpayer for any taxable year— (A) any amount distributed from the Fund during such taxable year, other than any amount distributed to pay costs described in subsection (e)(4)(B), and (B) except to the extent provided in regu- lations, amounts properly includible in gross income in the case of any deemed distribu- tion under subsection (e)(6), any termination under subsection (e)(7), or the disposition of any interest in the nuclear powerplant. (2) Deduction when economic performance oc- curs In addition to any deduction under sub- section (a), there shall be allowable as a de- duction for any taxable year the amount of the nuclear decommissioning costs with re- spect to which economic performance (within the meaning of section 461(h)(2)) occurs during such taxable year. (d) Ruling amount For purposes of this section— (1) Request required No deduction shall be allowed for any pay- ment to the Fund unless the taxpayer re- quests, and receives, from the Secretary a schedule of ruling amounts. For purposes of the preceding sentence, the taxpayer shall re- quest a schedule of ruling amounts upon each renewal of the operating license of the nuclear powerplant. (2) Ruling amount The term ‘‘ruling amount’’ means, with re- spect to any taxable year, the amount which