Title 26 — Internal Revenue CodeRelease 119-73
§468A Special rules for nuclear decommissioning costs
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter E— - Accounting Periods and Methods of Accounting › Part PART II— - METHODS OF ACCOUNTING › Subpart Subpart C— - Taxable Year for Which Deductions Taken › § 468A
Summary
Lets taxpayers who choose this rule deduct payments they make into a special Nuclear Decommissioning Reserve Fund each tax year. The amount put in cannot be more than the yearly "ruling amount." The taxpayer must ask the Secretary for a schedule of ruling amounts and do so again when the plant’s operating license is renewed. The Secretary sets the ruling amount to cover the plant’s total decommissioning cost over its useful life and to avoid overfunding or funding too fast. The Secretary must review and update the schedule at least once during the plant’s useful life or when asked. Each taxpayer must have a separate Fund for each plant. The Fund pays tax at a 20% rate on its gross income, but contributions that were deducted are not counted inside the Fund. The Fund can only accept payments that qualify for the taxpayer’s deduction. The Fund may only be used to pay decommissioning liabilities, to pay its administrative costs (including taxes and fees), and to invest money not currently needed. Distributions from the Fund are usually taxable to the taxpayer, except money paid to cover decommissioning costs or as rules allow. The taxpayer can also deduct decommissioning costs in the year the work is actually performed. If the Fund breaks the rules, the Secretary can disqualify it and treat all funds as distributed on that date. The taxpayer must end the Fund after decommissioning is largely complete. Special rules govern certain transfers into the Fund, how those transfers are deducted over the remaining useful life, that no gain or loss is recognized on such transfers, and that a payment made within 2½ months after a tax year can count for the prior year. Definitions: "ruling amount" — the annual funding level set by the Secretary to cover total decommissioning costs without overfunding; "nuclear powerplant" — includes any unit of a plant.
Full Legal Text
Title 26, §468A
Internal Revenue Code — Source: USLM XML via OLRC
(a)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)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)(1)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 regulations, amounts properly includible in gross income in the case of any deemed distribution under subsection (e)(6), any termination under subsection (e)(7), or the disposition of any interest in the nuclear powerplant.
(2)In addition to any deduction under subsection (a), there shall be allowable as a deduction for any taxable year the amount of the nuclear decommissioning costs with respect to which economic performance (within the meaning of section 461(h)(2)) occurs during such taxable year.
(d)For purposes of this section—
(1)No deduction shall be allowed for any payment to the Fund unless the taxpayer requests, and receives, from the Secretary a schedule of ruling amounts. For purposes of the preceding sentence, the taxpayer shall request a schedule of ruling amounts upon each renewal of the operating license of the nuclear powerplant.
(2)The term “ruling amount” means, with respect to any taxable year, the amount which the Secretary determines under paragraph (1) to be necessary to—
(A)fund the total nuclear decommissioning costs with respect to such power plant over the estimated useful life of such power plant, and
(B)prevent any excessive funding of such costs or the funding of such costs at a rate more rapid than level funding, taking into account such discount rates as the Secretary deems appropriate.
(3)The Secretary shall at least once during the useful life of the nuclear powerplant (or, more frequently, upon the request of the taxpayer) review, and revise if necessary, the schedule of ruling amounts determined under paragraph (1).
(e)(1)Each taxpayer who elects the application of this section shall establish a Nuclear Decommissioning Reserve Fund with respect to each nuclear powerplant to which such election applies.
(2)(A)There is hereby imposed on the gross income of the Fund for any taxable year a tax at the rate of 20 percent, except that—
(i)there shall not be included in the gross income of the Fund any payment to the Fund with respect to which a deduction is allowable under subsection (a), and
(ii)there shall be allowed as a deduction to the Fund any amount paid by the Fund which is described in paragraph (4)(B) (other than an amount paid to the taxpayer) and which would be deductible under this chapter for purposes of determining the taxable income of a corporation.
(B)The tax imposed by subparagraph (A) shall be in lieu of any other taxation under this subtitle of the income from assets in the Fund.
(C)For purposes of subtitle F—
(i)the Fund shall be treated as if it were a corporation, and
(ii)any tax imposed by this paragraph shall be treated as a tax imposed by section 11.
(3)Except as provided in subsection (f), the Fund shall not accept any payments (or other amounts) other than payments with respect to which a deduction is allowable under subsection (a).
(4)The Fund shall be used exclusively for—
(A)satisfying, in whole or in part, any liability of any person contributing to the Fund for the decommissioning of a nuclear powerplant (or unit thereof),
(B)to pay administrative costs (including taxes) and other incidental expenses of the Fund (including legal, accounting, actuarial, and trustee expenses) in connection with the operation of the Fund, and
(C)to the extent that a portion of the Fund is not currently needed for purposes described in subparagraph (A) or (B), making investments.
(5)Under regulations prescribed by the Secretary, for purposes of section 4951 (and so much of this title as relates to such section), the Fund shall be treated in the same manner as a trust described in section 501(c)(21).
(6)In any case in which the Fund violates any provision of this section or section 4951, the Secretary may disqualify such Fund from the application of this section. In any case to which this paragraph applies, the Fund shall be treated as having distributed all of its funds on the date such determination takes effect.
(7)Upon substantial completion of the nuclear decommissioning of the nuclear powerplant with respect to which a Fund relates, the taxpayer shall terminate such Fund.
(f)(1)Notwithstanding subsection (b), any taxpayer maintaining a Fund to which this section applies with respect to a nuclear power plant may transfer into such Fund not more than an amount equal to the present value of the portion of the total nuclear decommissioning costs with respect to such nuclear power plant previously excluded for such nuclear power plant under subsection (d)(2)(A) as in effect immediately before the date of the enactment of this subsection.
(2)(A)Except as provided in subparagraph (C), the deduction allowed by subsection (a) for any transfer permitted by this subsection shall be allowed ratably over the remaining estimated useful life (within the meaning of subsection (d)(2)(A)) of the nuclear power plant beginning with the taxable year during which the transfer is made.
(B)No deduction shall be allowed for any transfer under this subsection of an amount for which a deduction was previously allowed to the taxpayer (or a predecessor) or a corresponding amount was not included in gross income of the taxpayer (or a predecessor). For purposes of the preceding sentence, a ratable portion of each transfer shall be treated as being from previously deducted or excluded amounts to the extent thereof.
(C)If—
(i)any transfer permitted by this subsection is made to any Fund to which this section applies, and
(ii)such Fund is transferred thereafter,
(D)(i)No gain or loss shall be recognized on any transfer described in paragraph (1).
(ii)If appreciated property is transferred in a transfer described in paragraph (1), the amount of the deduction shall not exceed the adjusted basis of such property.
(3)Paragraph (1) shall not apply to any transfer unless the taxpayer requests from the Secretary a new schedule of ruling amounts in connection with such transfer.
(4)Notwithstanding any other provision of law, the taxpayer’s basis in any Fund to which this section applies shall not be increased by reason of any transfer permitted by this subsection.
(g)For purposes of this section, the term “nuclear powerplant” includes any unit thereof.
(h)For purposes of this section, a taxpayer shall be deemed to have made a payment to the Fund on the last day of a taxable year if such payment is made on account of such taxable year and is made within 2½ months after the close of such taxable year.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The date of the enactment of this subsection, referred to in subsec. (f)(1), is the date of enactment of Pub. L. 109–58, which was approved Aug. 8, 2005.
Amendments
2005—Subsec. (b). Pub. L. 109–58, § 1310(a), reenacted heading without change and amended text of subsec. (b) generally. Prior to amendment, text read as follows: “The amount which a taxpayer may pay into the Fund for any taxable year shall not exceed the lesser of— “(1) the amount of nuclear decommissioning costs allocable to the Fund which is included in the taxpayer’s cost of service for ratemaking purposes for such taxable year, or “(2) the ruling amount applicable to such taxable year.” Subsec. (d)(1). Pub. L. 109–58, § 1310(c), inserted at end “For purposes of the preceding sentence, the taxpayer shall request a schedule of ruling amounts upon each renewal of the operating license of the nuclear powerplant.” Subsec. (d)(2)(A). Pub. L. 109–58, § 1310(b)(2), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “fund that portion of the nuclear decommissioning costs of the taxpayer with respect to the nuclear powerplant which bears the same ratio to the total nuclear decommissioning costs with respect to such nuclear powerplant as the period for which the Fund is in effect bears to the estimated useful life of such nuclear powerplant, and”. Subsec. (e)(2)(A). Pub. L. 109–58, § 1310(e)(1), substituted “rate of 20 percent” for “rate set forth in subparagraph (B)” in introductory provisions. Subsec. (e)(2)(B) to (D). Pub. L. 109–58, § 1310(e)(2), (3), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out heading and text of former subpar. (B). Text read as follows: “For purposes of subparagraph (A), the rate set forth in this subparagraph is— “(i) 22 percent in the case of taxable years beginning in calendar year 1994 or 1995, and “(ii) 20 percent in the case of taxable years beginning after December 31, 1995.” Subsec. (e)(3). Pub. L. 109–58, § 1310(d), substituted “Except as provided in subsection (f), the Fund” for “The Fund”. Subsecs. (f) to (h). Pub. L. 109–58, § 1310(b)(1), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively. 1996—Subsec. (e)(2)(A). Pub. L. 104–188 provided that the amendment made by section 1917(b)(1) of Pub. L. 102–486 shall be applied as if “at a rate” appeared instead of “at the rate” in the material proposed to be stricken. See 1992 Amendment note below. 1992—Subsec. (e)(2)(A). Pub. L. 102–486, § 1917(b)(1), which directed that subpar. (A) be amended by striking “at the rate equal to the highest rate of tax specified in section 11(b)” and inserting “at the rate set forth in subparagraph (B)”, was executed by making the substitution for “at a rate equal to the highest rate of tax specified in section 11(b)”. See 1996 Amendment note above. Subsec. (e)(2)(B) to (D). Pub. L. 102–486, § 1917(b)(2), added subpar. (B) and redesignated former subpars. (B) and (C) as (C) and (D), respectively. Subsec. (e)(4)(C). Pub. L. 102–486, § 1917(a), struck out before period at end “described in section 501(c)(21)(B)(ii)”. 1986—Subsec. (a). Pub. L. 99–514, § 1807(a)(4)(E)(i), substituted “this section” for “this subsection”. Subsec. (c)(1)(A). Pub. L. 99–514, § 1807(a)(4)(B), substituted “subsection (e)(4)(B)” for “subsection (e)(2)(B)”. Subsec. (d). Pub. L. 99–514, § 1807(a)(4)(E)(ii), substituted “this section” for “this subsection” in introductory text. Subsec. (e). Pub. L. 99–514, § 1807(a)(4)(E)(iii), substituted “Reserve Fund” for “Trust Fund” in heading. Subsec. (e)(1). Pub. L. 99–514, § 1807(a)(4)(E)(iv), substituted “this section” for “this subsection” and “Reserve Fund” for “Trust Fund”. Subsec. (e)(2). Pub. L. 99–514, § 1807(a)(4)(C), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “There is imposed on the gross income of the Fund for any taxable year a tax at a rate equal to the maximum rate in effect under section 11(b), except that— “(A) there shall not be included in the gross income of the Fund any payment to the Fund with respect to which a deduction is allowable under subsection (a), and “(B) there shall be allowed as a deduction any amount paid by the Fund described in paragraph (4)(B) (other than to the taxpayer).” Subsec. (e)(4)(C). Pub. L. 99–514, § 1807(a)(4)(D), added subpar. (C). Subsec. (e)(6). Pub. L. 99–514, § 1807(a)(4)(E)(v), substituted “this section” for “this subsection” in two places and “this paragraph” for “this subparagraph”. Subsec. (f). Pub. L. 99–514, § 1807(a)(4)(E)(vi), substituted “For purposes of this section, the” for “The”. Subsec. (g). Pub. L. 99–514, § 1807(a)(4)(A)(i), added subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date
of 2005 Amendment Pub. L. 109–58, title XIII, § 1310(f), Aug. 8, 2005, 119 Stat. 1009, provided that: “The
Amendments
made by this section [amending this section] shall apply to taxable years beginning after December 31, 2005.”
Effective Date
of 1992 Amendment Pub. L. 102–486, title XIX, § 1917(c), Oct. 24, 1992, 106 Stat. 3025, provided that: “(1) Subsection (a).—The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1992. “(2) Subsection (b).—The
Amendments
made by subsection (b) [amending this section] shall apply to taxable years beginning after December 31, 1993. section 15 of the Internal Revenue Code of 1986 shall not apply to any change in rate resulting from the amendment made by subsection (b).”
Effective Date
of 1986 AmendmentAmendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, 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, see section 91(g)(5) of Pub. L. 98–369, as amended, set out as an
Effective Date
of 1984 Amendment note under section 461 of this title. Plan
Amendments
Not Required Until January 1, 1989For 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. Transitional Rule Pub. L. 99–514, title XVIII, § 1807(a)(4)(A)(ii), Oct. 22, 1986, 100 Stat. 2812, provided that: “To the extent provided in
Regulations
prescribed by the Secretary of the Treasury or his delegate, subsection (g) of section 468A of the Internal Revenue Code of 1954 [now 1986] (as added by clause (i)) shall be applied with respect to any payment on account of a taxable year beginning before January 1, 1987, as if it did not contain the requirement that the payment be made within 2½ months after the close of the taxable year. Such
Regulations
may provide that, to the extent such payment to the Fund is made more than 2½ months after the close of the taxable year, any adjustment to the tax attributable to such payment shall not affect the amount of interest payable with respect to periods before the payment is made. Such
Regulations
may provide appropriate adjustments to the deduction allowed under such section 468A for any such taxable year to take into account the fact that the payment to the Fund is made more than 2½ months after the close of the taxable year.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 468A
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73