[Federal Register Volume 64, Number 243 (Monday, December 20, 1999)]
[Proposed Rules]
[Pages 71082-71086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32693]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-106012-98]
RIN 1545-AW17
Definition of Contribution in Aid of Construction Under Section
118(c)
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
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SUMMARY: This document contains proposed regulations concerning the
definition of a contribution in aid of construction under section
118(c) and the adjusted basis of any property acquired with a
contribution in aid of construction. The proposed regulations affect a
regulated public utility that provides water or sewerage services
because a qualifying contribution in aid of construction is treated as
a contribution to the capital of the utility and excluded from gross
income. This document also provides notice of a public hearing on these
proposed regulations.
DATES: Written and electronic comments must be received by March 22,
2000.
Outlines of topics to be discussed at the public hearing scheduled
for April 27, 2000, must be received by April 6, 2000.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-106012-98), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered Monday through
Friday between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-
106012-98), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC. Alternatively, taxpayers may submit
comments electronically via the Internet by selecting the ``Tax Regs''
option on the IRS Home Page, or by submitting comments directly to the
IRS Internet site at http://www.irs.ustreas.gov/tax__regs/
regslist.html. The public hearing will be held in room 2615, Internal
Revenue Building, 1111 Constitution Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Paul
Handleman, (202) 622-3040; concerning submissions, the hearing, and/or
to be placed on the building access list to attend the hearing, LaNita
Van Dyke, (202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the collection of information should be
sent to the Office of Management and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503, with copies to the Internal Revenue
Service, Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC
20224.
Comments on the collection of information should be received by
February 18, 2000.
Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the
proper performance of the functions of the IRS, including whether the
information will have practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information (see below);
How the quality, utility, and clarity of the information to be
collected may be enhanced;
How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques or other forms of information
technology; and
Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
The requirement for the collection of information in this notice of
proposed rulemaking is in Sec. 1.118-2(e). The information is required
by the IRS to establish that a taxpayer has notified the IRS of amounts
to be treated as a contribution to capital under section 118(c). This
information will be used to determine when the statutory period for the
assessment of any deficiency attributable to any contribution to
capital under section 118(c) expires. The collection of information is
mandatory. The likely respondents are businesses and other for-profit
organizations.
Estimated total annual reporting burden: 100 hours.
The estimated annual burden per respondent varies from .5 hours to
5 hours, depending on individual circumstances, with an estimated
average of 1 hour.
Estimated number of respondents: 100.
Estimated annual frequency of responses: annually.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number assigned by the Office of
Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains proposed amendments to the Income Tax
Regulations (26 CFR part 1) to provide regulations under section 118(c)
of the Internal Revenue Code of 1986. Section 118(c) was added to the
Code by section 1613(a)(1)(B) of the Small Business Job Protection Act
of 1996 (SBJPA of 1996), 1996-3 C.B. 155, 248-250. Under section
1613(a)(3) of the SBJPA of 1996, the amendments made by section 1613(a)
apply to amounts received after June 12, 1996.
Explanation of Provisions
Contribution to Capital
Section 118(a) generally provides that, in the case of a
corporation, gross income does not include any contribution to the
capital of the taxpayer. Under section 118(b), a contribution in aid of
construction generally is not a contribution to the capital of the
taxpayer and is not excluded from gross income under section 118(a).
However, for amounts received after June 12, 1996, section 118(c)
provides an exception to this rule.
Under section 118(c)(1), the term ``contribution to the capital of
the
[[Page 71083]]
taxpayer'' includes any amount of money or other property received from
any person (whether or not a shareholder) by a regulated public utility
that provides water or sewerage disposal services if the amount is a
contribution in aid of construction. In the case of a contribution of
property other than water or sewerage disposal facilities, the amount
must meet the requirements of the expenditure rule of section 118(c)(2)
(which generally requires that the amount is expended to acquire or
construct water or sewerage disposal facilities within the specified
time period). Moreover, the amount (or any property acquired or
constructed with the amount) cannot be included in the taxpayer's rate
base for rate-making purposes.
Contribution in Aid of Construction
Section 118(c)(3)(A) provides that, for purposes of section 118(c),
the term ``contribution in aid of construction'' shall be defined by
regulations prescribed by the Secretary, except that such term shall
not include amounts paid as service charges for starting or stopping
services.
Section 118(c) was added by the SBJPA of 1996 ``to restore the
contribution in aid of construction provision that was repealed by the
Tax Reform Act of 1986 (1986 Act) for regulated public utilities that
provide water or sewerage disposal services.'' H.R. Conf. Rep. No. 737,
104th Cong., 2d Sess. 316 (1996), 1996-3 C.B. 741, 1056. Before the
1986 Act, former section 118(b) generally provided that a contribution
in aid of construction received by a regulated public utility was
treated as a contribution to the capital of the taxpayer and was
excluded from gross income. However, former section 118(b)(3)(A)
provided that the term ``contribution in aid of construction'' did not
include amounts paid as customer connection fees (including amounts
paid to connect the customer's line to an electric line, a gas main, a
steam line, or a main water or sewer line and amounts paid as service
charges for starting or stopping services). The legislative history of
the SBJPA of 1996 also states that ``[p]rior to the enactment of the
Tax Reform Act of 1986 * * * [a nontaxable] contribution in aid of
construction did not include a connection fee.'' Id.
The nontaxable contribution in aid of construction provision in
former section 118(b) is derived from a line of cases, including
several Supreme Court cases, beginning with Edwards v. Cuba R.R., 268
U.S. 628 (1925), IV-2 C.B. 122. In Edwards, the Supreme Court held that
subsidy payments by the Republic of Cuba to a railroad company to
induce the construction and operation of a railroad in Cuba were not
included in the recipient corporation's gross income because the
payments were not made for services rendered or to be rendered. In
Detroit Edison Co. v. Commissioner, 319 U.S. 98 (1943), 1943 C.B. 1019,
the Supreme Court looked at the contributors' motivation to determine
whether payments by customers for extending electrical service lines
were nonshareholder contributions to capital. Because the transferors
received direct benefits in the form of services as a result of the
contributions, the Court held that the payments were not contributions
to capital, but the price for receiving service.
The Supreme Court elaborated on the contributor's motivation in
Brown Shoe Co. v. Commissioner, 339 U.S. 583 (1950), 1950-1 C.B. 38,
when it held that, if the transferor did not anticipate any direct
benefit from the contribution, such as the receipt of services, but
expected only that the transaction would benefit the community at
large, the funds were contributions to capital. The lack of a direct
benefit to the transferor was considered indicative of an intent to
increase the transferee's capital. In United States v. Chicago,
Burlington & Quincy R.R., 412 U.S. 401 (1973), 1973-2 C.B. 428, the
Supreme Court held that government payments received by a railroad
company for improvements at grade crossing and intersections were not
contributions to capital. In reaching its holding, the Court set forth
five characteristics of a nonshareholder contribution to capital,
including that the amounts received must not constitute payments for
specific, quantifiable services provided for the transferor by the
transferee.
Consistent with the above Supreme Court cases, a customer
connection fee would not have qualified as a nonshareholder
contribution to the capital of the utility under section 118(a) because
the fee clearly is paid as a prerequisite for obtaining services. In
addition, the IRS' position prior to the enactment of former section
118(b) as articulated in Rev. Rul. 75-557, 1975-2 C.B. 33, was that
customer connection fees charged by a water utility were not excludable
from income. In 1976, Congress enacted former section 118(b) to treat
contributions in aid of construction to water or sewerage disposal
facilities as excludable contributions to capital. This legislation
specifically excluded customer connection fees from the definition of
nontaxable contributions in aid of construction. As explained by the
court in Florida Progress Corp. v. United States, M.D. Fla., No. 93-
246-CIV-T-25A, 9/2/98, Congress enacted former section 118(b) in 1976
to codify the already existing case law with regard to contributions in
aid of construction to water and sewerage disposal facilities.
Thereafter, payments made to a utility to encourage the extension of
facilities into new areas benefitting a large number of people would be
given tax free status; however, as held by the Supreme Court in Detroit
Edison, payments made to a utility as a prerequisite to receiving water
or sewerage service would be treated as taxable income to the utility.
The proposed regulations define the term ``contribution in aid of
construction,'' for purposes of section 118(c), as meaning any amount
of money or other property contributed to a regulated public utility
that provides water or sewerage disposal services to the extent that
the purpose of the contribution is to provide for the expansion,
improvement, or replacement of the utility's water or sewerage disposal
facilities. However, to restore the contribution in aid of construction
provision that existed before the 1986 Act for regulated public
utilities providing water and sewerage disposal services as well as to
be consistent with the Supreme Court cases discussed above, the
proposed regulations exclude customer connection fees from the
definition of contribution in aid of construction.
A customer connection fee is defined in the proposed regulations as
any amount of money or property contributed to the utility representing
the cost of installing a connection or service line (including the cost
of meters and piping) from the utility's main water or sewer lines to
the line owned by the customer or potential customer. However, money or
property contributed for a connection or service line from the
utility's main line to the customer 's or potential customers line is
not a customer connection fee if the connection or service line does
serve, or is designed to serve, more than one customer. The proposed
regulations also define a customer connection fee as including any
amount paid as a service charge for stopping or starting service.
The proposed regulations indicate that a contribution in aid of
construction may include an amount of money or other property
contributed to a regulated public utility for a water or sewerage
disposal facility subject to a contingent obligation to repay, in whole
or in part, the amount to the contributor (commonly referred to as an
``advance''). However, no inference is intended as to whether an amount
subject to such a
[[Page 71084]]
repayment obligation is a contribution or loan. Whether an advance is a
contribution or a loan is determined under general principles of
federal tax law based on all the facts and circumstances.
Adjusted Basis
Section 118(c)(4) provides that notwithstanding any other provision
of subtitle A, no deduction or credit shall be allowed for, or by
reason of, any expenditure which constitutes a contribution in aid of
construction to which section 118(c) applies. The adjusted basis of any
property acquired with a contribution in aid of construction to which
section 118(c) applies shall be zero.
Consistent with section 118(c)(4), the proposed regulations provide
rules for adjusting the basis of water or sewerage disposal facilities
acquired as, or acquired or constructed with any money received as, a
contribution in aid of construction.
Statute of Limitations
Section 118(d)(1) provides that if the taxpayer for any taxable
year treats an amount as a contribution to the capital of the taxpayer
described in section 118(c), then the statutory period for the
assessment of any deficiency attributable to any part of the amount
does not expire before the expiration of 3 years from the date the
Secretary is notified by the taxpayer (in such manner as the Secretary
may prescribe) of the amount of the expenditure referred to in section
118(c)(2)(A), of the taxpayer's intention not to make the expenditures
referred to in section 118(c)(2)(A), or of a failure to make the
expenditure within the period described in section 118(c)(2)(B).
Section 118(d)(2) provides that the deficiency may be assessed before
the expiration of such 3-year period notwithstanding the provisions of
any other law or rule of law which would otherwise prevent assessment.
The proposed regulations provide the time and manner for taxpayers to
notify the Secretary with respect to its contributions in aid of
construction under section 118(d)(1).
Proposed Effective Date
The regulations are proposed to be applicable for any money or
other property received by a regulated public utility that provides
water or sewerage disposal services on or after the date final
regulations are published in the Federal Register.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment is not required. It is hereby
certified that the collection of information in these regulations will
not have a significant economic impact on a substantial number of small
entities. This certification is based upon the fact that any burden on
taxpayers is minimal. Accordingly, a Regulatory Flexibility Analysis
under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not
required. Pursuant to section 7805(f) of the Internal Revenue Code,
this notice of proposed rulemaking will be submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on its impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) or electronic comments that are submitted timely
to the IRS. The IRS and Treasury Department specifically request
comments on the clarity of the proposed rule and how it may be made
easier to understand. All comments will be available for public
inspection and copying.
A public hearing has been scheduled for Thursday, April 27, 2000,
at 10 a.m. in room 2615, Internal Revenue Building, 1111 Constitution
Avenue, NW., Washington DC. Due to building security procedures,
visitors must enter at the 10th Street entrance, located between
Constitution and Pennsylvania Avenues, NW. In addition, all visitors
must present photo identification to enter the building. Because of
access restrictions, visitors will not be admitted beyond the immediate
entrance area more than 15 minutes before the hearing starts. For
information about having your name placed on the building access list
to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section
of this preamble.
The rules of 26 CFR 601.601(a)(3) apply to the hearing.
Persons who wish to present oral comments at the hearing must
submit an outline of the topics to be discussed and the time to be
devoted to each topic (signed original and eight (8) copies) by April
6, 2000.
A period of 10 minutes will be allotted to each person for making
comments.
An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving outlines has passed. Copies of the
agenda will be available free of charge at the hearing.
Drafting Information: The principal author of these regulations is
Paul F. Handleman, Office of the Assistant Chief Counsel (Passthroughs
and Special Industries), IRS. However, other personnel from the IRS and
Treasury Department participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments 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 is amended by adding
an entry in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.118-2 also issued under 26 U.S.C. 118(c)(3)(A); * * *
Par. 2. Section 1.118-2 is added to read as follows:
Sec. 1.118-2 Contribution in aid of construction.
(a) Special rule for water and sewerage disposal utilities--(1) In
general. For purposes of section 118, the term ``contribution to the
capital of the taxpayer'' includes any amount of money or other
property received from any person (whether or not a shareholder) by a
regulated public utility that provides water or sewerage disposal
services if--
(i) The amount is a contribution in aid of construction under
paragraph (b) of this section;
(ii) In the case of a contribution of property other than water or
sewerage disposal facilities, the amount satisfies the expenditure rule
under paragraph (c) of this section; and
(iii) The amount (or any property acquired or constructed with the
amount) is not included in the taxpayer's rate base for ratemaking
purposes.
(2) Definitions--(i) Regulated public utility has the meaning given
such term by section 7701(a)(33), except that such term does not
include any utility which is not required to provide water or sewerage
disposal services to members of the general public in its service area.
(ii) Water or sewerage disposal facility is defined as tangible
property described in section 1231(b) that is used predominately (i.e.,
80% or more) in the trade or business of furnishing water or sewerage
disposal services.
(b) Contribution in aid of construction--(1) In general. For
[[Page 71085]]
purposes of section 118(c) and this section, the term ``contribution in
aid of construction'' means any amount of money or other property
contributed to a regulated public utility that provides water or
sewerage disposal services to the extent that the purpose of the
contribution is to provide for the expansion, improvement, or
replacement of the utility's water or sewerage disposal facilities.
(2) Advances. A contribution in aid of construction may include an
amount of money or other property contributed to a regulated public
utility for a water or sewerage disposal facility subject to a
contingent obligation to repay the amount, in whole or in part, to the
contributor (commonly referred to as an ``advance''). For example, an
amount received by a utility from a developer to construct a water
facility pursuant to an agreement under which the utility will pay the
developer a percentage of the receipts from the facility over a fixed
period may constitute a contribution in aid of construction. Whether an
advance is a contribution or a loan is determined under general
principles of federal tax law based on all the facts and circumstances.
For the treatment of any amount of a contribution in aid of
construction that is repaid by the utility to the contributor, see
paragraphs (c)(2)(ii) and (d)(2) of this section.
(3) Customer connection fee. A customer connection fee is not a
contribution in aid of construction under this paragraph (b) and is
includible in income. The term ``customer connection fee'' includes any
amount of money or other property transferred to the utility
representing the cost of installing a connection or service line
(including the cost of meters and piping) from the utility's main water
or sewer lines to the line owned by the customer or potential customer.
However, money or other property contributed for a connection or
service line from the utility's main line to the customer's or
potential customer's line is not a customer connection fee if the
connection or service line does serve, or is designed to serve, more
than one customer. A customer connection fee also includes any amount
paid as a service charge for stopping or starting service.
(4) Binding agreement to reimburse utility for a facility
previously placed in service. If a water or sewerage disposal facility
is placed in service by the utility before an amount is contributed to
the utility, the contribution is not a contribution in aid of
construction under this paragraph (b) with respect to the cost of the
facility unless, at the time the facility is placed in service by the
utility, there is an agreement, binding under local law between the
prospective contributor and the utility, that the utility is to receive
the amount as reimbursement for the cost of acquiring or constructing
the facility. If such an agreement exists, the basis of the facility
must be reduced by the amount of the contribution at the time the
facility is placed in service.
(5) Classification by ratemaking authority. The fact that the
applicable ratemaking authority classifies any money or other property
received by a utility as a contribution in aid of construction is not
conclusive as to its treatment under this paragraph (b).
(c) Expenditure rule--(1) In general. An amount satisfies the
expenditure rule of section 118(c)(2) if the amount is expended for the
acquisition or construction of property described in section
118(c)(2)(A), the amount is paid or incurred before the end of the
second taxable year after the taxable year in which the amount was
received as required by section 118(c)(2)(B), and accurate records are
kept of contributions and expenditures as provided in section
118(c)(2)(C).
(2) Excess amount--(i) Includible in the utility's income. An
amount received by a utility as a contribution in aid of construction
that is not expended for the acquisition or construction of water or
sewerage disposal facilities as required by paragraph (c)(1) of this
section (the excess amount) is not a contribution to the capital of the
taxpayer under paragraph (a) of this section. Except as provided in
paragraph (c)(2)(ii) of this section, such excess amount is includible
in the utility's income in the taxable year in which the amount was
received.
(ii) Repayment of excess amount. If the excess amount described in
paragraph (c)(2)(i) of this section is repaid, in whole or in part,
either--
(A) Before the end of the time period described in paragraph (c)(1)
of this section, the repayment amount is not includible in the
utility's income; or
(B) After the end of the time period described in paragraph (c)(1)
of this section, the repayment amount may be deducted by the utility in
the taxable year in which it is paid or incurred to the extent such
amount was included in income.
(3) Example. The application of this paragraph (c) is illustrated
by the following example:
Example. M, a calendar year regulated public utility that
provides water services, received a $1,000,000 contribution in aid
of construction in 1999 for the purpose of constructing a water
facility. To the extent that the $1,000,000 exceeded the actual cost
of the facility, the contribution was subject to being returned. In
2000, M built the facility at a cost of $700,000 and returned
$200,000 to the contributor. As of the end of 2001, M had not
returned the remaining $100,000. Assuming accurate records are kept,
the requirement under section 118(c)(2) is satisfied for $700,000 of
the contribution. Because $200,000 of the contribution was returned
within the time period during which qualifying expenditures could be
made, this amount is not includible in M's income. However, the
remaining $100,000 is includible in M's income for its 1999 taxable
year (the taxable year in which the amount was received) because the
amount was neither spent nor repaid during the prescribed time
period. To the extent M repays the remaining $100,000 after year
2001, M would be entitled to a deduction in the year such repayment
is paid or incurred.
(d) Adjusted basis--(1) Exclusion from basis. Except for a
repayment described in paragraph (d)(2) of this section, to the extent
that a water or sewerage disposal facility is acquired or constructed
with an amount received as a contribution to the capital of the
taxpayer under paragraph (a) of this section, the basis of the facility
is reduced by the amount of the contribution. To the extent the water
or sewerage disposal facility is acquired as a contribution to the
capital of the taxpayer under paragraph (a) of this section, the basis
of the contributed facility is zero.
(2) Repayment of contribution. If a contribution to the capital of
the taxpayer under paragraph (a) of this section is repaid to the
contributor, either in whole or in part, then the repayment amount is a
capital expenditure in the taxable year in which it is paid or
incurred, resulting in an increase in the property's adjusted basis in
such year.
(3) Allocation of contributions. An amount treated as a capital
expenditure under this paragraph (d) is to be allocated proportionately
to the adjusted basis of each property acquired or constructed with the
contribution based on the relative cost of such property.
(4) Example. The application of this paragraph (d) is illustrated
by the following example:
Example. A, a calendar year regulated public utility that
provides water services, received a $1,000,000 contribution in aid
of construction in 1999 as an advance from B, a developer, for the
purpose of constructing a water facility. To the extent that the
$1,000,000 exceeds the actual cost of the facility, the contribution
is subject to being returned. Under the terms of the advance, A
agrees to pay to B a percentage of the receipts from the facility
over a fixed period, but limited to the cost of the facility. In
2000, A builds the facility at a cost of $700,000 and returns
$300,000 to B. In 2001, A pays
[[Page 71086]]
$20,000 to B out of the receipts from the facility. Assuming
accurate records are kept, the $700,000 advance is a contribution to
the capital of A under paragraph (a) of this section and is
excludable from A's income. The basis of the $700,000 facility
constructed with this contribution to capital is zero. The $300,000
excess amount is not a contribution to the capital of A under
paragraph (a) of this section because it does not meet the
expenditure rule described in paragraph (c)(1) of this section.
However, this excess amount is not includible in A's income pursuant
to paragraph (c)(2)(ii) of this section since the amount is repaid
to B within the required time period. The repayment of the $300,000
excess amount to B in 2000 is not treated as a capital expenditure
by A. The $20,000 payment to B in 2001 is treated as a capital
expenditure by A in 2001 resulting in an increase in the adjusted
basis of the water facility from zero to $20,000.
(e) Statute of limitations--(1) Extension of statute of
limitations. Under section 118(d)(1), the statutory period for
assessment of any deficiency attributable to a contribution to capital
under paragraph (a) of this section does not expire before the
expiration of 3 years after the date the taxpayer notifies the
Secretary in the time and manner prescribed in paragraph (e)(2) of this
section.
(2) Time and manner of notification. Notification is made by
attaching a statement to the taxpayer's federal income tax return for
the taxable year in which any of the reportable items in paragraphs
(e)(2)(i) through (iii) of this section occur. The statement must
contain the taxpayer's name, address, employer identification number,
taxable year and the following information with respect to
contributions of property other than water or sewerage disposal
facilities that are subject to the expenditure rule described in
paragraph (c) of this section:
(i) The amount of contributions in aid of construction expended
during the taxable year for property described in section 118(c)(2)(A)
(qualified property) as required under paragraph (c)(1) of this
section, identified by taxable year in which the contributions were
received.
(ii) The amount of contributions in aid of construction that the
taxpayer does not intend to expend for qualified property as required
under paragraph (c)(1) of this section, identified by taxable year in
which the contributions were received.
(iii) The amount of contributions in aid of construction that the
taxpayer failed to expend for qualified property as required under
paragraph (c)(1) of this section, identified by taxable year in which
the contributions were received.
(f) Effective date. This section is applicable for any money or
other property received by a regulated public utility that provides
water or sewerage disposal services on or after the date final
regulations are published in the Federal Register.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 99-32693 Filed 12-17-99; 8:45 am]
BILLING CODE 4830-01-U
