A utility gets an approved schedule of deduction amounts and a revised ruling amount for its nuclear decommissioning fund

Plain-English summary

Under section 468A, an electric utility that owns a nuclear power plant can take current tax deductions for money it sets aside in a qualified fund to pay for eventually decommissioning (safely dismantling) the plant, but only up to annual limits the IRS sets in a "schedule of ruling amounts." A 2005 law change let utilities also make a one-time "special transfer" to fund decommissioning costs that older law had disallowed, with that deduction spread ratably over the plant's remaining life. Here an investor-owned utility that operates a nuclear plant asked the IRS for two things: a schedule of deduction amounts for a subsequent special transfer, and a mandatory revised schedule of ruling amounts to go with it. The utility supported its numbers with an independent decommissioning cost study and the cost assumptions its rate regulators had approved. The IRS found the utility is an eligible taxpayer with a qualifying ownership interest, that its assumptions were reasonable and consistent with the regulations, and approved both the schedule of deduction amounts (allowing the special transfer to be deducted ratably over the stated years) and the revised schedule of ruling amounts. The IRS made no determination that the independent study conforms to industry standards. This lets the utility fund and deduct its share of decommissioning costs on an IRS-blessed timetable.

Ruling snapshot

• Question: Are the utility's proposed schedule of deduction amounts (for a special transfer) and revised schedule of ruling amounts for its nuclear decommissioning fund consistent with section 468A and approvable?
• Outcome: approved (both schedules approved; special transfer deductible ratably over the plant's remaining useful life)
• Key authorities: IRC § 468A(b), (d), (f); Treas. Reg. §§ 1.468A-1, 1.468A-2, 1.468A-3, 1.468A-8

Full text (IRS public release)

Internal Revenue Service                                 Department of the Treasury
                                                         Washington, DC 20224

Number: 201910007                                        Third Party Communication: None
Release Date: 3/8/2019                                   Date of Communication: Not Applicable
Index Number: 468A.04-02
                                                         Person To Contact:
----------------------                                   -------------------------, ID No. -----------------
---------------------------                              -------------------
----------------------------------------------           Telephone Number:
-----------------------                                  ---------------------
-------------------------------------                    Refer Reply To:
                                                         CC:PSI:B6
Re: ---------------------------------------------------- PLR-120607-18
--------------------------------------------------------      Date:
       ------------------------------------------------------ December 06, 2018
--------------------------------------------------------

LEGEND:
Taxpayer          = -----------------------------------------------------------------------
Parent            = --------------------------------------------------------------------------------------
Plant             = ------------------------------------------------
State A           = ----------
State B           = ------------
Site              = --------------------------
Method            = -----------
Commission A      = -------------------------------------------------------------
Commission B      = ----------------------------------------------------------------
Commission C      = -------------------------------------------------------------
Independent Study = --------------------------------------------------------------------------------------
                    --------------------------------------------
a                 = --------
b                 = --------
c                 = --------
d                 = -----------------
e                 = -------------------
f                 = ----
g                 = ----
h                 = ------
i                 = -----------------
j                 = -----------------
k                 = ------
l                 = -----------------
m                 = -----------------
n                 = ------
o                 = --------
p                 = --------
q                 = --------
r                 = ---------------
PLR-120607-18                                        2

s                      = --------
t                      = --------------
u                      = --------
v                      = ---------------
w                      = --------
x                      = --------------
y                      = --
Order                  = ----------------------------------------------------------
Date 1                 = --------------------------
Date 2                 = ------------------
Date 3                 = ---------------------
Date 4                 = -----------------------
Year 1                 = -------
Year 2                 = -------
Year 3                 = -------
Year 4                 = -------
Year 5                 = -------
Fund                   = -------------------------------------------
Director               = ------------------------------------------------

Dear --------------:

        This letter responds to your request, dated June 28, 2018, for a subsequent
schedule of deduction amounts pursuant to § 468A(f) of the Internal Revenue Code and
§ 1.468A-8(c)(1) of the Income Tax Regulations and for a mandatory revised schedule
of ruling amounts under § 468A(f)(3) and § 1.468A-3(f)(1)(iii). Taxpayer previously
received a schedule of deduction amounts for a special transfer on Date 1.

       Taxpayer represents the facts and information relating to its request for rulings as
follows:

       Taxpayer is an investor-owned electric utility company principally engaged in the
generation, transmission, and distribution of electric energy in portions of State A and
State B. Taxpayer is incorporated in State A and is a wholly-owned subsidiary of
Parent. Parent files a consolidated federal income tax return with its affiliated
corporations, including Taxpayer, on a calendar year basis using an accrual method of
accounting.

       Taxpayer is the sole owner and operator of the Plant, which is located at Site.
The Plant was issued an amended operating license that is scheduled to expire on Date

4. The estimated base cost for decommissioning the Plant is based on an Independent
Study and the proposed method of decommissioning the Plant is Method. Since the
last amended schedule of ruling amounts, Commission A issued Order effective Date 2,
in which it approved the estimated decommissioning costs for the Plant to be included in
PLR-120607-18                               3

Taxpayer’s cost of service for ratemaking purposes based on the assumptions derived
in the Independent Study.

        With regard to the decommissioning costs of the Plant included in Taxpayer’s
cost of service for ratemaking purposes, Taxpayer is subject to the regulatory
jurisdiction of Commission A, Commission B, and Commission C. Taxpayer’s demand-
related costs, including decommissioning costs, are allocated as follows: Commission
A a percent, Commission B b percent, and Commission C c percent. These
percentages fluctuate somewhat from year to year.

       For Commission A, the estimated cost of $d (in Year 1 dollars) was used as a
base cost for decommissioning the Plant. The estimated cost of decommissioning the
Plant is $e in future (Year 4 – Year 5) dollars. The methodology used to convert the
base cost to future dollars was by escalating costs at varying inflation rates of f to g
percent. The assumed after-tax rate of return to be earned by the amount collected for
decommissioning is h percent.

       For Commission B, the estimated cost of $i (in Year 1 dollars) was used as a
base cost for decommissioning the Plant. The estimated cost of decommissioning the
Plant is $j in future (Year 3 – Year 4) dollars. The methodology used to convert the
base cost to future dollars was by escalating costs at varying inflation rates of f to g
percent. The assumed after-tax rate of return to be earned by the amount collected for
decommissioning is k percent.

       For Commission C, the estimated cost of $l (in Year 1 dollars) was used as a
base cost for decommissioning the Plant. The estimated cost of decommissioning the
Plant is $m in future (Year 4 – Year 5) dollars. The methodology used to convert the
base cost to future dollars was by escalating costs at varying inflation rates of f to g
percent. The assumed after-tax rate of return to be earned by the amount collected for
decommissioning is n percent.

       Section 468A(a), as amended by the Energy Tax Incentives Act of 2005 (the
Act), Pub. L. 109-58, 119 Stat. 594, allows an electing taxpayer to deduct payments
made to a nuclear decommissioning reserve fund.

       Section 468A(b) limits the amount that may be paid into the nuclear
decommissioning fund in any year to the ruling amount applicable to that year. Prior to
the changes made by the Act, the deduction was limited to the lesser of the amount
included in the utility’s cost of service for ratemaking purposes or the ruling amount.
Generally, as a result, only regulated utilities could take advantage of § 468A. The Act
amendment of § 468A eliminated the cost-of-service limitation. Accordingly,
decommissioning costs of an unregulated nuclear power plant may now be funded by
deductible contributions to a qualified nuclear decommissioning fund.
PLR-120607-18                                4

       Section 468A(d)(1) provides that no deduction shall be allowed for any payment
to the nuclear decommissioning fund unless the taxpayer requests and receives from
the Secretary a schedule of ruling amounts. The "ruling amount" for any tax year is
defined under § 468A(d)(2) as the amount which the Secretary determines to be
necessary to fund the total nuclear decommissioning cost of that nuclear power plant
over the estimated useful life of the plant. This term is further defined to include the
amount necessary to prevent excessive funding of nuclear decommissioning costs or
funding of these costs at a rate more rapid than level funding, taking into account such
discount rates as the Secretary deems appropriate.

       Prior to the changes made by the Act, deductible contributions were limited to the
amount necessary for an electing taxpayer to fund the plant’s post-1983 nuclear
decommissioning costs (determined as if decommissioning costs accrued ratably over
the estimated useful life of the plant), provided that the taxpayer elected to establish a
fund in 1984. Prior law also did not allow a taxpayer electing to establish a fund later
than 1984 to contribute to that fund any amount in excess of that amount necessary to
fund the ratable portion of the plant’s nuclear decommissioning costs beginning in the
year the fund is established.

        Section 468A(f)(1) now allows a taxpayer to contribute to a nuclear
decommissioning fund the entire cost of decommissioning the plant, including both the
pre-1984 amount that was denied under the law prior to the Act as well as any amount
attributable to any year after 1983 in which a taxpayer had not established a fund under
§ 468A. Section 468A(f)(2)(A) provides that the deduction for the contribution of the
previously-excluded amount is allowed ratably over the remaining useful life of the
nuclear plant.

       Section 468A(h) provides that a taxpayer shall be deemed to have made a
payment to the nuclear decommissioning fund on the last day of a taxable year if the
payment is made on account of such taxable year and is made within 2½ months after
the close of the tax year. This section applies to payments made pursuant to either a
schedule of ruling amounts or a schedule of deduction amounts.

       Section 1.468A-1(a) provides that an eligible taxpayer may elect to deduct
nuclear decommissioning costs under § 468A of the Code. An "eligible taxpayer," as
defined under § 1.468A-1(b)(1) of the regulations, is a taxpayer that has a "qualifying
interest" in any portion of a nuclear power plant. A qualifying interest is, among other
things, a direct ownership interest.

       Section 1.468A-2(b)(1) provides that the maximum amount of cash payments
made (or deemed made) to a nuclear decommissioning fund during any tax year shall
not exceed the ruling amount applicable to the nuclear decommissioning fund for such
taxable year. The limitation on the amount of cash payments for purposes of § 1.468A-
2(b)(1) does not apply to any “special transfer” permitted under § 1.468A-8.
PLR-120607-18                                5


        Section 1.468A-3(a)(1) provides that, in general, a schedule of ruling amounts for
a nuclear decommissioning fund is a ruling specifying annual payments that, over the
tax years remaining in the "funding period" as of the date the schedule first applies, will
result in a projected balance of the nuclear decommissioning fund as of the last day of
the funding period equal to (and in no event more than) the "amount of
decommissioning costs allocable to the fund."

        Section 1.468A-3(a)(2) provides that, to the extent consistent with the principles
and provisions of this section, each schedule of ruling amounts shall be based on
reasonable assumptions concerning the after-tax rate of return to be earned by the
amounts collected for decommissioning, the total estimated cost of decommissioning
the nuclear plant, and the frequency of contributions to a nuclear decommissioning fund
for a taxable year. Under § 1.468A-3(a)(3), the Internal Revenue Service shall provide
a schedule of ruling amounts identical to the schedule proposed by the taxpayer, but no
such schedule shall be provided by the Service unless the taxpayer's proposed
schedule is consistent with the principles and provisions of that section.

        Section 1.468A-3(a)(4) provides that the taxpayer bears the burden of
demonstrating that the proposed schedule of ruling amounts is consistent with the
principles of the regulations and that it is based on reasonable assumptions. That
section also provides additional guidance regarding how the Service will determine
whether a proposed schedule of ruling amounts is based on reasonable assumptions.
For example, if a public utility commission established or approved the currently
applicable rates for the furnishing or sale by the taxpayer of electricity from the plant,
the taxpayer can generally satisfy this burden of proof by demonstrating that the
schedule of ruling amounts is calculated using the assumptions used by the public utility
commission in its most recent order. In addition, a taxpayer that owns an interest in a
deregulated nuclear plant may submit assumptions used by a public utility commission
that formerly had regulatory jurisdiction over the plant as support for the assumptions
used in calculating the taxpayer’s proposed schedule of ruling amounts, with the
understanding that the assumptions used by the public utility commission may be given
less weight if they are out of date or were developed in a proceeding for a different
taxpayer. The use of other industry standards, such as the assumptions underlying the
taxpayer's most recent financial assurance filing with the NRC, are described by the
temporary regulations as an alternative means of demonstrating that the taxpayer has
calculated its proposed schedule of ruling amounts on a reasonable basis. Section
1.468A-3(a)(4) further provides that consistency with financial accounting statements is
not sufficient, in the absence of other supporting evidence, to meet the taxpayer’s
burden of proof.

       Section 1.468A-3(b)(1) provides that, in general, the ruling amount for any tax
year in the funding period shall not be less than the ruling amount for any earlier tax
year. Under § 1.468A-3(c)(1), the funding period begins on the first day of the first tax
PLR-120607-18                                 6

year for which a deductible payment is made to the nuclear decommissioning fund and
ends on the last day of the taxable year that includes the last day of the estimated
useful life of the nuclear power plant to which the fund relates.

         Section 1.468A-3(c)(2) provides rules for determining the estimated useful life of
a nuclear plant for purposes of § 468A. In general, under § 1.468A-3(c)(2)(i)(A), if the
plant was included in rate base for ratemaking purposes for a period prior to January 1,
2006, the date used in the first such ratemaking proceeding as the estimated date on
which the nuclear plant will no longer be included in the taxpayer’s rate base is the end
of the estimated useful life of the nuclear plant. Section 1.468A-3(c)(2)(i)(B) provides
that, if the nuclear plant is not described in § 1.468A-3(c)(2)(i)(A), the last day of the
estimated useful life of the nuclear plant is determined as of the date the plant is placed
in service. Under § 1.468A-3(c)(2)(i)(C), any reasonable method may be used in
determining the estimated useful life of a nuclear power plant that is not described in
§ 1.468A-3(c)(2)(i)(A).

       Section 1.468A-3(d)(1) provides that the amount of decommissioning costs
allocable to a nuclear decommissioning fund is the taxpayer's share of the total
estimated cost of decommissioning the nuclear power plant. Section 1.468A-3(d)(3)
provides that a taxpayer's share of the total estimated cost of decommissioning a
nuclear power plant equals the total estimated cost of decommissioning such plant
multiplied by the taxpayer's qualifying interest in the plant.

       Section 1.468A-3(e) provides the rules regarding the manner of requesting a
schedule of ruling amounts. Section 1.468A-3(e)(1)(v) provides that the Service will not
provide or revise a ruling amount applicable to a taxable year in response to a request
for a schedule of ruling amounts that is filed after the deemed payment date (as defined
in § 1.468A-2(c)(1)) for such taxable year.

      Section 1.468A-3(e)(2) enumerates the information required to be contained in a
request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling
amount for any taxable year.

       Section 1.468A-3(e)(3) provides that the Service may prescribe administrative
procedures that supplement the provisions of §§ 1.468A-3(e)(1) and (2). In addition,
that section provides that the Service may, in its discretion, waive the requirements of
§§ 1.468A-3(e)(1) and (2) under appropriate circumstances.

       Section 1.468A-3(f)(1) describes the circumstances in which a taxpayer must
request a revised schedule of ruling amounts. Section 1.468A-3(f)(1)(iii) requires that a
taxpayer requesting a schedule of deduction amounts must also request a revised
schedule of ruling amounts for the fund. The revised schedule of ruling amounts must
apply beginning with the first taxable year following the first year in which a deduction is
allowed under the schedule of deduction amounts.
PLR-120607-18                                 7


       Section 1.468A-3(f)(2) provides that any taxpayer that has previously obtained a
schedule of ruling amounts may request a revised schedule of ruling amounts. Such a
request must be made in accordance with the rules of § 1.468A-3(e). The Internal
Revenue Service shall not provide a revised schedule of ruling amounts applicable to a
taxable year in response to a request for a schedule of ruling amounts that is filed after
the deemed payment deadline date for such taxable year.

        Section 1.468A-8(a)(1) provides that, under the provisions of § 468A(f), as
described above, a taxpayer may make a special transfer of cash or property to the
nuclear decommissioning fund. This special transfer is not subject to the § 468A(b)
limitation. The amount of the special transfer is the present value of the pre-2005 non-
qualifying percentage of the estimated future costs of decommissioning the nuclear
plant that was disallowed under § 468A prior to the Act.

       Section 1.468A-8(a)(2) defines the pre-2005 non-qualifying percentage as equal
to 100 percent reduced by the sum of the qualifying percentage used in determining the
taxpayer’s last schedule of ruling amounts for the fund under § 468A as it existed prior
to the Act and the percentage transferred in any previous special transfer.

       Section 1.468A-8(a)(3) provides that the taxpayer is not required to transfer the
entire amount eligible for the special transfer in one year but must take any prior special
transfers into account in calculating the pre-2005 qualifying percentage. Further,
pursuant to § 1.468A-8(c)(2), a taxpayer making a special transfer in more than one
year must request a new schedule of deduction amounts in connection with each
special transfer.

       Section 1.468A-8(a)(4)(i) provides that the amount of any special transfer made
by a taxpayer on or before the 15th day of the third calendar month after the close of any
taxable year (the deemed payment deadline date) shall be deemed made during that
taxable year if the taxpayer irrevocably designates the amount of the special transfer as
relating to that taxable year.

       Section 1.468A-8(b) provides that the deduction for the special transfer is
allowed ratably over the remaining useful life of the nuclear plant. Under § 1.468A-
8(b)(2)(i), the deduction for property contributed in a special transfer is limited to the
lesser of the fair market value of the property or the taxpayer’s basis in the property,
except as provided in § 1.468A-8(b)(2)(ii). Under § 1.468A-8(b)(5), the taxpayer
recognizes no gain or loss on the special transfer of property, the taxpayer’s basis in the
fund is not increased by reason of the special transfer of property, and the fund’s basis
in the property transferred in the special transfer is the same as the transferee’s basis in
that property immediately prior to the special transfer.
PLR-120607-18                                8

        Section 1.468A-8(c) provides that taxpayer may not make a special transfer to a
qualified nuclear decommissioning fund unless the taxpayer requests from the IRS a
schedule of deduction amounts in connection with such transfer. A request for a
schedule of deduction amounts may be made in connection with a request for a
schedule of ruling amounts but in such case, the calculations for both the schedule of
ruling amounts and the schedule of deduction amounts must be separately stated.

        Section 1.468A-8(d) describes the manner of requesting a schedule of deduction
amounts. Section 1.468A-8(d)(1)(v) provides that, except as provided in § 1.468A-
8(d)(1)(vi), the Service will not provide or revise a deduction amount applicable to a
taxable year in response to a request for a schedule of deduction amounts that is filed
after the deemed payment deadline date for such taxable year.

       As stated above, prior to the changes made by the Act, deductible contributions
were limited to the lesser of (1) the amount necessary to fund the plant’s post-1983
nuclear decommissioning costs, or (2) the amount necessary to fund the plant’s
decommissioning costs for that portion of the plant’s estimated useful life for which a
fund had been established. Under that prior law, Taxpayer was allowed to contribute
(1) o percent for Commission A; (2) p percent for Commission B and (3) q percent for
Commission C, of the amounts necessary to fully decommission their respective shares
of the Plant. Section 468A(f)(1) allows a taxpayer to contribute to the nuclear
decommissioning fund the pre-1984 amount that was denied under the law prior to the
Act (“special transfer”). Under § 1.468A-8(b) the deduction for such special transfer is
allowed ratably over the remaining useful life of the Plant.

Commission A

       The present value of the Taxpayer’s Commission A jurisdictional portion of the
previously excluded estimated future decommissioning costs is $r as of Date 3 (the
“subsequent special transfer amount”). The Taxpayer’s pre-2005 non-qualifying
percentage of estimated future decommissioning costs of the Plant is s percent (100
percent reduced by the Company’s qualifying percentage (o percent) and the
percentage of costs transferred in the prior special transfer). The estimated useful life
of the Plant as defined in Treas. Reg. § 1.468A-3(c)(2) ends in Year 3. Therefore,
Taxpayer seeks to deduct the special transfer amount ratably in Year 2 through Year 3.

Commission B

      The present value of the Taxpayer’s Commission B jurisdictional portion of the
previously excluded estimated future decommissioning cost is $t as of Date 3 (the
“subsequent special transfer amount”). The Taxpayer’s pre-2005 non-qualifying
percentage of estimated future decommissioning cost of the unit is u percent (100
percent reduced by the Company’s qualifying percentage (p percent) and the
percentage of costs transferred in the prior special transfer). The estimated useful life
PLR-120607-18                                 9

of the Plant as defined in Treas. Reg. § 1.468A-3 (c)(2) ends in Year 3. Therefore,
Taxpayer seeks to deduct the special transfer amount ratably in Year 2 through Year 3.

Commission C

       The present value of the Taxpayer’s Commission C jurisdictional portion of the
previously excluded estimated future decommissioning cost is $v as of Date 3 (the
“subsequent special transfer amount”). The Taxpayer’s pre-2005 non-qualifying
percentage of estimated future decommissioning costs of the unit is w percent (100
percent reduced by the Company’s qualifying percentage (q percent) and the
percentage of costs transferred in the prior special transfer). The estimated useful life
of the Plant as defined in Treas. Reg. § 1.468A-3(c)(2) ends in Year 3. Therefore,
Taxpayer seeks to deduct the special transfer amount ratably in Year 2 through Year 3.

       We have examined the representations and information submitted by the
Taxpayer in relation to the requirements set forth in § 468A and the regulations
thereunder. Based solely upon these representations of the facts, we conclude that the
Taxpayer may make a special transfer of $x each year beginning in Year 2 and
continuing through Year 3. Accordingly, Taxpayer may deduct the amounts contributed
in Year 2 through Year 3, as set forth below.

                           SCHEDULE OF DEDUCTION AMOUNTS

          Transfer                         Each Year                        Total
  Subsequent Special Transfer         Year 2 through Year 3                  $x

       The subsequent special transfer amount stated above is the maximum amount
permitted to be transferred to the Fund under § 468A(f)(1). If Taxpayer transfers a
lesser amount to the Fund in Year 2 through Year 3, in order to make an additional
special transfer in a later year (including a special transfer of the difference between the
special transfer amount stated above and the lesser amount transferred in Year 2
through Year 3), Taxpayer must request a new schedule of deduction amounts and in
that request must take the Year 2 through Year 3 transfers into account and recalculate
the pre-2005 qualifying percentage in such request.

       We note that, if Taxpayer elects to make a special transfer of property for all or a
portion of this special transfer, the amount of the deduction is the lesser of the fair
market value of the property transferred or the basis of the property in the hands of
Taxpayer immediately prior to the transfer unless Taxpayer makes the election as
described in § 1.468A-8(b)(2)(ii).

     Furthermore, regarding Taxpayer’s request for a revised schedule of ruling
amounts, we have examined the representations and information submitted by the
Taxpayer in relation to the requirements set forth in § 468A and the regulations
PLR-120607-18                                10

thereunder. Based solely upon these representations of the facts, we reach the
following conclusions:

       1. Pursuant to § 1.468A-3(a)(4), Taxpayer has met its burden of demonstrating
          that the proposed schedule of ruling amounts is consistent with the principles
          of the Code and regulations and is based on reasonable assumptions.

       2. Taxpayer has a qualifying interest in the Plant and is, therefore, an eligible
          taxpayer under § 1.468A-1(b)(1) of the regulations.

       3. Taxpayer, as owner of the Plant, has calculated its share of the total
          decommissioning costs under § 1.468A-3(d)(3) of the regulations.

       4. The proposed schedule of ruling amounts was derived by following the
          assumptions contained in the Independent Study and used by Commission A
          to calculate the amount of decommissioning costs to be included in
          Taxpayer’s cost of service for ratemaking purposes. Thus, Taxpayer has
          demonstrated, pursuant to § 1.468A-3(a)(4), that the proposed schedule of
          ruling amounts is based on reasonable assumptions and is consistent with
          the principles of § 468A and the regulations thereunder.

       5. The maximum amount of cash payments made (or deemed made) to the
          Fund during any tax year is restricted to the ruling amount applicable to the
          Fund, as set forth under § 1.468A-2(b)(1) of the regulations.

        Taxpayer has been granted, above, a schedule of deduction amounts relating to
Year 2 through Year 3. Section 1.468A-3(e)(1)(v) provides that the Service will not
provide or revise a ruling amount applicable to a taxable year in response to a request
for a schedule of ruling amounts that is filed after the deemed payment date (as defined
in § 1.468A-2(c)(1)) for such taxable year. Further, § 468A(f)(3) and § 1.468A-3(f)(1)(iii)
requires that a taxpayer requesting a schedule of deduction amounts must also request
a revised schedule of ruling amounts for the Fund and provides that the revised
schedule of ruling amounts must apply beginning with the first taxable year following the
first year in which a deduction is allowed under the schedule of deduction amounts.

      Based solely on the determinations above, we conclude that Taxpayer’s
proposed schedule of ruling amounts satisfies the requirements of § 468A of the Code.
We have approved the following revised schedule of ruling amounts.

                      APPROVED SCHEDULE OF RULING AMOUNTS

               Each Year                                     Ruling Amount
          Year 2 through Year 3                                    $y
PLR-120607-18                                 11

       If any of the events described in § 1.468A-3(f)(1) occur in future years, Taxpayer
must request a review and revision of the schedule of ruling amounts. Generally,
Taxpayer is required to file such a request on or before the deemed payment deadline
date for the first taxable year in which the rates reflecting such action became effective.
When no such event occurs, Taxpayer must file a request for a revised schedule of
ruling amounts on or before the deemed payment deadline of the tenth taxable year
following the close of the tax year in which this schedule of ruling amounts is received.

       Except as specifically determined above, no opinion is expressed or implied
concerning the Federal income tax consequences of the transaction described above.
Specifically, no determination is made whether the Independent Study conforms to
industry standards and practices.

       This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3)
of the Code provides it may not be used or cited as precedent. In accordance with the
power of attorney on file with this office, a copy of this letter is being sent to your
authorized representative. We are also sending a copy of this letter ruling to the
Director. Pursuant to § 1.468A-7(a), a copy of this letter must be attached (with the
required Election Statement) to Taxpayer's federal income tax return for each tax year
in which Taxpayer claims a deduction for payments made to the Fund.


                                              Sincerely,

                                              _________________________________
                                              Peter C. Friedman
                                              Senior Technician Reviewer, Branch 6
                                              Office of the Associate Chief Counsel
                                              (Passthroughs & Special Industries)