1 | 2 | 3 | 4 | 5 | 6 | 7 |
Year | Additions | Flow-through retirements | Net additions | Adjusted capacity1 | Actual capacity | Units of qualified additions1 2 |
1970 | 1000 | 700 | 300 | 5000 | 5300 | 300 |
1971 | 300 | 500 | (200) | 5300 | 5100 | |
1972 | 500 | 200 | 300 | 5300 | 5400 | 100 |
1973 | 400 | 800 | (400) | 5400 | 5000 | |
1974 | 600 | 400 | 200 | 5400 | 5200 | |
1975 | 800 | 300 | 500 | 5400 | 5700 | 300 |
1 Capacity as of Jan. 1, 1970, plus amounts in column 7 for years prior to the year for which determination is being made.
2 Column 6 minus column 5.
Qualified portion of basis of asset ÷ Total basis of asset = Units of qualified additions computed in column 7 on chart ÷ Units of capacity of additions computed in column 2 on chart.
Step 1. Find the total cost (within the meaning of section 1012) to the taxpayer of additions during the taxable year of all post-1969 public utility property with respect to which section 167(l)(2)(C) would apply if the election had not been made.
Step 2. Aggregate the cost (within the meaning of section 1012) to the taxpayer of all retirements during the taxable year of public utility property with respect to which the flow-through method of accounting was being used at the time of their retirement.
Step 3. Subtract the figure reached in step 2 from the figure reached in step 1.
In the event that the figure reached in step 2 exceeds the figure reached in step 1 such excess shall be carried forward to the next taxable year and shall be aggregated with the cost (within the meaning of section 1012) to the taxpayer of all retirements referred to in step 2 for such next taxable year.
Amount of qualified additions computed in step 3 ÷ Amount of total additions computed in step 1 = Qualified portion of basis of asset ÷ Total basis of asset.
Million | |
Step 1. Aggregate cost of flow-through additions | $4.0 |
Step 2. Cost of all flow-through retirements | 1.5 |
Step 3. Figure reached in step 1 less figure reached in step 2 | 2.5 |
The amount of qualified public utility property to which section 167(l)(2)(C) will not apply is $2.5 million. Pursuant to the provisions of paragraph (c)(2) of this section, the amount of qualified public utility property would be allocated to the basis for depreciation (as defined in section 167(g)) of an asset with a total basis for depreciation of $2 million as follows:
$2.5 million (figure in step 3)/$4 million (figure in step 1) = Qualified portion of basis of asset/$2 million Qualified portion of basis of asset = $1.25 million.
Million | |
Step 1. Aggregate cost of flow-through additions | $1.0 |
Step 2. Cost of all flow-through retirements | 3.0 |
Step 3. Figure reached in step 1 less figure reached in step 2 | (2.0) |
Since retirements of flow-through public utility property for the year 1972 exceeded additions made during such year, the excess retirements, $2.0 million, must be carried forward to be aggregated with retirements for 1973.
26 C.F.R. §1.167(l)-2