20180515PAC to Monsanto Attachment 1.7-1.pdf

§13001 21-PERCENT CORPORATE TAX RATE.
Act Sections Not Amending Code for the Tax Cuts and Jobs Act
Pending & Enacted Legislation
Sec. 13001. 21-PERCENT CORPORATE TAX RATE.
(a)IN GENERAL. * * * * * * * * * * * *
(b)CONFORMING AMENDMENTS. * * * * * * * * * * * *
(c)EFFECTIVE DATE.
(1)IN GENERAL.-Except as otherwise provided in this subsection, the amendments made by
subsections (a) and (b) shall apply to taxable years beginning after December 31, 2017.
(2)WITHHOLDING.-The amendments made by subsection (b)(3) shall apply to distributions made
after December 31, 2017.
(3)CERTAIN TRANSFERS.-The amendments made by subsection (b)(6) shall apply to transfers
made after December 31, 2017.
(d)NORMALIZATION REQUIREMENTS.
(1)IN GENERAL.-A normalization method of accounting shall not be treated as being used with
respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code
of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes and reflecting
operating results in its regulated books of account, reduces the excess tax reserve more rapidly or to a
greater extent than such reserve would be reduced under the average rate assumption method.
(2)ALTERNATIVE METHOD FOR CERTAIN TAXPAYERS.-If, as of the first day of the taxable year
that includes the date of enactment of this Act-
(A)the taxpayer was required by a regulatory agency to compute depreciation for public utility
property on the basis of an average life or composite rate method, and
(B)the taxpayer's books and underlying records did not contain the vintage account data necessary
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to apply the average rate assumption method, the taxpayer will be treated as using a normalization
method of accounting if, with respect to such jurisdiction, the taxpayer uses the alternative method for
public utility property that is subject to the regulatory authority of that jurisdiction.
(3)DEFINITIONS.-For purposes of this subsection-
(A)EXCESS TAX RESERVE.-The term
"excess tax reserve" means the excess of-
(i)the reserve for deferred taxes (as described in section 168(i)(9)(A)(ii) of the Internal Revenue
Code of 1986) as of the day before the corporate rate reductions provided in the amendments made
by this section take effect, over
(ii)the amount which would be the balance in such reserve if the amount of such reserve were
determined by assuming that the corporate rate reductions provided in this Act were in effect for all
prior periods.
(B)AVERAGE RATE ASSUMPTION METHOD.-The average rate assumption method is the method
under which the excess in the reserve for deferred taxes is reduced over the remaining lives of the
property as used in its regulated books of account which gave rise to the reserve for deferred taxes.
Under such method, during the time period in which the timing differences for the property reverse,
the amount of the adjustment to the reserve for the deferred taxes is calculated by multiplying-
(i)the ratio of the aggregate deferred taxes for the property to the aggregate timing differences for
the property as of the beginning of the period in question, by
(ii)the amount of the timing differences which reverse during such period.
(C)ALTERNATIVE METHOD.-The "alternative method" is the method in which the taxpayer-
(i)computes the excess tax reserve on all public utility property included in the plant account on the
basis of the weighted average life or composite rate used to compute depreciation for regulatory
purposes, and
(ii)reduces the excess tax reserve ratably over the remaining regulatory life of the property.
(4)TAX INCREASED FOR NORMALIZATION VIOLATION.-If, for any taxable year ending after the
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date of the enactment of this Act, the taxpayer does not use a normalization method of accounting for
the corporate rate reductions provided in the amendments made by this section-
(A)the taxpayer's tax for the taxable year shall be increased by the amount by which it reduces its
excess tax reserve more rapidly than permitted under a normalization method of accounting, and
(B)such taxpayer shall not be treated as using a normalization method of accounting for purposes of
subsections (f)(2) and (i)(9)(C) of section 168 of the Internal Revenue Code of 1986.
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§168 Accelerated cost recovery system. [Amended by the Tax Cuts and Jobs Act, P.L. 115-97; see
Code history for details.]
Internal Revenue Code (RIA)
Internal Revenue Code
§ 168 Accelerated cost recovery system. [Amended by
the Tax Cuts and Jobs Act, P.L. 115-97; see Code history
for details.]
(a)General rule. * * * * * * * * * * * *
(b) Applicable depreciation method. * * * * * * * * * * * *
(c) Applicable recovery period. * * * * * * * * * * * *
(d) Applicable convention. * * * * * * * * * * * *
(e) Classification of property. * * * * * * * * * * * *
(f) Property to which section does not apply.
This section shall not apply to-
(1) Certain methods of depreciation. * * * * * * * * * * * *
(2) Certain public utility property.
Any public utility property (within the meaning of subsection (i)(10) ) if the taxpayer does not use a
normalization method of accounting.
(3) Films and video tape. * * * * * * * * * * * *
(4) Sound recordings. * * * * * * * * * * * *
(5) Certain property placed in service in churning transactions. * * * * * * * * * * * *
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(g) Alternative depreciation system for certain property. * * * * * * * * * * * *
(h) Tax-exempt use property. * * * * * * * * * * * *
(i) Definitions and special rules. * * * * * * * * * * * *
(2) Qualified technological equipment. * * * * * * * * * * * *
(3) Lease term. * * * * * * * * * * * *
(4) General asset accounts. * * * * * * * * * * * *
(5) Changes in use. * * * * * * * * * * * *
(6) Treatments of additions or improvements to property. * * * * * * * * * * * *
(7) Treatment of certain transferees. * * * * * * * * * * * *
(9)Normalization rules.
(A)In general. In order to use a normalization method of accounting with respect to any public utility
property for purposes of subsection (f)(2) -
(i)the taxpayer must, in computing its tax expense for purposes of establishing its cost of service
for ratemaking purposes and reflecting operating results in its regulated books of account, use a
method of depreciation with respect to such property that is the same as, and a depreciation period
for such property that is no shorter than, the method and period used to compute its depreciation
expense for such purposes; and
(ii)if the amount allowable as a deduction under this section with respect to such property
(respecting all elections made by the taxpayer under this section ) differs from the amount that
would be allowable as a deduction under section 167 using the method (including the period, first
and last year convention, and salvage value) used to compute regulated tax expense under clause
(i), the taxpayer must make adjustments to a reserve to reflect the deferral of taxes resulting from
such difference.
(B) Use of inconsistent estimates and projections, etc.
(i) In general. One way in which the requirements of subparagraph (A) are not met is if the
taxpayer, for ratemaking purposes, uses a procedure or adjustment which is inconsistent with the
requirements of subparagraph (A) .
(ii) Use of inconsistent estimates and projections. The procedures and adjustments which are
to be treated as inconsistent for purposes of clause (i) shall include any procedure or adjustment
for ratemaking purposes which uses an estimate or projection of the taxpayer's tax expense,
depreciation expense, or reserve for deferred taxes under subparagraph (A)(ii) unless such
estimate or projection is also used, for ratemaking purposes, with respect to the other 2 such items
and with respect to the rate base.
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(iii) Regulatory authority. The Secretary may by regulations prescribe procedures and adjustments
(in addition to those specified in clause (ii) ) which are to be treated as inconsistent for purposes of
clause (i) .
(C) Public utility property which does not meet normalization rules. In the case of any public utility
property to which this section does not apply by reason of subsection (f)(2), the allowance for
depreciation under section 167(a)shall be an amount computed using the method and period
referred to in subparagraph (A)(i).
(10) Public utility property.
The term "public utility property" means property used predominantly in the trade or business of the
furnishing or sale of-
(A)electrical energy, water, or sewage disposal services,
(B) gas or steam through a local distribution system,
(C) telephone services, or other communication services if furnished or sold by the Communications
Satellite Corporation for purposes authorized by the Communications Satellite Act of 1962 (47 U.S.C.
701), or
(D) transportation of gas or steam by pipeline,
if the rates for such furnishing or sale, as the case may be, have been established or approved by a
State or political subdivision thereof, by any agency or instrumentality of the United States, or by a
public service or public utility commission or other similar body of any State or political subdivision
thereof.
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