Treasury Regulations · 26 CFR
§ 1.167(l)-2. Public utility property; election as to post-1969 property representing growth in capacity.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 167(l)
Cite as 26 CFR § 1.167(l)-2
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- June 10, 1970 by T.D. 7045
- Last amended
- June 7, 1974 by T.D. 7315
- Issued under
- 26 U.S.C. § 167(l)
- Length
- 2,872 words · about 12 min to read
- Defines
- 2 terms
- Cross-references
- cites 2 Code sections and 0 regulations; cited by 1
Corporation A, an electric utility company, wishes to have the election provided by section 167(l)(4)(A) apply only with respect to its production plant. A statement that the election shall apply only with respect to production plant will be sufficient to include within the election all of the taxpayer's qualified production plant of any kind. All public utility property of the taxpayer other than production plant will not be subject to the election.
Corporation B, an electric utility company, wishes to have the election provided by section 167(l)(4)(A) apply only with respect to nuclear production plant. A statement which clearly indicates that only nuclear production plant will be included in the election will be sufficient to exclude from the election all public utility property other than nuclear production plant.
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|
| Year | Additions | Flow-through retirements | Net additions | Adjusted capacity 1 | Actual capacity | Units of qualified additions 1 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.
Corporation A, a telephone company subject to the jurisdiction of the Federal Communications Commission, elected, pursuant to the provisions of section 167(l)(4)(A) and this section, with respect to all of its qualified post-1969 public utility property to have the provisions of paragraph (2) (C) of section 167(l) not apply. In 1971 the Corporation added new underground cable with a cost (within the meaning of section 1012) to it of $4 million to its underground cable account. In the same year it retired public utility property with a cost (within the meaning of section 1012) to Corporation A of $1.5 million. The flow-through method of accounting was being used with respect to all of the retired property at the time of retirement. Using the formula method described in paragraph (c) of this section, the amount of qualified underground cable would be determined as follows:
| 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.
In 1972 Corporation A (the corporation described in example (1)) added underground cable with a cost (within the meaning of section 1012) to it of $1 million. In the same year the cost (within the meaning of section 1012) to the corporation of retirements of public utility property with respect to which the flow-through method of accounting was being used was $3 million. There were no other additions or retirements. The amount of qualified public utility property would be determined as follows:
| 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.
Corporation B, a gas pipeline company subject to the jurisdiction of the Federal Power Commission, made the election provided by section 167(l)(4)(A) and this section with respect to all of its post-1969 public utility property. Corporation B chose to use an engineering data method of determining which property was subject to the election provided by this section. In 1970, the corporation replaced a portion of its pipeline with respect to which the flow-through method of accounting was being used at the time of its retirement which had a peak capacity on January 1, 1970, of 100,000 thousand cubic feet (M c.f.) per day at a pressure of 14.73 pounds per square inch absolute (p.s.i.a.) with pipe with a capacity of 125,000 M c.f. per day at 14.73 p.s.i.a. Assuming that there were no other additions or retirements, using an engineering data method one-fifth of the new pipeline would be property subject to the election of this section effective for its taxable year beginning on January 1, 1971.
In 1970 Corporation C (with the same characteristics as the corporation described in example (3)) extended its pipeline 5 miles further than it extended on January 1, 1970. Assuming that there were no other additions or retirements, the entire extension would be property subject to the election provided by this section effective for its taxable year beginning on January 1, 1971.
As a result of a change of service areas between two corporations, in 1970 Corporation D (with the same characteristics as the corporation described in example (3)) retired a pipeline running north and south and replaced it with a pipeline of equal length and capacity running east and west. No part of the pipeline running east and west is property subject to the election.
[T.D. 7045, 35 FR 8933, June 10, 1970. Redesignated by T.D. 7315, 39 FR 20195, June 7, 1974]
Terms defined here
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Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Cited by 1 other regulation
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Amended by T.D. 7315 (39 FR 20195)
- Issued by T.D. 7045 (35 FR 8933)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Itemized Deductions for Individuals and Corporations
Nearby sections
- § 1.167(g)-1 Basis for depreciation.
- § 1.167(h)-1 Life tenants and beneficiaries of trusts and estates.
- § 1.167(i)-1 Depreciation of improvements in the case of mines, etc.
- § 1.167(l)-1 Limitations on reasonable allowance in case of property of certain public utilities.
- § 1.167(l)-2 Public utility property; election as to post-1969 property representing growth in capacity.
- § 1.167(l)-3 Multiple regulation, asset acquisitions, reorganizations, etc.
- § 1.167(l)-4 Public utility property; election to use asset depreciation range system.
- § 1.167(m)-1 Class lives.
- § 1.168-5 Special rules.