[Federal Register Volume 71, Number 236 (Friday, December 8, 2006)]
[Rules and Regulations]
[Pages 71045-71047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20740]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9286]
RIN 1545-BE91


Railroad Track Maintenance Credit; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to temporary regulations.

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SUMMARY: This document contains corrections to temporary regulations 
(TD 9286) that were published in the Federal Register on Friday, 
September 8, 2006 (71 FR 53009) providing rules for claiming the 
railroad track maintenance credit under section 45G of the Internal 
Revenue Code for qualified railroad track maintenance expenditures paid 
or incurred by a Class II railroad or Class III railroad and other 
eligible taxpayers during the taxable year.

DATES: This correction is effective September 8, 2006.

FOR FURTHER INFORMATION CONTACT: Winston H. Douglas, (202) 622-3110 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The correction notice that is the subject of this document is under 
section 45G of the Internal Revenue Code.

Need for Correction

    As published, temporary regulations (TD 9286) contain errors that 
may prove to be misleading and are in need of clarification.

Correction of Publication

    Accordingly, the publication of the temporary regulations (TD 
9286), which was the subject of FR Doc. E6-14858, is corrected as 
follows:

[[Page 71046]]

    1. On page 53010, column 1, in the preamble, under the paragraph 
heading ``General Overview'', first and second lines from the bottom of 
the second paragraph, the language ``assigned to such person by such a 
railroad.'' is corrected to read ``assigned to such person by a Class 
II railroad or a Class III railroad.''.
    2. On page 53010, column 2, in the preamble, under the paragraph 
heading ``Scope'', first paragraph of the column, last line of the 
paragraph, the language ``of controlled groups under section 45G.'' is 
corrected to read ``of controlled groups under section 45G with respect 
to the RTMC.''.
    3. On page 53010, column 2, in the preamble, under the paragraph 
heading ``Eligible Taxpayer'', fourth line of the first paragraph, the 
language ``defined in the temporary regulations as:'' is corrected to 
read ``defined as:''.
    4. On page 53010, column 2, in the preamble, under the paragraph 
heading ``Eligible Taxpayer'', third line from the bottom of the first 
paragraph, the language ``railroad track assigned to the person for'' 
is corrected to read ``railroad track assigned to the taxpayer for''.
    5. On page 53010, column 2, in the preamble, under the paragraph 
heading ``Eligible Taxpayer'', second through the sixth line from the 
bottom of the second paragraph, the language ``Price Index)). 49 CFR 
part 1201, subpart A, Sec.  1-1(a). In general, Class III railroads 
have annual carrier operating revenues of $20 million or less after 
applying the railroad revenue deflator formula. 49'' is corrected to 
read ``Price Index)). See 49 CFR part 1201, subpart A, Sec.  1-1(a). In 
general, Class III railroads have annual carrier operating revenues of 
$20 million or less after applying the railroad revenue deflator 
formula. See 49''.
    6. On page 53010, column 3, in the preamble, under the paragraph 
heading ``Eligible Taxpayer'', second paragraph of the column, tenth to 
seventeenth lines, the language ``services are the transport of freight 
by rail, the loading and unloading of freight transported by rail, 
locomotive leasing or rental, and maintenance of a railroad's right-of-
way (including vegetation control). Examples of services that are not 
railroad-related services are general business services,'' is corrected 
to read ``services include the transport of freight by rail, the 
loading and unloading of freight transported by rail, locomotive 
leasing or rental, and maintenance of a railroad's right-of-way 
(including vegetation control). Examples of services that are not 
railroad-related services include general business services,''.
    7. On page 53011, column 1, in the preamble, under the paragraph 
heading ``Determination of QRTME Paid or Incurred'', second paragraph, 
third and fourth lines, the language ``to a taxpayer using an accrual 
method of accounting. In this case, paid or'' is corrected to read ``to 
taxpayers using an accrual method of accounting. For such taxpayers, 
paid or''.
    8. On page 53011, column 1, in the preamble, under the paragraph 
heading ``Determination of QRTME Paid or Incurred'', second paragraph, 
fifteenth to twentieth lines, the language ``any such expenditures. The 
temporary regulations provide that reimbursements may consist of 
amounts paid either directly or indirectly to the taxpayer. Examples of 
indirect reimbursements are discounted freight shipping rates,'' is 
corrected to read ``any expenditures that would otherwise qualify as 
QRTME. The temporary regulations provide that reimbursements may 
consist of amounts paid either directly or indirectly to the taxpayer. 
Examples of indirect reimbursements include discounted freight shipping 
rates,''.
    9. On page 53011, column 1, in the preamble, under the paragraph 
heading ``Determination of QRTME Paid or Incurred'', third paragraph, 
first line, the language ``If an eligible taxpayer (assignee) pays'' is 
corrected to read ``The IRS and Treasury believe that the statute is 
intended to allow suppliers and shippers to claim the credit for 
providing the funding for the QRTME performed on railroad track owned 
by, or leased to, a Class II railroad or Class III railroad. However, 
the suppliers and shippers may not have the necessary expertise to 
perform the repairs and improvements. The IRS and Treasury believe that 
these eligible taxpayers should be able to claim the credit for 
providing the funding to the extent that the Class II railroads and 
Class III railroads use such funding to perform the repairs and 
improvements to the track. Therefore, if an eligible taxpayer 
(assignee) pays''.
    10. On page 53011, column 1, in the preamble, under the paragraph 
heading ``Determination of QRTME Paid or Incurred'', third paragraph, 
fifth line from the bottom of the column, the language ``paragraph, 
this QRTME would be'' is corrected to read ``paragraph, QRTME would 
be''.
    11. On page 53011, column 2, in the preamble, under the paragraph 
heading ``Assignment of Railroad Track Miles'', first paragraph, first 
through fifth lines, the language ``For purposes of section 45G, the 
temporary regulations provide that an assignment of a mile of railroad 
track is not a legal transfer of title, but merely a designation. This 
designation must be'' is corrected to read ``The temporary regulations 
provide that an assignment of a mile of railroad track is not a legal 
transfer of title, but merely a designation made solely for purposes of 
section 45G. This designation must be''.
    12. On page 53011, column 2, in the preamble, under the paragraph 
heading ``Assignment of Railroad Track Miles'', second paragraph, fifth 
line, the language ``track. Thus, if a Class II railroad or Class'' is 
corrected to read ``track. If a Class II railroad or Class''.
    13. On page 53011, column 2, in the preamble, under the paragraph 
heading ``Assignment of Railroad Track Miles'', fourth paragraph, 
second line, the language ``that a taxpayer must file Form 8900,'' is 
corrected to read ``that a taxpayer file Form 8900,''.
    14. On page 53011, column 3, in the preamble, last paragraph of the 
column, first line, the language ``The temporary regulations also'' is 
corrected to read ``The temporary regulations''.
    15. On page 53012, column 1, in the preamble, first paragraph of 
the column, first line, the language ``assignment is properly 
reported.'' is corrected to read ``assignment is reported.''.
    16. On page 53012, column 1, in the preamble, under the paragraph 
heading ``Special Rules'', first paragraph, second through fourth lines 
from the bottom of the paragraph, the language ``structure (railroad 
track, roadbed, bridges, and related track structures) and intangible 
assets to which the'' is corrected to read ``structure and intangible 
assets to which the''.
    17. On page 53012, column 1, in the preamble, under the paragraph 
heading ``Special Rules'', second paragraph, sixth line, the language 
``of the RTMC allowable. This reduction'' is corrected to read ``of the 
RTMC allowable. The basis reduction''.
    18. On page 53012, column 1, in the preamble, under the paragraph 
heading ``Special Rules'', third paragraph, first line, the language 
``The temporary regulations also'' is corrected to read ``The temporary 
regulations do not''.
    19. On page 53012, column 2, in the preamble, under the paragraph 
heading ``Special Rules'', first paragraph of the column, fourth line 
to the last of the paragraph, the language ``legislative history does 
not refer to, any exception to this rule. Accordingly, pursuant to 
section 61 and the regulations under section 61, the owner of the 
tangible assets (for example, railroad track and roadbed) with respect 
to which the QRTME is paid or incurred by another

[[Page 71047]]

person that does not have a depreciable interest in those assets has 
gross income in the amount of that QRTME. However, the application of 
section 61 to QRTME paid or incurred with respect to eligible railroad 
track that is leased by a Class II railroad or Class III railroad 
raises a question as to under what circumstances the owner or lessee 
should recognize gross income with respect to QRTME. The IRS and 
Treasury Department request comments on this issue.'' is replaced to 
read ``legislative history does not refer to, any exception to this 
rule for an owner of tangible assets (for example, railroad track and 
roadbed) for the value of the repairs or improvements to such assets 
with respect to which QRTME is paid or incurred by another person that 
does not have a depreciable interest in such assets.''

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
 [FR Doc. E6-20740 Filed 12-7-06; 8:45 am]
BILLING CODE 4830-01-P