[Federal Register Volume 89, Number 95 (Wednesday, May 15, 2024)]
[Proposed Rules]
[Pages 42404-42408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10579]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-133850-13]
RIN 1545-BN93


Interest Capitalization Requirements for Improvements to 
Designated Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations that would remove 
the associated property rule and similar rules from the existing 
regulations on the interest capitalization requirements for 
improvements to designated property. In addition, this document 
contains proposed regulations that would modify the definition of 
``improvement'' for purposes of applying those existing regulations. 
Lastly, this document contains proposed regulations that would modify 
other rules in those existing regulations in light of the proposed 
removal of the associated property rule. The proposed regulations would 
affect taxpayers making improvements to real or tangible personal 
property that constitute the production of designated property.

DATES: Written or electronic comments and requests for a public hearing 
must be received by July 15, 2024.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically via the Federal eRulemaking Portal at https://www.regulations.gov (indicate IRS and REG-133850-13) by following the 
online instructions for submitting comments. Requests for a public 
hearing must be submitted as prescribed in the ``Comments and Requests 
for a Public Hearing'' section. Once submitted to the Federal 
eRulemaking Portal, comments cannot be edited or withdrawn. The 
Department of the Treasury (Treasury Department) and the IRS will 
publish for public availability any comments submitted to the IRS's 
public docket. Send paper submissions to: CC:PA:01:PR (REG-133850-13), 
Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin 
Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Livia Piccolo of the Office of Associate Chief Counsel (Income Tax and 
Accounting), at (202) 317-7007; concerning submissions of comments or a 
public hearing, Vivian Hayes, (202) 317-6901 (not toll-free numbers) or 
by email at [email protected] (preferred).

SUPPLEMENTARY INFORMATION: 

Background

    This document proposes amendments to Sec.  1.263A-11(e)(1)(ii) and 
(iii) of the Income Tax Regulations (26 CFR part 1) to remove the 
``associated property rule'' and similar rules from the interest 
capitalization requirements for improvements that constitute the 
production of property under section 263A(f) of the Internal Revenue 
Code (Code). In addition, this document proposes amendments to Sec.  
1.263A-11(f) to clarify that Sec.  1.263A-11(f) applies only to 
property purchased and further produced before it is placed in service. 
Finally, this document proposes to amend Sec.  1.263A-8(d)(3) to update 
the definition of ``improvement'' so that it is consistent with the 
definition of ``improvement'', including the exceptions, safe harbors, 
and elections provided under Sec.  1.263(a)-3.
    Sections 263A(a) and (b) of the Code generally require the 
capitalization of direct and indirect costs of real or tangible 
personal property produced by the taxpayer. Under section 263A(g)(1) 
and Sec.  1.263A-8(d)(3), the term ``produce'' includes ``improve.''
    Section 263A(f) contains rules for capitalizing interest with 
respect to certain property produced by the taxpayer and for 
determining the amount of interest required to be capitalized. In 
general, section 263A(f)(1) limits capitalization to interest that is 
paid or incurred during the production period and that is allocable to 
real property or certain tangible personal property produced by the 
taxpayer, referred to as ``designated property'' in the section 263A 
regulations. See Sec.  1.263A-8(b)(1). Under section 263A(f)(2)(A), in 
determining the amount of interest required to be capitalized to any 
property, (i) interest on any indebtedness directly attributable to 
production expenditures with respect to the property is assigned to the 
property, and (ii) interest on any other indebtedness is assigned to 
the property to the extent that the taxpayer's interest cost could have 
been reduced if production expenditures not attributable to 
indebtedness described in clause (i) had not been incurred (avoided 
cost method).
    Section 1.263A-8(a) provides that taxpayers must use the avoided 
cost method described in Sec.  1.263A-9 in determining the amount of 
interest required to be capitalized with respect to the production of 
designated property. Section 1.263A-9(a)(1) explains that, under the 
avoided cost method, any interest that the taxpayer theoretically would 
have avoided if accumulated production expenditures (as defined in 
Sec.  1.263A-11) (APEs) had been used to repay or reduce the taxpayer's 
outstanding debt must be capitalized. Under Sec.  1.263A-11(a), APEs 
generally mean the cumulative amount of direct and indirect costs 
described in section 263A(a) that are required to be capitalized with 
respect to a unit of property.
    Section 1.263A-9(c) provides that, to the extent a taxpayer's APEs 
exceed traced debt (that is, debt that is allocated to APEs with 
respect to the unit of property), the general formula for determining 
the amount of interest that must be capitalized is the average excess 
expenditures multiplied by the weighted average interest rate on the 
debt during the time the production occurs. A larger base of production 
expenditures leads to more interest capitalized.
    Section 1.263A-11(e)(1)(i) provides that, if an improvement 
constitutes the production of designated property under Sec.  1.263A-
8(d)(3), APEs with respect to the improvement consist of all direct and 
indirect costs required to be capitalized with respect to the 
improvement. In the case of an improvement to a unit of real property 
qualifying as the production of designated property under Sec.  1.263A-
8(d)(3), Sec.  1.263A-11(e)(1)(ii) provides that APEs include an 
allocable portion of the cost of land, and for any measurement period, 
the adjusted basis of any existing structure, common feature, or other 
property that is not placed in service, or must be temporarily 
withdrawn from service to complete the improvement (associated 
property) during any part of the measurement period if the associated 
property directly benefits the property being improved, the associated 
property directly benefits from the improvement, or the improvement was 
incurred by reason of the associated property (associated property 
rule). In the case of an improvement to a unit of tangible personal 
property qualifying as the production of designated property under 
Sec.  1.263A-8(d)(3), Sec.  1.263A-

[[Page 42405]]

11(e)(1)(iii) provides that APEs include the adjusted basis of the 
asset being improved if that asset either is not placed in service or 
must be temporarily withdrawn from service to complete the improvement.
    Section 1.263A-12(a) explains that under Sec.  1.263A-9, a taxpayer 
must capitalize interest for computation periods that include the 
production period of a unit of designated property. In the case of 
property produced for self-use, Sec.  1.263A-12(d)(1) generally 
provides that the production period for a unit of property ends on the 
date that the unit is placed in service and all production activities 
reasonably expected to be undertaken are completed.
    In Dominion Resources, Inc. v. United States, 681 F.3d 1313 (Fed. 
Cir. 2012), the Federal Circuit invalidated the associated property 
rule of Sec.  1.263A-11(e)(1)(ii)(B) for property temporarily withdrawn 
from service. The court concluded that the regulation was not a 
reasonable interpretation of the avoided cost rule in section 
263A(f)(2)(A)(ii) and that it violated the State Farm requirement that 
the Treasury Department and the IRS provide a reasoned explanation for 
adopting a regulation. See Motor Vehicles Mfrs. Ass'n of the United 
States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).
    The taxpayer in Dominion Resources was a public utility that 
replaced coal burners in two of its electric generating plants. This 
action required the taxpayer to temporarily withdraw the two electric 
generating plants from service. During that time, Dominion incurred 
interest on debt unrelated to the improvements. Dominion deducted some 
of that interest, and the IRS disagreed with the taxpayer's 
computations. The IRS argued that pursuant to Sec.  1.263A-
11(e)(1)(ii)(B), the taxpayer's APEs should include the cost of the 
improvements (that is, the amount spent to replace the coal burners), 
as well as the adjusted basis of the property temporarily withdrawn 
from service to complete the improvement (that is, the electric 
generating plants).
    The taxpayer and the IRS ultimately reached a settlement agreement, 
pursuant to which Dominion deducted 50 percent and capitalized 50 
percent of the disputed amount. The taxpayer subsequently filed a claim 
for refund, asserting that the entire amount was deductible. The 
taxpayer challenged the validity of Sec.  1.263A-11(e)(1)(ii)(B) as 
applied to its improvements. In Dominion Resources, Inc. v. United 
States, 97 Fed. Cl. 239 (Fed. Cl. 2011), the United States Court of 
Federal Claims upheld the validity of the associated property rule and 
denied the taxpayer's claim for refund.
    On appeal, the United States Court of Appeals for the Federal 
Circuit (Federal Circuit) reversed the lower court decision and 
invalidated the associated property rule of Sec.  1.263A-
11(e)(1)(ii)(B) for property temporarily withdrawn from service. The 
Federal Circuit explained that the regulation ``unreasonably links'' 
the interest capitalized when a taxpayer makes an improvement to the 
adjusted basis of the property temporarily withdrawn from service to 
complete the improvement. The court reasoned that to implement the 
avoided cost principle, the interest to be capitalized is the amount 
that could have been avoided if funds had not been expended for the 
improvement. However, the adjusted basis of the temporarily withdrawn 
property does not represent an ``avoided'' amount. The court found that 
``[a] property owner does not expend funds in an amount equal to the 
adjusted basis [of the temporarily withdrawn property] when making the 
improvement. Instead, she expends funds in an amount equal to the cost 
of the improvement itself.'' Dominion Resources, 681 F.3d at 1318; see 
also S. Rep. No. 99-313, at 144 (1986) (interest to be capitalized is 
the amount ``that could have been avoided if funds had not been 
expended for construction.''); H.R. Rep. No. 99-426, at 628 (1985) 
(same). Thus, the court concluded that the regulation contradicts the 
avoided cost rule.
    Section 1.263A-8(d)(3) provides that any improvement to property 
described in Sec.  1.263(a)-1(b) constitutes the production of 
property. Final regulations under sections 162 and 263(a) of the Code 
(TD 9636) were published in the Federal Register (78 FR 57686) on 
September 19, 2013. The final regulations clarified the definition of 
``improvement'' and moved the definition to Sec.  1.263(a)-3. Section 
1.263(a)-3 did not change the meaning of the term ``improvement'' but 
synthesized applicable case law and prior administrative rules into a 
framework to ease determinations of whether a cost must be capitalized 
as an improvement cost or deducted as a repair and maintenance expense. 
These final regulations also clarified that a cost capitalized as an 
improvement cost can include only the cost of activities performed 
after the property is placed in service. See Sec.  1.263(a)-3(d).

Explanation of Provisions

    The Treasury Department and the IRS have considered the Federal 
Circuit's opinion in Dominion Resources and agree with its rationale. 
Under this rationale, treating the adjusted basis of any associated 
property that is temporarily withdrawn from service to complete the 
improvement as a component of APEs contradicts the avoided cost rule 
because the adjusted basis of the temporarily withdrawn property does 
not represent an ``avoided'' amount. Accordingly, these proposed 
regulations would remove the associated property rule at Sec.  1.263A-
11(e)(1)(ii)(B) (for improvements to real property) and Sec.  1.263A-
11(e)(1)(iii) (for improvements to tangible personal property) for 
property temporarily withdrawn from service. For similar reasons, these 
proposed regulations would remove the rule at Sec.  1.263A-
11(e)(1)(ii)(A) (APEs with respect to an improvement to real property 
includes an allocable portion of the cost of land).
    In Dominion Resources, the challenge to Sec.  1.263A-
11(e)(1)(ii)(B) applied only to improvements to property ``temporarily 
withdrawn from service'' and not to improvements to property that is 
``not placed in service.'' However, the Treasury Department and the IRS 
have determined that the associated property rule at Sec. Sec.  1.263A-
11(e)(1)(ii)(B) and 1.263A-11(e)(1)(iii) for improvements to property 
``not placed in service'' also should be removed because under Sec.  
1.263(a)-3(d), the definition of ``improvement'' is limited to amounts 
paid for activities performed after the property is placed in service. 
Amounts paid for activities performed prior to the date that property 
is placed in service are characterized as acquisition or production 
costs (rather than improvement costs) and are generally capitalized 
under Sec.  1.263(a)-2 and section 263A. See Sec. Sec.  1.263(a)-2(d) 
and (c)(1). In addition, the APE rules in Sec.  1.263A-11(f) already 
address a situation in which a taxpayer incurs production costs with 
respect to property that has not been placed in service. Accordingly, 
these proposed regulations would remove the associated property rule at 
Sec. Sec.  1.263A-11(e)(1)(ii)(B) and 1.263A-11(e)(1)(iii) for 
improvements to property not placed in service.
    Because these proposed regulations would remove the associated 
property rule at Sec.  1.263A-11(e)(1)(ii)(B), the de minimis rule of 
Sec.  1.263A-11(e)(2) would be irrelevant. Accordingly, these proposed 
regulations also would remove this de minimis rule.
    As a result of the proposed amendments to Sec.  1.263(a)-11(e) to 
remove from APEs the adjusted basis of associated real property, the 
adjusted

[[Page 42406]]

basis of associated tangible personal property, and an allocable 
portion of the cost of the land when the taxpayer makes an improvement, 
a taxpayer would be required to include in APEs only the direct and 
indirect costs of the improvement itself.
    The proposed regulations would not change the substance of the 
rules in Sec.  1.263A-11(f) concerning interest capitalized with 
respect to property purchased and further produced before it is placed 
in service. Section 1.263A-11(f) provides that if a taxpayer purchases 
a unit of property for further production, the taxpayer's APEs include 
the full purchase price of the property plus additional direct and 
indirect costs incurred by the taxpayer.
    The Treasury Department and the IRS considered whether the rules in 
Sec.  1.263A-11(f) should be modified to exclude the purchase price of 
such property from the taxpayer's APEs in light of the holding in 
Dominion Resources. That is, the Treasury Department and the IRS 
considered whether the rationale of Dominion Resources should apply to 
situations in which a taxpayer purchases property for further 
production prior to placing the property in service. As noted 
previously in the Background and this Explanation of Provisions, the 
holding in Dominion Resources was limited to improvements to property 
``temporarily withdrawn from service'' and did not address situations 
in which a taxpayer purchases property for further production prior to 
placing the property in service. Further, unlike the cost of property 
that is temporarily withdrawn from service to be improved, the cost of 
property purchased for further production prior to being placed in 
service represents an ``avoided'' amount under avoided cost principles 
because the cost of such property is a component cost of the original 
production activity. In contrast, the cost of property that is 
temporarily withdrawn from service to be improved is not a component 
cost of the subsequent production activity. Accordingly, these proposed 
regulations would retain the substantive rules in Sec.  1.263A-11(f). 
However, these proposed regulations would modify Sec.  1.263A-11(f) to 
clarify that Sec.  1.263A-11(f) applies only to situations in which 
property is purchased and further produced before the property is 
placed in service.
    The Treasury Department and the IRS recognize that the proposed 
amendments to remove from APEs the adjusted basis of associated real 
property, the adjusted basis of associated tangible personal property, 
and an allocable portion of the cost of the land when the taxpayer 
makes an improvement may increase the potential for abuse. For example, 
a taxpayer may attempt to treat property produced for self-use as 
having been placed in service (even though the placed-in-service 
requirements have not yet been met) and then attempt to characterize 
subsequent production activities as an improvement, thereby improperly 
excluding relevant costs from APEs. Section 1.263A-12(d)(1) provides 
that in the case of property produced for self-use, the production 
period for a unit of property does not end until the taxpayer places 
the property in service and all production activities reasonably 
expected to be undertaken are completed. The proposed regulations 
contain a cross-reference to Sec.  1.263A-12(d)(1) to emphasize that 
taxpayers must comply with the rules of that section when determining 
whether the production period has ended and therefore whether the 
taxpayer's production activities constitute an improvement.
    The final regulations under sections 162 and 263(a), published in 
2013, clarify the definition of ``improvement'' and change the specific 
citations for the definition. Specifically, Sec.  1.263(a)-3 now 
governs the definition of ``improvement'' for purposes of section 
263(a). In addition, Sec.  1.263(a)-3 includes certain exceptions, safe 
harbors, and elections that may be applied in determining whether 
certain amounts must be treated as improvement costs. The treatment 
afforded by the application of Sec.  1.263(a)-3, including these 
exceptions, safe harbors, and elections, should also apply in 
determining whether costs must be treated as improvements for the 
computation of APEs for section 263A interest capitalization purposes. 
Accordingly, these proposed regulations would amend Sec.  1.263A-
8(d)(3) to update the definition of ``improvement'' so that it is 
consistent with the definition of ``improvement'', including the 
exceptions, safe harbors, and elections provided under Sec.  1.263(a)-
3. Note, however, the de minimis safe harbor election, as provided by 
Sec.  1.263(a)-1(f), is not an election under Sec.  1.263(a)-3 and 
generally does not apply to amounts paid for tangible property subject 
to section 263A if these amounts comprise the direct or allocable 
indirect costs of other property produced by the taxpayer. See Sec.  
1.263(a)-1(f)(3)(v). Accordingly, the de minimis safe harbor election 
under Sec.  1.263(a)-1(f) generally would not apply in determining 
whether amounts should be included in the computation of APEs for 
interest capitalization under section 263A.

Proposed Applicability Dates

    These regulations are proposed to apply to taxable years beginning 
after the date that final regulations are published in the Federal 
Register. However, taxpayers may choose to apply these proposed 
regulations for taxable years beginning after May 15, 2024 and on or 
before the date that final regulations are published in the Federal 
Register.

Special Analyses

I. Regulatory Planning and Review

    Pursuant to the Memorandum of Agreement, Review of Treasury 
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory 
actions issued by the IRS are not subject to the requirements of 
section 6 of Executive Order 12866, as amended. Therefore, a regulatory 
impact assessment is not required.

II. Paperwork Reduction Act

1. Collections of Information
    These proposed regulations do not impose additional recordkeeping 
or reporting burden related to section 263A for taxpayers. A change in 
a taxpayer's treatment of interest to a method consistent with 
Sec. Sec.  1.263A-8(d)(3) and 1.263A-11(e) and (f), as applicable, is a 
change in method of accounting to which sections 446 and 481 apply. 
Taxpayers change methods of accounting by filing Form 3115 (OMB 1545-
2070). For purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)) (PRA), the reporting burden associated with Form 3115 will be 
reflected in the PRA submission for OMB 1545-2070, so no estimate is 
provided here.
2. Burden Estimates
    These regulations impose 0 hours and $0 of additional recordkeeping 
or reporting burden related to section 263A for taxpayers. Taxpayers 
who change their accounting method based on the revised requirements do 
so by filing Form 3115 (OMB 1545-2070). For purposes of the PRA, the 
reporting burden associated with Form 3115 will be reflected in the PRA 
submission for OMB 1545-2070, so no estimate is provided here.
    Because businesses with gross receipts of up to $25 million (as 
adjusted for inflation pursuant to sections 263A(i) and 446(c)) are 
exempted from the requirement to capitalize costs, including interest, 
under section 263A, businesses with

[[Page 42407]]

gross receipts in excess of $25 million (as adjusted for inflation) are 
impacted by these proposed regulations. Approximately 30,000 taxpayers 
with gross receipts in excess of $25 million (as adjusted for 
inflation) reported that they were subject to section 263A during the 
past five years. This number is based upon the number of taxpayers who 
reported that they were subject to section 263A on Forms 1120, 1125-A, 
and 4562.
    It is estimated that no more than 1 percent of these businesses 
will make improvements to real or tangible personal property that 
constitute the production of designated property for which a change in 
accounting method will be made in any one year. Therefore, it is 
estimated that approximately 300 taxpayers may be impacted by the 
changes in these proposed regulations.

III. Regulatory Flexibility Act

    Small business taxpayers, those with gross receipts of up to $ 25 
million (as adjusted for inflation), are exempted from the requirement 
to capitalize costs, including interest, under section 263A. Therefore, 
very few, if any, small business taxpayers will be affected by these 
proposed regulations. It is hereby certified that these proposed 
regulations will not have a significant economic impact on a 
substantial number of small entities within the meaning of section 
601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6). The 
Treasury Department and the IRS invite comments about the potential 
impacts of this proposed rule on small entities.
    Pursuant to section 7805(f) of the Code, this notice of proposed 
rulemaking has been submitted to the Chief Counsel of the Office of 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

IV. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a final rule that includes any 
Federal mandate that may result in expenditures in any one year by a 
State, local, or Tribal government, in the aggregate, or by the private 
sector, of $100 million (updated annually for inflation). This proposed 
rule does not include any Federal mandate that may result in 
expenditures by State, local, or Tribal governments, or by the private 
sector in excess of that threshold.

V. Executive Order 13132: Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on State and local 
governments, and is not required by statute, or preempts State law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive order. This proposed rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive order.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS, as prescribed in this preamble under the ADDRESSES heading. 
The Treasury Department and the IRS request comments on all aspects of 
the proposed regulations. Any comments will be made available at 
https://www.regulations.gov or upon request.
    A public hearing will be scheduled if requested in writing by any 
person who timely submits electronic or written comments. Requests for 
a public hearing are also encouraged to be made electronically. If a 
public hearing is scheduled, notice of the date and time for the public 
hearing will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is Livia Piccolo of the 
Office of the Associate Chief Counsel (Income Tax and Accounting). 
However, other personnel from the Treasury Department and IRS 
participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS propose to amend 
26 CFR part 1 as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read, in 
part, as follows:

    Authority:  26 U.S.C. 7805 * * *
* * * * *


Sec.  1.263A-0   [Amended]

0
Par. 2. Section 1.263A-0 is amended by removing the entries for Sec.  
1.263A-11(e)(1) and (2).
0
Par. 3. Section 1.263A-8 is amended by revising paragraph (d)(3)(i) to 
read as follows:


Sec.  1.263A-8   Requirement to capitalize interest.

* * * * *
    (d) * * *
    (3) Improvements to existing property--(i) In general. Any 
improvement to property owned by the taxpayer that is treated as an 
improvement under Sec.  1.263(a)-3 constitutes the production of 
property. Generally, any improvement to designated property constitutes 
the production of designated property. An improvement is not treated as 
the production of designated property, however, if the de minimis 
exception described in paragraph (b)(4) of this section applies to the 
improvement. Paragraph (d)(3)(iii) of this section provides an 
exception for certain improvements to tangible personal property. In 
addition, improvements to designated property under this paragraph 
(d)(3)(i) do not include repairs and maintenance described in Sec.  
1.162-4(a).
* * * * *
0
Par. 4. Section 1.263A-11 is amended by revising paragraphs (e) and (f) 
to read as follows:


Sec.  1.263A-11   Accumulated production expenditures.

* * * * *
    (e) Improvements. If an improvement constitutes the production of 
designated property under Sec.  1.263A-8(d)(3), accumulated production 
expenditures with respect to the improvement consist of all direct and 
indirect costs required to be capitalized with respect to the 
improvement. See Sec.  1.263A-12(d)(1) to determine when the production 
period for a unit of property has ended.
    (f) Mid-production purchases. If a taxpayer purchases a unit of 
property for further production before the purchased unit of property 
is placed in service, the taxpayer's accumulated production 
expenditures include the full purchase price of the purchased unit of 
property plus all the additional direct and indirect production costs 
incurred by the taxpayer that are required to be capitalized with 
respect to the purchased unit of property.
* * * * *

[[Page 42408]]

0
Par. 5. Section 1.263A-15 is amended by adding paragraph (a)(6) to read 
as follows:


Sec.  1.263A-15   Effective dates, transitional rules, and anti-abuse 
rule.

    (a) * * *
    (6) Sections 1.263A-8(d)(3) and 1.263A-11(e) and (f) apply to 
taxable years beginning after [DATE OF PUBLICATION OF FINAL RULE]. A 
change in a taxpayer's treatment of interest to a method consistent 
with Sec. Sec.  1.263A-8(d)(3) and 1.263A-11(e) and (f), as applicable, 
is a change in method of accounting to which sections 446 and 481 
apply.
* * * * *

Douglas W. O'Donnell,
Deputy Commissioner.
[FR Doc. 2024-10579 Filed 5-14-24; 8:45 am]
BILLING CODE 4830-01-P