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May 6, 2022

IRS rules qualified nuclear decommissioning reserve fund can be used for waste storage facility

In PLR 202218003, the IRS ruled that a qualified nuclear decommissioning reserve fund (QNDRF) could be used by a nuclear power plant owner to pay for an onsite nuclear waste storage facility, even though those costs might be reimbursed by the Department of Energy (DOE), because they were "nuclear decommissioning costs" under IRC Section 468A.


Taxpayer is a nuclear power plant owner who contracts with the DOE to dispose of its nuclear waste, as required under its Nuclear Regulatory Commission license. Spent nuclear waste must cool in a pool for several years and then be moved to dry storage in an independent spent fuel storage installation (ISFSI). Taxpayer is responsible for the cost of storing the nuclear waste until it is accepted by the DOE, which is not currently accepting nuclear waste for disposal. Taxpayer has therefore constructed an ISFSI at its site to store nuclear waste. Taxpayer maintains and contributes to a QNDRF.

Law and analysis

IRC Section 468A allows taxpayers with ownership interests in nuclear power plants to elect to currently deduct the future decommissioning costs related to those plants by placing them in a QNDRF. Generally, these deductions offset the income inclusion that occurs when the money is distributed from the QNDRF for the costs of decommissioning activities when they are actually performed. However, these amounts cannot be included as deductible expenses in computing taxable income to the extent they are reimbursed.

Treas. Reg. Section 1.468A1(b)(6) defines nuclear decommissioning costs as "all otherwise deductible expenses" used for this purpose, including amounts used for "the construction, operation, and ultimate decommissioning of a facility used solely to store, pending delivery to a permanent repository or disposal, spent nuclear fuel generated by one or more nuclear power plants (that is, directly related to an ISFSI)."

The IRS thus concluded that ISFSI-related costs can be paid for from a QNDRF because they constitute "nuclear decommissioning costs" under IRC Section 468A, even though the deductibility of those costs may be limited by potential DOE reimbursements.


This ruling provides clarity around the ability to use funds from the QNDRF for decommissioning activities that may be eligible for reimbursement by the DOE.

After years of concern as to whether taxpayers could use funds from the QNDRF that may be eligible for DOE reimbursement to pay for an onsite nuclear waste storage facility without disqualifying the trust, the IRS has addressed these concerns in a manner favorable to taxpayers.


Contact Information
For additional information concerning this Alert, please contact:
Americas Power & Utilities Tax Group
   • Mike Reno (
   • Brian Murphy (
   • Jim Barrett (