SECTION 3. SCOPE

This revenue procedure applies to a taxpayer that has a depreciable interest in

2011–18 I.R.B. 740 May 2, 2011

of property by 88%. The result is each class of property’s basis amount after taking into account the network asset maintenance allowance.

(3) For each class of property, allocate that class of property’s basis amount determined in 5.03(2) among the class of property’s wireline network assets (excluding the wireline network assets acquired in an applicable asset acquisition as defined in § 1060 or in a transaction to which § 338(h)(10) applies) according to the basis of each wireline network asset determined before application of the network asset maintenance allowance.

(4) The amount determined in (3) for each network asset (excluding the wireline network assets acquired in an applicable asset acquisition as defined in § 1060 or in a transaction to which § 338(h)(10) applies) is the basis of such asset to be used to determine the deductions allowable or income tax credits available that require tax basis to be reduced before any depreciation is computed (for example, § 179, § 179D, or similar provisions; § 44 and § 46; and section 1603 payments). The net amount for each network asset after the reduction in basis for such deductions, credits, and section 1603 payments is that property’s § 1.168(b)–1(a)(3) unadjusted depreciable basis.

(5) In addition, expenditures for wireline network assets acquired in an applicable asset acquisition as defined in § 1060 or in a transaction to which § 338(h)(10) applies are capital expenditures under § 263(a) to which the ordinarily applicable basis and holding period rules and regulations apply.

.04 Required schedule . A taxpayer utilizing the wireline network asset maintenance allowance method must attach a schedule to its federal income tax return for the taxable year identifying the amounts for each step of the network asset maintenance allowance method computation provided in sections 5.02(1)-(5) above.

.05 Example . X is a wireline carrier with network assets used primarily to provide wireline telecommunication or broadband services. X adopts the wireline network maintenance allowance method provided in this revenue procedure. To determine the wireline network asset maintenance allowance for the taxable year, X first determines its adjusted basis attributable to wireline network assets as follows:

made between the outside cable pairs and the central office equipment.

.05 Service area interface . “Service area interface” box (SAI) means an outdoor telecommunications cabinet mounted on the ground (typically on cable right-ofways) or on telephone poles that protects splice points.

.06 Remote and network terminal . “Remote and network terminal” (RNT) means a terminal located outside the central office building that provides management and maintenance functions, and computes bandwidth profiles used for the wireline network and customer premises equipment.