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Federal Register/Vol. 79, No. 139/Monday, July 21 Federal Register / Vol. 79, No. 139 / Monday, July 21, 2014 / Rules and Regulations 42197 connection with the acquisition or experimental or laboratory sense. Because When these regulations are enforced, production of depreciable property to be $50,000 of Z’s costs to construct the new test certain restrictions are placed on marine used in the taxpayer’s trade or business bed was incurred for research and traffic in specified areas. This are limited to amounts expended for experimentation, the costs qualify as research rulemaking project promotes efficiency or experimental expenditures under section research or experimentation within the 174. Paragraph (b)(2) of this section applies by eliminating the need to produce a meaning of section 174 and paragraph to $50,000 of Z’s costs for the test bed separate rule for each individual (a) of this section. because they are expenditures for research or recurring event, and serves to provide (5) Examples. The following examples experimentation that result in depreciable notice of the known recurring events illustrate the application of paragraph property to be used in the taxpayer’s trade or requiring a special local regulation or (b) of this section. business. Z’s remaining $4,950,000 of costs is safety zone throughout the year. not allowable under section 174 because Example 1. Amounts paid to others for DATES: This rule is effective August 20, these costs were not incurred for research or research or experimentation resulting in 2014. experimentation. depreciable property. X is a tool ADDRESSES: Documents mentioned in manufacturer. X has developed a new tool * * * * * this preamble are part of docket [USCG– design, and orders a specially-built machine (d) Effective/applicability date. The 2014–0095]. To view documents from Y to produce X’s new tool. The machine eighth and ninth sentences of § 1.174– mentioned in this preamble as being is built upon X’s order and at X’s risk, and 2(a)(1); § 1.174–2(a)(2); § 1.174–2(a)(4); available in the docket, go to http:// Y does not provide a guarantee of economic § 1.174–2(a)(5); § 1.174–2(a)(11) utility. There is uncertainty regarding the www.regulations.gov, type the docket appropriate design of the machine. Under X’s Example 3 through Example 10; number in the ‘‘SEARCH’’ box and click contract with Y, X pays $15,000 for Y’s § 1.174–2(b)(4); and § 1.174–2(b)(5) ‘‘SEARCH.’’ Click on Open Docket engineering and design labor, $5,000 for apply to taxable years ending on or after Folder on the line associated with this materials and supplies used to develop the July 21, 2014. Taxpayers may apply the rulemaking. You may also visit the appropriate design of the machine, and provisions enumerated in the preceding Docket Management Facility in Room $10,000 for Y’s machine production materials sentence to taxable years for which the W12–140 on the ground floor of the and labor. The $15,000 of engineering and limitations for assessment of tax has not Department of Transportation West design labor costs and the $5,000 of materials expired. and supplies costs represent research and Building, 1200 New Jersey Avenue SE., development costs in the experimental or John Dalrymple, Washington, DC 20590, between 9 a.m. laboratory sense. Therefore, the $15,000 X Deputy Commissioner for Services and and 5 p.m., Monday through Friday, pays Y for Y’s engineering and design labor Enforcement. except Federal holidays. and the $5,000 for materials and supplies FOR FURTHER INFORMATION CONTACT: If used to develop the appropriate design of the Approved: June 27, 2014. Mark J. Mazur, you have questions on this rule, call or machine are for research or experimentation email Dennis Sens, Fifth Coast Guard under section 174. However, section 174 Assistant Secretary of the Treasury (Tax District, Prevention Division, (757) 398– does not apply to the $10,000 of production Policy). 6204, [email protected]. If you costs of the machine because those costs [FR Doc. 2014–16956 Filed 7–18–14; 8:45 am] were not incurred for research or have questions on viewing or submitting experimentation. See paragraph (a)(2) of this BILLING CODE 4830–01–P material to the docket, call Cheryl section (relating to production costs) and Collins, Program Manager, Docket paragraph (b)(4) of this section (limiting Operations, telephone (202) 366–9826. deduction to amounts expended for research DEPARTMENT OF HOMELAND SUPPLEMENTARY INFORMATION: or experimentation). SECURITY Example 2. Expenditures with respect to Table of Acronyms other property. Z is an aircraft manufacturer. Coast Guard Z incurs $5,000,000 to construct a new test AOR Area of Responsibility bed that will be used in the development and 33 CFR Parts 100 and 165 APA Administrative Procedure Act improvement of Z’s aircraft. No portion of Z’s COTP Captain of the Port $5,000,000 of costs to construct the new test [Docket Number USCG–2014–0095] DHS Department of Homeland Security bed represent research and development FR Federal Register costs in the experimental or laboratory sense RIN 1625–AA00, AA08 NPRM Notice of Proposed Rulemaking to develop or improve the test bed. Because no portion of the costs to construct the new Special Local Regulations and Safety A. Regulatory History and Information test bed were incurred for research or Zones; Recurring Marine Events and The Coast Guard published an interim experimentation, the $5,000,000 will be Fireworks Displays Within the Fifth final rule and request for comments on considered an amount paid or incurred in the Coast Guard District May 27, 2014 (79 FR 30025). The special production of depreciable property to be local regulations listed in 33 CFR used in the taxpayer’s trade or business that AGENCY: Coast Guard, DHS. are not allowable under section 174. 100.501 and safety zones in 33 CFR However, the allowances for depreciation of ACTION: Final rule. 165.506 were last amended on May 21, the test bed are considered research and 2013 (78 FR 29629). SUMMARY: This document adopts as a experimental expenditures of other products, B. Basis and Purpose for purposes of section 174, to the extent the final rule, without change, an interim test bed is used in connection with research final rule amending the Coast Guard This rulemaking updates the list of or experimentation of other products. See regulations established for recurring permanent special local regulations at paragraph (b)(1) of this section (depreciation marine events and fireworks displays 33 CFR 100.501 and safety zones at 33 allowances may be considered research or that take place within the Fifth Coast CFR 165.506, established for recurring experimental expenditures). Guard District area of responsibility. marine events and fireworks displays at Example 3. Expenditure resulting in Under that rule, the list of recurring depreciable property. Assume the same facts various locations within the Fifth Coast as Example 2, except that $50,000 of the marine events requiring special local Guard District area of responsibility costs of the test bed relates to costs to resolve regulations or safety zones is updated (AOR). The Fifth Coast Guard District uncertainties regarding the new test bed with revisions, additional events, and AOR is defined in 33 CFR 3.25. design. The $50,000 of costs represents removal of events that no longer take Publishing these regulatory updates in research and development costs in the place in the Fifth Coast Guard District. a single rulemaking promotes efficiency VerDate Mar<15>2010 16:01 Jul 18, 2014 Jkt 232001 PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 E:\FR\FM\21JYR1.SGM 21JYR1 tkelley on DSK3SPTVN1PROD with RULES 42198 Federal Register / Vol. 79, No. 139 / Monday, July 21, 2014 / Rules and Regulations and provides the public with notice enforce 50 special local regulations for The two newly added marine events through publication in the Federal marine events and 78 safety zones for to 33 CFR 100.501 affect the Middle Register of the upcoming recurring fireworks displays on the specified River, Essex, MD and the Atlantic marine events and fireworks displays navigable waters as listed within the Ocean, Ocean City, MD. The two and their accompanying regulations, Table to § 100.501 and § 165.506 removed events no longer listed in 33 special local regulations, and safety respectively. CFR 100.501 are the Tri Rock Triathlon, zones. D. Discussion of the Final Rule Annapolis, MD, and the Virginia Beach, C. Discussion of Comments, Changes VA, Hydroplane Races. The 10 existing and the Final Rule Special Local Regulations special local regulations that involve The Coast Guard did not receive This rule adds 2 new marine events changes to marine event date(s) and comments in response to the interim with special local regulations, removes coordinates are shown in Table 1, with final rule and request for comments 2 events, and revises 10 previously reference by section as printed in the published in the Federal Register. established marine events in the Table Table to § 100.501. Accordingly, the Coast Guard will to § 100.501. TABLE 1 Table to Revision § 100.501 section Location (date/coordinates) 1. (a.) 4 .................... N. Atlantic Ocean, Atlantic City, NJ ................................................................................................ date. 2. (b.) 7 .................... Severn River, Annapolis, MD .......................................................................................................... coordinates. 3. (b.) 20 .................. Patuxent River, Solomons Island, MD ...........................................................................................
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