Goto Section: 32.26 | 32.101 | Table of Contents
FCC 32.27
Revised as of October 1, 2011
Goto Year:2010 |
2012
§ 32.27 Transactions with affiliates.
(a) Unless otherwise approved by the Chief, Wireline Competition
Bureau, transactions with affiliates involving asset transfers into or
out of the regulated accounts shall be recorded by the carrier in its
regulated accounts as provided in paragraphs (b) through (f) of this
section.
(b) Assets sold or transferred between a carrier and its affiliate
pursuant to a tariff, including a tariff filed with a state commission,
shall be recorded in the appropriate revenue accounts at the tariffed
rate. Non-tariffed assets sold or transferred between a carrier and its
affiliate that qualify for prevailing price valuation, as defined in
paragraph (d) of this section, shall be recorded at the prevailing
price. For all other assets sold by or transferred from a carrier to
its affiliate, the assets shall be recorded at no less than the higher
of fair market value and net book cost. For all other assets sold by or
transferred to a carrier from its affiliate, the assets shall be
recorded at no more than the lower of fair market value and net book
cost.
(1) Floor. When assets are sold by or transferred from a carrier to an
affiliate, the higher of fair market value and net book cost
establishes a floor, below which the transaction cannot be recorded.
Carriers may record the transaction at an amount equal to or greater
than the floor, so long as that action complies with the Communications
Act of 1934, as amended, Commission rules and orders, and is not
otherwise anti-competitive.
(2) Ceiling. When assets are purchased from or transferred from an
affiliate to a carrier, the lower of fair market value and net book
cost establishes a ceiling, above which the transaction cannot be
recorded. Carriers may record the transaction at an amount equal to or
less than the ceiling, so long as that action complies with the
Communications Act of 1934, as amended, Commission rules and orders,
and is not otherwise anti-competitive.
(3) Threshold. For purposes of this section carriers are required to
make a good faith determination of fair market value for an asset when
the total aggregate annual value of the asset(s) reaches or exceeds
$500,000, per affiliate. When a carrier reaches or exceeds the $500,000
threshold for a particular asset for the first time, the carrier must
perform the market valuation and value the transaction on a
going-forward basis in accordance with the affiliate transactions rules
on a going-forward basis. When the total aggregate annual value of the
asset(s) does not reach or exceed $500,000, the asset(s) shall be
recorded at net book cost.
(c) Services provided between a carrier and its affiliate pursuant to a
tariff, including a tariff filed with a state commission, shall be
recorded in the appropriate revenue accounts at the tariffed rate.
Non-tariffed services provided between a carrier and its affiliate
pursuant to publicly-filed agreements submitted to a state commission
pursuant to section 252(e) of the Communications Act of 1934 or
statements of generally available terms pursuant to section 252(f)
shall be recorded using the charges appearing in such publicly-filed
agreements or statements. Non-tariffed services provided between a
carrier and its affiliate that qualify for prevailing price valuation,
as defined in paragraph (d) of this section, shall be recorded at the
prevailing price. For all other services sold by or transferred from a
carrier to its affiliate, the services shall be recorded at no less
than the higher of fair market value and fully distributed cost. For
all other services sold by or transferred to a carrier from its
affiliate, the services shall be recorded at no more than the lower of
fair market value and fully distributed cost.
(1) Floor. When services are sold by or transferred from a carrier to
an affiliate, the higher of fair market value and fully distributed
cost establishes a floor, below which the transaction cannot be
recorded. Carriers may record the transaction at an amount equal to or
greater than the floor, so long as that action complies with the
Communications Act of 1934, as amended, Commission rules and orders,
and is not otherwise anti-competitive.
(2) Ceiling. When services are purchased from or transferred from an
affiliate to a carrier, the lower of fair market value and fully
distributed cost establishes a ceiling, above which the transaction
cannot be recorded. Carriers may record the transaction at an amount
equal to or less than the ceiling, so long as that action complies with
the Communications Act of 1934, as amended, Commission rules and
orders, and is not otherwise anti-competitive.
(3) Threshold. For purposes of this section, carriers are required to
make a good faith determination of fair market value for a service when
the total aggregate annual value of that service reaches or exceeds
$500,000, per affiliate. When a carrier reaches or exceeds the $500,000
threshold for a particular service for the first time, the carrier must
perform the market valuation and value the transaction in accordance
with the affiliate transactions rules on a going-forward basis. All
services received by a carrier from its affiliate(s) that exist solely
to provide services to members of the carrier's corporate family shall
be recorded at fully distributed cost.
(d) In order to qualify for prevailing price valuation in paragraphs
(b) and (c) of this section, sales of a particular asset or service to
third parties must encompass greater than 25 percent of the total
quantity of such product or service sold by an entity. Carriers shall
apply this 25 percent threshold on an asset-by-asset and
service-by-service basis, rather than on a product-line or service-line
basis. In the case of transactions for assets and services subject to
section 272, a BOC may record such transactions at prevailing price
regardless of whether the 25 percent threshold has been satisfied.
(e) Income taxes shall be allocated among the regulated activities of
the carrier, its nonregulated divisions, and members of an affiliated
group. Under circumstances in which income taxes are determined on a
consolidated basis by the carrier and other members of the affiliated
group, the income tax expense to be recorded by the carrier shall be
the same as would result if determined for the carrier separately for
all time periods, except that the tax effect of carry-back and
carry-forward operating losses, investment tax credits, or other tax
credits generated by operations of the carrier shall be recorded by the
carrier during the period in which applied in settlement of the taxes
otherwise attributable to any member, or combination of members, of the
affiliated group.
(f) Companies that employ average schedules in lieu of actual costs are
exempt from the provisions of this section. For other organizations,
the principles set forth in this section shall apply equally to
corporations, proprietorships, partnerships and other forms of business
organizations.
[ 67 FR 5679 , Feb. 6, 2002, as amended at 69 FR 53648 , Sept. 2, 2004]
Subpart C--Instructions for Balance Sheet Accounts
Goto Section: 32.26 | 32.101
Goto Year: 2010 |
2012
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