7 AAC 53.951 - Related organizations and related parties

(a) The department will not reimburse a grantee for interest or rent paid to a related organization or related party.

(b) For the purposes of a residential child care facility grant, the department will treat depreciation and use costs of an asset that the grantee is buying or leasing from a related organization or related party as described in 7 AAC 53.931(j), 7 AAC 53.945, and in this section as follows:

(1) If a grantee owes interest to a related organization or related party for a loan that was used to purchase an asset, or for which an asset is collateral, the grantee may disregard that loan in calculating the grantee's equity in the asset.

(2) A grantee may claim reimbursement for depreciation or use costs of an asset that it purchased from a related organization or related party, or rents from a related organization or related party if the rental payments for the asset would be an allowable cost if the lessor was not a related organization or related party. The grantee shall calculate the depreciation or use allowance as though the grantee had acquired the asset

(A) at the time the related organization or related party acquired it; and

(B) for the amount that the related organization or related party paid, or the amount of the asset's fair market value at the time the asset was donated to the related organization, whichever is less.

(c) The department will consider any cost related to a transaction between a grantee and either a related party or related organization, to be an allowable cost only if the grantee first demonstrates by clear and convincing evidence that the terms of the transaction were no more favorable to the related party or related organization than the terms of a similar transaction between unrelated parties dealing at arm's length would have been at the same time and place.

(d) A grantee shall, upon the request of the department, demonstrate that a party or organization to which the grantee paid money under a residential child care facility grant, is not a related party or organization.

Notes

7 AAC 53.951

Eff. 1/13/85, Register 93

Authority:AS 47.05.010

AS 47.40.011

AS 47.40.031