§179B Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations

Summary

Small business refiners can take a tax deduction equal to 75 percent of certain capital costs they pay or incur in a tax year if they choose this rule. "Small business refiner" and "qualified costs" are defined elsewhere. If a refiner’s average daily U.S. runs for the 1-year period ending December 31, 2002, were more than 155,000 barrels, the 75‑percent figure is reduced. The reduction equals 75 percentage points multiplied by (the excess over 155,000 barrels divided by 50,000 barrels). The deduction cannot be reduced below zero. The property's tax basis must be lowered by the deducted amount. For depreciation rules, the deduction is treated as depreciation. Section 280B does not apply to amounts treated as expenses here. If the refiner and its owners are cooperatives under the tax rules, the refiner must make the election on a timely filed return and it is final for that year. If any deduction portion is passed to owners, the cooperative must give each receiving owner written notice of the amount before the return due date.