§179B Deduction for Capital Costs Incurred in Complying with Environmental Protection Agency Sulfur Regulations

Summary

Small business oil refiners can choose to deduct, right away, 75 percent of what they spend to comply with the Environmental Protection Agency's sulfur rules, even though those costs would normally be added to the property's capital account. The 75 percent rate shrinks for refiners whose average daily refinery runs in 2002 were above 155,000 barrels, phasing down to zero as the excess approaches 50,000 barrels. The property's basis is reduced by the deducted amount, and the deduction is treated as depreciation when the property is later sold. A refiner organized as a cooperative can elect to pass the deduction through to its owners, and must notify each owner in writing of the amount allocated. The election is made on a timely filed return and cannot be revoked for that year.