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

Summary

Small business refiners who choose this option can deduct 75 percent of qualified capital costs they pay or incur in the tax year, as long as those costs are capital expenses. If the refiner’s average daily domestic runs for the 1-year period ending on December 31, 2002, were more than 155,000 barrels, the 75 percent is cut down. The cut equals the 75 percent times the amount over 155,000 barrels divided by 50,000, and the result can’t be less than zero. The tax basis of the property must be lowered by the part taken as the deduction, the deduction is treated as depreciation for section 1245 rules, and section 280B does not apply to amounts treated as expenses here. If the refiner and any direct owners are cooperatives under part I of subchapter T, the refiner must make the election on a timely filed return and that election is final for that year. If any deduction is allocated to owners, the cooperative must give each owner a written notice of the allocation before the return is due.