§179C Election to Expense Certain Refineries

Summary

You can choose to deduct 50 percent of the cost of certain refinery equipment as an expense instead of treating it as a long-term asset. To get this, the equipment must be new to you, put into service after the law was passed and before January 1, 2014, meet environmental rules in effect when it started service, and meet timing rules about contracts and construction (no binding contract on or before June 14, 2005; certain construction or service dates tied to January 1, 2010). If the work adds at least a 5 percent boost in daily output (not counting asphalt or lube oil) or lets the refinery process shale, tar sands, or similar fuels at 25 percent or more of daily throughput, it qualifies. Equipment mainly used as a topping plant, asphalt plant, lube oil shop, terminal, or blending plant, or built only to meet government orders, does not qualify. If equipment is sold and then leased back within 3 months, the start date is treated as when the lease use begins. A Clean Air Act waiver does not count for the environmental test. You must make the choice on your tax return in the way the IRS requires, and you generally cannot take it back unless the IRS agrees. Cooperatives may pass their share of the deduction to cooperative owners based on ownership, but that choice is made on the return for the year and cannot be changed for that year; the cooperative must tell owners the amount before the return is due. The deduction is allowed only if you file a report with the IRS about how your refineries operate.