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103D CONGRESS

1ST SESSION H. R. 3621

To amend the Internal Revenue Code of 1986 to allow a deduction for

costs incurred to cleanup contaminated property.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 22, 1993

Mr. BACHUS of Alabama introduced the following bill; which was referred to

the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow a

deduction for costs incurred to cleanup contaminated

property.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. DEDUCTION FOR COSTS INCURRED TO CLEAN4 UP CONTAMINATED PROPERTY.

5 (a) IN GENERAL.—Part VI of subchapter B of chap6 ter 1 of the Internal Revenue Code of 1986 (relating to

7 itemized deductions for individuals and corporations) is

8 amended by adding at the end thereof the following new

9 section:
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1 ‘‘SEC. 198. EXPENDITURES TO CLEANUP CONTAMINATED

2 PROPERTY.

3 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer en4 gaged in a trade or business may treat environmental

5 cleanup expenditures which are paid or incurred by the

6 taxpayer during the taxable year as expenses which are

7 not chargeable to capital account. The expenditures which

8 are so treated shall be allowed as a deduction.

9 ‘‘(b) ENVIRONMENTAL CLEANUP EXPENDITURES.—

10 For purposes of this section—

11 ‘‘(1) IN GENERAL.—The term ‘environmental

12 cleanup expenditures’ means expenditures to remove,

13 or to take remedial action with respect to, any sub14 stance on any property owned by the taxpayer if

15 such removal or remedial action—

16 ‘‘(A) is required under the Comprehensive

17 Environmental Response, Compensation, and

18 Liability Act (42 U.S.C. 9601 et seq.), and

19 ‘‘(B) at least meets the requirements of

20 such Act.

21 ‘‘(2) EXCEPTIONS.—Such term shall not in22 clude any expenditure—

23 ‘‘(A) which is taken into account in deter24 mining the basis of any property of a character

25 subject to the allowance for depreciation under

26 section 167, or
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1 ‘‘(B) which is allowable as a deduction

2 under any other provision of this chapter.

3 ‘‘(c) GENERATOR, ETC. NOT ELIGIBLE.—This sec4 tion shall not apply to expenditures to remove, or take re5 medial action with respect to, any substance on any prop6 erty if the taxpayer (or any related party) is potentially

7 liable under paragraph (2), (3), or (4) of section 107(a)

8 of the Comprehensive Environmental Response, Com9 pensation, and Liability Act with respect to such property.

10 ‘‘(d) WHEN METHOD MAY BE ADOPTED.—

11 ‘‘(1) WITHOUT CONSENT.—A taxpayer may,

12 without consent of the Secretary, adopt the method

13 provided in this section for the taxpayer’s first tax14 able year—

15 ‘‘(A) which begins after the date of the en16 actment of this section, and

17 ‘‘(B) for which environmental cleanup ex18 penditures are paid or incurred.

19 ‘‘(2) WITH CONSENT.—A taxpayer may, with

20 the consent of the Secretary, adopt at any time the

21 method provided in this section.’’

22 (b) EXCEPTION FROM REQUIRED CAPITALIZA23 TION.—Subsection (a) of section 263 of such Code is

24 amended by striking ‘‘or’’ at the end of subparagraph (F),

25 by striking the period at the end of subparagraph (G) and
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1 inserting ‘‘, or’’, and by adding at the end thereof the fol2 lowing new subparagraph:

3 ‘‘(H) environmental cleanup expenditures

4 deductible under section 198.’’

5 (c) CLERICAL AMENDMENT.—The table of sections

6 for part VI of subchapter B of chapter 1 of such Code

7 is amended by adding at the end thereof the following new

8 item:

‘‘Sec. 198. Expenditures to cleanup contaminated property.’’

9 (d) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 December 31, 1985.

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