[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Proposed Rules]
[Pages 31473-31474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15665]



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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[PS-39-93]
RIN 1545-AR63


Definition of Structure

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed regulations relating to 
deductions available upon demolition of a building. These proposed 
regulations reflect changes to the law made by the Tax Reform Act of 
1984 and affect owners and lessees of real property who demolish 
buildings. This document also provides notice of a public hearing on 
these regulations.

DATES: Written comments, requests to appear and outlines of topics to 
be discussed at the public hearing scheduled for October 9, 1996, must 
be received by September 18, 1996.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (PS-39-93), room 5228, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. In the alternative, submissions may be hand delivered between 
the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (PS-39-93), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Bernard P. 
Harvey, (202) 622-3110; concerning submissions and the hearing, 
Christina Vasquez, (202) 622-6803 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains proposed regulations under section 280B of 
the Internal Revenue Code. Section 280B was added by the Tax Reform Act 
of 1976, Public Law 94-455, 2124(b), 90 Stat. 1520, 1918 (Oct. 4, 
1976), and significant amendments were made to the provision by the 
Economic Recovery Tax Act of 1981, Public Law 97-34, 212(d)(2)(C) and 
(e)(2), 95 Stat. 172, 239 (Aug. 13, 1981) (1981 Act) and the Tax Reform 
Act of 1984, Public Law 98-369, 1063, 98 Stat. 494, 1047 (July 18, 
1984) (1984 Act). Transition rules were provided in the Tax Reform Act 
of 1986, Public Law 99-514, 1878(h), 100 Stat. 2085, 2904 (Oct. 22, 
1986) (1986 Act). As originally enacted, section 280B required any 
costs or losses incurred on account of the demolition of any certified 
historic structure (a building or structure meeting certain 
requirements) to be capitalized into the land upon which the demolished 
structure was located. The 1981 Act modified the definition of 
certified historic structure for purposes of section 280B from a 
building or structure meeting certain requirements to a building (or 
its structural components) meeting certain requirements. The 1984 Act 
substituted ``any structure'' for ``certified historic structure.'' 
These proposed regulations define what ``structure'' means for purposes 
of section 280B.

Explanation of Provisions

    These proposed regulations define the term ``structure'' for 
purposes of section 280B as a building and its structural components as 
those terms are defined in Sec. 1.48-1(e) of the Income Tax 
Regulations. Thus, under section 280B, a structure will include only a 
building and its structural components and not other inherently 
permanent structures such as oil and gas storage tanks, blast furnaces, 
and coke ovens.
    The proposed regulations rely on the legislative history underlying 
the 1984 and 1986 Acts, which refer repeatedly to buildings rather than 
to structures generally. In addition, the legislative history of the 
1984 Act discusses the difficulty of applying the intent test of 
Sec. 1.165-3 of the regulations, which applies to the demolition of 
buildings, and indicates that the newly added language is meant to 
eliminate this difficulty.

Proposed Effective Date

    The regulations are proposed to be effective on and after the date 
that final regulations are filed with the Federal Register.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It also has been determined 
that section 553(b) of the Administrative Procedure Act (5 U.S.C. 
chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do 
not apply to these regulations, and, therefore, a Regulatory 
Flexibility Analysis is not required. Pursuant to section 7805(f) of 
the Internal Revenue Code, this notice of proposed rulemaking will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) that are submitted timely to the IRS. All 
comments will be available for public inspection and copying.
    A public hearing has been scheduled for October 9, 1996, in the 
Commissioner's Conference Room. Because of access restrictions, 
visitors will not be admitted beyond the Internal Revenue Building 
lobby more than 15 minutes before the hearing starts.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing.
    Persons that wish to present oral comments at the hearing must 
submit written comments and an outline of the topics to be discussed 
and the time to be devoted to each topic (signed original and eight (8) 
copies) by September 18, 1996.
    A period of 10 minutes will be allotted to each person for making 
comments.
    An agenda showing the scheduling of the speakers will be prepared 
after the deadline for receiving outlines has passed. Copies of the 
agenda will be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Bernard P. Harvey, 
Office of Assistant Chief Counsel (Passthroughs and Special 
Industries). However, other personnel from the IRS and Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income Taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *


[[Page 31474]]


    Par. 2. Section 1.280B-1 is added to read as follows:


Sec. 1.280B-1  Demolition of structures.

    (a) In general. Section 280B provides that, in the case of the 
demolition of any structure, no deduction otherwise allowable under 
chapter 1 of subtitle A shall be allowed to the owner or lessee of such 
structure for any amount expended for the demolition or any loss 
sustained on account of the demolition, and that the expenditure or 
loss shall be treated as properly chargeable to the capital account 
with respect to the land on which the demolished structure was located.
    (b) Definition of structure. For purposes of section 280B, the term 
structure means a building, as defined in Sec. 1.48-1(e)(1), and the 
structural components of that building, as defined in Sec. 1.48-
1(e)(2).
    (c) Effective date. This section applies with respect to 
demolitions occurring on or after the date that the final regulations 
are filed with the Federal Register.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 96-15665 Filed 6-19-96; 8:45 am]
BILLING CODE 4830-01-P