I
104TH CONGRESS
2D SESSION
H. R. 4200
To amend the Internal Revenue Code of 1986 to encourage the cleanup
of contaminated brownfield sites.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 26, 1996
Mrs. JOHNSON of Connecticut 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 encourage
the cleanup of contaminated brownfield sites.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. EXPENSING OF ENVIRONMENTAL REMEDI-
ATION COSTS.
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new section:
‘‘SEC. 198. EXPENSING OF ENVIRONMENTAL REMEDIATION
COSTS.
‘‘(a) IN GENERAL.—A taxpayer may elect to treat
any qualified environmental remediation expenditure
which is paid or incurred by the taxpayer as an expense
which is not chargeable to capital account. Any expendi-
ture which is so treated shall be allowed as a deduction
for the taxable year in which it is paid or incurred.
‘‘(b) QUALIFIED
ENVIRONMENTAL
REMEDIATION
EXPENDITURE.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified envi-
ronmental remediation expenditure’ means any ex-
penditure—
‘‘(A) which is otherwise chargeable to cap-
ital account, and
‘‘(B) which is paid or incurred in connec-
tion with the abatement or control of hazardous
substances at a qualified contaminated site.
‘‘(2) SPECIAL RULE FOR EXPENDITURES FOR
DEPRECIABLE PROPERTY.—Such term shall not in-
clude any expenditure for the acquisition of property
of a character subject to the allowance for deprecia-
tion which is used in connection with the abatement
or control of hazardous substances at a qualified
contaminated site; except that the portion of the al-
lowance under section 167 for such property which
is otherwise allocated to such site shall be treated as
a qualified environmental remediation expenditure.
‘‘(c) QUALIFIED CONTAMINATED SITE.—For pur-
poses of this section—
‘‘(1) IN
GENERAL.—The term ‘qualified con-
taminated site’ means any area—
‘‘(A) which is held by the taxpayer for use
in a trade or business or for the production of
income, or which is property described in sec-
tion 1221(1) in the hands of the taxpayer, and
‘‘(B) which contains (or potentially con-
tains) any hazardous substance.
‘‘(2) TAXPAYER
MUST
RECEIVE
STATEMENT
FROM
STATE
ENVIRONMENTAL
AGENCY.—An area
shall be treated as a qualified contaminated site by
reason of a substance described in subparagraph
(A), (B), or (C) of subsection (d)(1) only if the tax-
payer receives a statement from the appropriate
agency of the State in which such area is located
that such area meets the requirements of subpara-
graph (B) of paragraph (1) of this subsection.
‘‘(3) APPROPRIATE STATE AGENCY.— For pur-
poses of paragraph (2), the appropriate agency of a
State is the agency designated by the Administrator
of the Environmental Protection Agency for pur-
poses of this section. If no agency of a State is des-
ignated under the preceding sentence, the appro-
priate agency for such State shall be the Environ-
mental Protection Agency.
‘‘(d) HAZARDOUS SUBSTANCE.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘hazardous sub-
stance’ means—
‘‘(A) any substance which is a hazardous
substance as defined in section 101(14) of the
Comprehensive Environmental Response, Com-
pensation, and Liability Act of 1980,
‘‘(B) any substance which is designated as
a hazardous substance under section 102 of
such Act,
‘‘(C) any extremely hazardous substance
under the Emergency Planning and Community
Right to Know Act of 1986,
‘‘(D) asbestos (whether friable or nonfri-
able),
‘‘(E) radon,
‘‘(F) lead paint, and
‘‘(G) any petroleum product.
‘‘(2) EXCEPTION.—Such term shall not include
any substance described in subparagraph (A), (B),
(C), or (G) of paragraph (1) with respect to which
a removal or remedial action is not permitted under
section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980
by reason of subsection (a)(3) thereof.
‘‘(e) DEDUCTION RECAPTURED AS ORDINARY IN-
COME ON SALE, ETC.—Solely for purposes of section
1245, in the case of property to which a qualified environ-
mental remediation expenditure would have been capital-
ized but for this section—
‘‘(1) the deduction allowed by this section for
such expenditure shall be treated as a deduction for
depreciation, and
‘‘(2) such property (if not otherwise section
1245 property) shall be treated as section 1245
property solely for purposes of applying section 1245
to such deduction.
‘‘(f) COORDINATION WITH OTHER PROVISIONS.—
Sections 280B and 468 shall not apply to amounts which
are treated as expenses under this section.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part VI of subchapter B of chapter 1 of such Code
is amended by adding at the end the following new item:
‘‘Sec. 198. Expensing of environmental remediation costs.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures paid or incurred
after the date of the enactment of this Act, in taxable
years ending after such date.
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