[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1542 Introduced in Senate (IS)]

  2d Session
                                S. 1542

To amend the Internal Revenue Code of 1986 to provide for the expensing 
of environmental remediation costs in empowerment zones and enterprise 
                              communities.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 26, 1996

 Mr. Abraham (for himself and Mr. Lieberman) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for the expensing 
of environmental remediation costs in empowerment zones and enterprise 
                              communities.

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

SECTION 1. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    (a) In General.--Part II of subchapter V of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 1395. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    ``(a) Treatment as Expense.--A taxpayer may elect to treat any 
environmental remediation cost as an expense which is not chargeable to 
capital account. Any cost so treated shall be allowable as a deduction 
for the taxable year in which the cost is paid or incurred.
    ``(b) Environmental Remediation Cost.--For purposes of this 
section--
            ``(1) In general.--The term `environmental remediation 
        cost' means any cost which--
                    ``(A) is chargeable to capital account,
                    ``(B) is paid or incurred in connection with the 
                abatement or control of environmental contaminants at a 
                site located within an empowerment zone or enterprise 
                community, and
                    ``(C) is certified by the applicable Federal or 
                State authority as being required by, and in compliance 
                with, applicable Federal and State laws governing 
                abatement and control of environmental contaminants.
            ``(2) Exceptions.--Such term shall not include any amount 
        paid or incurred--
                    ``(A) for equipment which is used in the 
                environmental remediation and which is of a character 
                subject to an allowance for depreciation or 
                amortization, or
                    ``(B) in connection with a site which is on the 
                national priorities list under section 105(a)(8)(B) of 
                the Comprehensive Environmental Response, Compensation, 
                and Liability Act of 1980 (42 U.S.C. 9605(a)(8)(B).
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Limitation based on income from trade or business.--
        The amount allowed as a deduction under subsection (a) for any 
        taxable year shall not exceed the aggregate amount of taxable 
        income of the taxpayer for such taxable year which is derived 
        from the active conduct by the taxpayer of any trade or 
        business during such taxable year. For purposes of this 
        paragraph, rules similar to the rules of subparagraphs (B) and 
        (C) of section 179(b)(3) shall apply. In the case of a 
        partnership, S corporation, trust or other pass thru entity, 
        this paragraph shall be applied at both the entity and owner 
        levels.
            ``(2) Recapture rules.--
                    ``(A) Property not used in trade or business.--The 
                Secretary shall, by regulations, provide for 
                recapturing the benefit of any deduction allowable 
                under subsection (a) with respect to any property not 
                used predominantly in a trade or business at any time.
                    ``(B) Treatment of gain as ordinary income.--For 
                purposes of section 1245--
                            ``(i) the deduction allowable under 
                        subsection (a) shall be treated as a deduction 
                        allowable to the taxpayer for depreciation or 
                        amortization; and
                            ``(ii) property (other than section 1245 
                        property) to which the deduction would 
                        otherwise have been chargeable shall be treated 
                        as section 1245 property solely for purposes of 
                        applying section 1245 to such deduction.''
    (b) Conforming Amendments.--The table of sections for part II of 
subchapter U of chapter 1 of such Code is amended--
            (1) by striking ``TAX-EXEMPT FACILITY BONDS'' in the 
        heading for part II and inserting ``TAX-INCENTIVES'', and
            (2) by adding at the end the following new item:

                              ``Sec. 1395. Expensing of environmental 
                                        remediation costs.''
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.
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