[Federal Register Volume 62, Number 249 (Tuesday, December 30, 1997)]
[Rules and Regulations]
[Pages 67725-67726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33646]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8745]
RIN 1545-AR63


Definition of Structure

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to 
deductions available upon demolition of a building. These final 
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.

DATES: The regulations are effective December 30, 1997.

FOR FURTHER INFORMATION CONTACT: Bernard P. Harvey, (202) 622-3110 (not 
a toll-free number). For dates of applicability of these regulations, 
see Sec. 1.280B-1(c).

SUPPLEMENTARY INFORMATION:

Background

    This document contains final 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 As originally enacted, section 280B required any costs or losses 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

[[Page 67726]]

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.''
    A notice of proposed rulemaking was published in the Federal 
Register (61 FR 31473) on June 20, 1996. The one written comment 
received supports the position announced in the notice of proposed 
rulemaking.
    These final regulations define what ``structure'' means for 
purposes of section 280B.

Explanation of Provisions

    These final 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 final 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.

Special Analyses

    It has been determined that this Treasury decision 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) 
does not apply to these regulations and, because these regulations do 
not impose on small entities a collection of information requirement, 
the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. 
Therefore, a Regulatory Flexibility Analysis is not required. Pursuant 
to section 7805(f) of the Internal Revenue Code, the notice of proposed 
rulemaking preceding these regulations was submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small business.
    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.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is 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 * * *

    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), including 
the structural components of that building, as defined in Sec. 1.48-
1(e)(2).
    (c) Effective date. This section is effective for demolitions 
commencing on or after December 30, 1997.

    Dated: December 8, 1997.
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.

    Approved:
Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 97-33646 Filed 12-29-97; 8:45 am]
BILLING CODE 4830-01-U