26 U.S.C. § 169 — Amortization of pollution control facilities

Page 839 TITLE 26—INTERNAL REVENUE CODE § 169 ‘‘(3) CERTAIN FAILURE TO FILE.—If— ‘‘(A) a lessor or lessee fails to file any return within the time prescribed by this subsection, and ‘‘(B) such failure is shown to be due to reasonable cause and not due to willful neglect, the lessor or lessee shall be treated as having filed a timely return if a return is filed within a reasonable time after the failure is ascertained. ‘‘(b) INFORMATION REQUIRED.—The information re- quired to be included in the return pursuant to this subsection is as follows: ‘‘(1) The name, address, and taxpayer identifying number of the lessor and the lessee (and parent com- pany if a consolidated return is filed); ‘‘(2) The district director’s office with which the in- come tax returns of the lessor and lessee are filed; ‘‘(3) A description of each individual property with respect to which the election is made; ‘‘(4) The date on which the lessee places the prop- erty in service, the date on which the lease begins and the term of the lease; ‘‘(5) The recovery property class and the ADR mid- point life of the leased property; ‘‘(6) The payment terms between the parties to the lease transaction; ‘‘(7) Whether the ACRS deductions and the invest- ment tax credit are allowable to the same taxpayer; ‘‘(8) The aggregate amount paid to outside parties to arrange or carry out the transaction; ‘‘(9) For the lessor only: the unadjusted basis of the property as defined in section 168(d)(1); ‘‘(10) For the lessor only: if the lessor is a partner- ship or a grantor trust, the name, address, and tax- payer identifying number of the partners or the bene- ficiaries, and the district director’s office with which the income tax return of each partner or beneficiary is filed; and ‘‘(11) Such other information as may be required by the return or its instructions. Paragraph (8) shall not apply with respect to any per- son for any calendar year if it is reasonable to estimate that the aggregate adjusted basis of the property of such person which will be subject to subsection (a) for such year is $1,000,000 or less. ‘‘(c) COORDINATION WITH OTHER INFORMATION REQUIRE- MENTS.—In the case of agreements executed after De- cember 31, 1982, to the extent provided in regulations prescribed by the Secretary of the Treasury or his dele- gate, the provisions of this section shall be modified to coordinate such provisions with the other information requirements of the Internal Revenue Code of 1986.’’ REGULATED PUBLIC UTILITIES; SPECIAL TRANSITIONAL RULE FOR NORMALIZATION REQUIREMENTS Pub. L. 97–34, title II, § 209(d)(1), Aug. 13, 1981, 95 Stat. 226, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘If, by the terms of the appli- cable rate order last entered before the date of the en- actment of this Act [Aug. 13, 1981] by a regulatory com- mission having appropriate jurisdiction, a regulated public utility would (but for this provision) fail to meet the requirements of section 168(e)(3) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to property because, for an accounting period ending after December 31, 1980, such public utility used a method of accounting other than a normalization method of accounting, such regulated public utility shall not fail to meet such requirements if, by the terms of its first rate order determining cost of service with respect to such property which becomes effective after the date of the enactment of this Act and on or before January 1, 1983, such regulated public utility uses a normalization method of accounting. This provi- sion shall not apply to any rate order which, under the rules in effect before the date of the enactment of this Act, required a regulated public utility to use a method of accounting with respect to the deduction allowable by section 167 which, under section 167(l), it was not permitted to use.’’ INTERIM REGULATIONS WITH RESPECT TO NORMALIZATION; AUTHORITY TO PRESCRIBE Pub. L. 97–34, title II, § 209(d)(4), Aug. 13, 1981, 95 Stat. 227, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Until Congress acts further, the Secretary of the Treasury or his delegate may pre- scribe such interim regulations as may be necessary or appropriate to determine whether the requirements of section 168(e)(3)(B) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] have been met with respect to property placed in service after December 31, 1980.’’ § 169. Amortization of pollution control facilities (a) Allowance of deduction Every person, at his election, shall be entitled to a deduction with respect to the amortization of the amortizable basis of any certified pollu- tion control facility (as defined in subsection (d)), based on a period of 60 months. Such amor- tization deduction shall be an amount, with re- spect to each month of such period within the taxable year, equal to the amortizable basis of the pollution control facility at the end of such month divided by the number of months (includ- ing the month for which the deduction is com- puted) remaining in the period. Such amortiz- able basis at the end of the month shall be com- puted without regard to the amortization deduc- tion for such month. The amortization deduc- tion provided by this section with respect to any month shall be in lieu of the depreciation deduc- tion with respect to such pollution control facil- ity for such month provided by section 167. The 60-month period shall begin, as to any pollution control facility, at the election of the taxpayer, with the month following the month in which such facility was completed or acquired, or with the succeeding taxable year. (b) Election of amortization The election of the taxpayer to take the amor- tization deduction and to begin the 60-month pe- riod with the month following the month in which the facility is completed or acquired, or with the taxable year succeeding the taxable year in which such facility is completed or ac- quired, shall be made by filing with the Sec- retary, in such manner, in such form, and within such time, as the Secretary may by regulations prescribe, a statement of such election. (c) Termination of amortization deduction A taxpayer which has elected under subsection (b) to take the amortization deduction provided in subsection (a) may, at any time after making such election, discontinue the amortization de- duction with respect to the remainder of the amortization period, such discontinuance to begin as of the beginning of any month specified by the taxpayer in a notice in writing filed with the Secretary before the beginning of such month. The depreciation deduction provided under section 167 shall be allowed, beginning with the first month as to which the amortiza- tion deduction does not apply, and the taxpayer shall not be entitled to any further amortization deduction under this section with respect to such pollution control facility. (d) Definitions and special rules For purposes of this section— Page 840 TITLE 26—INTERNAL REVENUE CODE § 169 (1) Certified pollution control facility The term ‘‘certified pollution control facil- ity’’ means a new identifiable treatment facil- ity which is used, in connection with a plant or other property in operation before January 1, 1976, to abate or control water or atmos- pheric pollution or contamination by remov- ing, altering, disposing, storing, or preventing the creation or emission of pollutants, con- taminants, wastes, or heat and which— (A) the State certifying authority having jurisdiction with respect to such facility has certified to the Federal certifying authority as having been constructed, reconstructed, erected, or acquired in conformity with the State program or requirements for abate- ment or control of water or atmospheric pol- lution or contamination; (B) the Federal certifying authority has certified to the Secretary (i) as being in compliance with the applicable regulations of Federal agencies and (ii) as being in fur- therance of the general policy of the United States for cooperation with the States in the prevention and abatement of water pollution under the Federal Water Pollution Control Act, as amended (33 U.S.C. 466 et seq.), or in the prevention and abatement of atmos- pheric pollution and contamination under the Clean Air Act, as amended (42 U.S.C. 1857 et seq.); and (C) does not significantly— (i) increase the output or capacity, ex- tend the useful life, or reduce the total op- erating costs of such plant or other prop- erty (or any unit thereof), or (ii) alter the nature of the manufac- turing or production process or facility. (2) State certifying authority The term ‘‘State certifying authority’’ means, in the case of water pollution, the State water pollution control agency as de- fined in section 13(a) of the Federal Water Pol- lution Control Act and, in the case of air pol- lution, the air pollution control agency as de- fined in section 302(b) of the Clean Air Act. The term ‘‘State certifying authority’’ in- cludes any interstate agency authorized to act in place of a certifying authority of the State. (3) Federal certifying authority The term ‘‘Federal certifying authority’’ means, in the case of water pollution, the Sec- retary of the Interior and, in the case of air pollution, the Secretary of Health and Human Services. (4) New identifiable treatment facility (A) In general For purposes of paragraph (1), the term ‘‘new identifiable treatment facility’’ in- cludes only tangible property (not including a building and its structural components, other than a building which is exclusively a treatment facility) which is of a character subject to the allowance for depreciation provided in section 167, which is identifiable as a treatment facility, and which is prop- erty— (i) the construction, reconstruction, or erection of which is completed by the tax- payer after December 31, 1968, or (ii) acquired after December 31, 1968, if the original use of the property com- mences with the taxpayer and commences after such date. In applying this section in the case of prop- erty described in clause (i) there shall be taken into account only that portion of the basis which is properly attributable to con- struction, reconstruction, or erection after December 31, 1968. (B) Certain facilities placed in operation after April 11, 2005 In the case of any facility described in paragraph (1) solely by reason of paragraph (5), subparagraph (A) shall be applied by sub- stituting ‘‘April 11, 2005’’ for ‘‘December 31, 1968’’ each place it appears therein. (5) Special rule relating to certain atmospheric pollution control facilities In the case of any atmospheric pollution control facility which is placed in service after April 11, 2005, and used in connection with an electric generation plant or other property which is primarily coal fired— (A) paragraph (1) shall be applied without regard to the phrase ‘‘in operation before January 1, 1976’’, and (B) in the case of a facility placed in serv- ice in connection with a plant or other prop- erty placed in operation after December 31, 1975, this section shall be applied by sub- stituting ‘‘84’’ for ‘‘60’’ each place it appears in subsections (a) and (b). (e) Profitmaking abatement works, etc. The Federal certifying authority shall not cer- tify any property under subsection (d)(1)(B) to the extent it appears that by reason of profits derived through the recovery of wastes or other- wise in the operation of such property, its costs will be recovered over its actual useful life. (f) Amortizable basis (1) Defined For purposes of this section, the term ‘‘am- ortizable basis’’ means that portion of the ad- justed basis (for determining gain) of a cer- tified pollution control facility which may be amortized under this section. (2) Special rules (A) If a certified pollution control facility has a useful life (determined as of the first day of the first month for which a deduction is allowable under this section) in excess of 15 years, the amortizable basis of such facil- ity shall be equal to an amount which bears the same ratio to the portion of the adjusted basis of such facility, which would be eligi- ble for amortization but for the application of this subparagraph, as 15 bears to the num- ber of years of useful life of such facility. (B) The amortizable basis of a certified pollution control facility with respect to which an election under this section is in ef- fect shall not be increased, for purposes of this section, for additions or improvements after the amortization period has begun. (g) Depreciation deduction The depreciation deduction provided by sec- tion 167 shall, despite the provisions of sub- Page 841 TITLE 26—INTERNAL REVENUE CODE § 170 section (a), be allowed with respect to the por- tion of the adjusted basis which is not the amor- tizable basis. [(h) Repealed. Pub. L. 92–178, title I, § 104(f)(2), Dec. 10, 1971, 85 Stat. 502] (i) Life tenant and remainderman In the case of property held by one person for life with remainder to another person, the de- duction under this section shall be computed as if the life tenant were the absolute owner of the property and shall be allowable to the life ten- ant. (j) Cross reference For special rule with respect to certain gain de- rived from the disposition of property the adjusted basis of which is determined with regard to this sec- tion, see section 1245. (Added Pub. L. 91–172, title VII, § 704(a), Dec. 30, 1969, 83 Stat. 667; amended Pub. L. 92–178, title I, § 104(f)(2), Dec. 10, 1971, 85 Stat. 502; Pub. L. 93–625, § 3(a), Jan. 3, 1975, 88 Stat. 2109; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XXI, § 2112(b), (c), Oct. 4, 1976, 90 Stat. 1834, 1906; Pub. L. 109–58, title XIII, § 1309(a)–(d), Aug. 8, 2005, 119 Stat. 1007; Pub. L. 109–135, title IV, § 402(e), Dec. 21, 2005, 119 Stat. 2611; Pub. L. 115–141, div. U, title IV, § 401(a)(51), Mar. 23, 2018, 132 Stat. 1186.) Editorial Notes REFERENCES IN TEXT The Federal Water Pollution Control Act, as amended (33 U.S.C. 466 et seq.), referred to in subsec. (d)(1)(B), is act June 30, 1948, ch. 758, as amended generally by Pub. L. 92–500, § 2, Oct. 18, 1972, 86 Stat. 816, which is classi- fied generally to chapter 26 (§ 1251 et seq.) of Title 33, Navigation and Navigable Waters. The subject matter of section 13(a) of the act, referred to in subsec. (d)(2), is covered by section 1362(1) of Title 33. For complete classification of this Act to the Code, see Short Title note set out under section 1251 of Title 33 and Tables. The Clean Air Act, referred to in subsec. (d)(1)(B), is act July 14, 1955, ch. 360, 69 Stat. 322, which is classified generally to chapter 85 (§ 7401 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 7401 of Title 42 and Tables. Section 302(b) of the Clean Air Act, referred to in sub- sec. (d)(2), formerly classified to section 1857h(b) of Title 42, was reclassified to section 7602(b) of Title 42 on enactment of Pub. L. 95–95. PRIOR PROVISIONS A prior section 169, act Aug. 16, 1954, ch. 736, 68A Stat. 55, related to amortization of grain-storage facilities, prior to the reorganization of part VI of subchapter B of chapter 1 of this title by Pub. L. 91–172. AMENDMENTS 2018—Subsec. (d)(5)(B). Pub. L. 115–141 inserted ‘‘a’’ before ‘‘facility’’. 2005—Subsec. (d). Pub. L. 109–58, § 1309(c), inserted ‘‘and special rules’’ after ‘‘Definitions’’ in heading. Subsec. (d)(3). Pub. L. 109–58, § 1309(d), substituted ‘‘Health and Human Services’’ for ‘‘Health, Education, and Welfare’’. Subsec. (d)(4)(B). Pub. L. 109–58, § 1309(b), amended heading and text of subpar. (B) generally. Prior to amendment, text read as follows: ‘‘In the case of any treatment facility used in connection with any plant or other property not in operation before January 1, 1969, the preceding sentence shall be applied by substituting December 31, 1975, for December 31, 1968.’’ Subsec. (d)(5). Pub. L. 109–58, § 1309(a), added par. (5). Subsec. (d)(5)(B). Pub. L. 109–135 inserted ‘‘in the case of facility placed in service in connection with a plant or other property placed in operation after December 31, 1975,’’ before ‘‘this section’’. 1976—Subsecs. (b), (c). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (d)(1). Pub. L. 94–455, §§ 1906(b)(13)(A), 2112(b), substituted in provisions preceding subpar. (A) ‘‘Janu- ary 1, 1976,’’ for ‘‘January 1, 1969,’’ and ‘‘storing, or pre- venting the creation or emission of’’ for ‘‘or storing’’, struck out in subpar. (B) ‘‘or his delegate’’ after ‘‘Sec- retary’’, and added subpar. (C). Subsec. (d)(4). Pub. L. 94–455, § 2112(c), among other changes, struck out provisions relating to treatment facilities placed in service by taxpayer before Jan. 1, 1976, and inserted provisions that in case of treatment facilities used in connection with any plan or other property not in operation before Jan. 1, 1969, Dec. 31, 1975, shall be substituted for Dec. 31, 1968, as the cut-off date for taking into account that portion of the basis which is attributable to construction, reconstruction, or erection. 1975—Subsec. (d)(4)(B). Pub. L. 93–625 substituted ‘‘January 1, 1976’’ for ‘‘January 1, 1975’’. 1971—Subsec. (h). Pub. L. 92–178 struck out provision that investment credit not be allowed. See section 48(a)(8) of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–135 effective as if included in the provision of the Energy Policy Act of 2005, Pub. L. 109–58, to which such amendment relates, see section 402(m)(1) of Pub. L. 109–135, set out as an Effective and Termination Dates of 2005 Amendments note under sec- tion 23 of this title. Pub. L. 109–58, title XIII, § 1309(e), Aug. 8, 2005, 119 Stat. 1007, provided that: ‘‘The amendments made by this section [amending this section] shall apply to fa- cilities placed in service after April 11, 2005.’’ EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–455, title XXI, § 2112(d)(2), Oct. 4, 1976, 90 Stat. 1907, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendments made by subsection (b) [amending this section] shall apply to taxable years beginning after December 31, 1975. Such amendments shall not apply in the case of any property with respect to which the amortization period under section 169 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] has begun before January 1, 1976.’’ EFFECTIVE DATE Pub. L. 91–172, title VII, § 704(c), Dec. 30, 1969, 83 Stat. 670, provided that: ‘‘The amendments made by this sec- tion [enacting this section and amending sections 642, 1082, 1245, and 1250 of this title] shall apply with respect to taxable years ending after December 31, 1968.’’ Executive Documents TRANSFER OF FUNCTIONS Functions vested in Secretary of the Interior and Secretary of Health, Education, and Welfare by subsec. (d)(1)(B), (3) of this section transferred to Adminis- trator of Environmental Protection Agency by Reorg. Plan No. 3, of 1970, § 2(a)(9), eff. Dec. 2, 1970, 35 F.R. 15623, 84 Stat. 2086, set out in the Appendix to Title 5, Government Organization and Employees. § 170. Charitable, etc., contributions and gifts (a) Allowance of deduction (1) General rule There shall be allowed as a deduction any charitable contribution (as defined in sub-