26 USC 198 - Expensing of environmental remediation costs

U.S Code last checked for updates: Oct 24, 2026

§ 198.

Expensing of environmental remediation costs

(a)

In general

(b)

Qualified environmental remediation expenditure

For purposes of this section—

(1)

In general

The term “qualified environmental remediation expenditure” means any expenditure—

(A)

which is otherwise chargeable to capital account, and

(B)

which is paid or incurred in connection with the abatement or control of hazardous substances at a qualified contaminated site.

(2)

Special rule for expenditures for depreciable property

(c)

Qualified contaminated site

For purposes of this section—

(1)

In general

The term “qualified contaminated 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 section 1221(a)(1) in the hands of the taxpayer, and

(B)

at or on which there has been a release (or threat of release) or disposal of any hazardous substance.

(2)

National priorities listed sites not included

(3)

Taxpayer must receive statement from State environmental agency

(4)

Appropriate State agency

(d)

Hazardous substance

For purposes of this section—

(1)

In general

The term “hazardous substance” means—

(A)

any substance which is a hazardous substance as defined in section 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980,

(B)

any substance which is designated as a hazardous substance under section 102 of such Act, and

(C)

any petroleum product (as defined in section 4612(a)(3)).

(2)

Exception

(e)

Deduction recaptured as ordinary income on sale, etc.

Solely for purposes of section 1245, in the case of property to which a qualified environmental remediation expenditure would have been capitalized 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

(g)

Regulations

(h)

Termination

(Added Pub. L. 105–34, title IX, § 941(a), Aug. 5, 1997, 111 Stat. 882; amended Pub. L. 106–170, title V, §§ 511, 532(c)(2)(A), Dec. 17, 1999, 113 Stat. 1924, 1930; Pub. L. 106–554, § 1(a)(7) [title I, § 162(a), (b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–625;

cite as: 26 USC 198