Election To Amortize Pollution Control Facilities

This election applies only to “certified pollution control facilities.” These are “new” facilities used in connection with a plant or other property in operation before '76, to abate or control water or atmospheric pollution or contamination by removing, altering, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes or heat and which satisfy certain other requirements. The amortizable basis must be reduced by 20% for facilities placed in service by a corporation (other than an S corporation).

If the facility's useful life is in excess of 15 years its amortizable basis is proportionately reduced.

Separate election can be made for each facility.

Making the election for one facility, or for the facilities in one plan, doesn't require that the election be made for all facilities owned by the taxpayer. There is no bar to electing the amortization deduction for some facilities and taking depreciation for other facilities owned by the same taxpayer.

Making the election and selecting when amortization begins.

The election to take the amortization deduction and to begin the 60-month amortization period (either with the month following the month in which the facility is completed or acquired, or with the first month of the succeeding tax year) is made by a statement to that effect attached to the return for the tax year in which the first month of the amortization period falls. The statement must include the following information (if not otherwise included in the documents referred to in Item 9, below):

(1) a description clearly identifying each certified pollution control facility for which an amortization deduction is claimed;

(2) the date on which such facility was completed or acquired;

(3) the useful life of the facility as of the date the property is placed in service;

(4) the date as of which the amortization period is to begin;

(5) the date the plant or other property to which the facility is connected began operating;

(6) the total costs and expenditures paid or incurred in the acquisition, construction, and installation of such facility;

(7) a description of any wastes which the facility will recover during the course of its operation, and a reasonable estimate of the profits which will be realized by the sale of such wastes, whether pollutants or otherwise, over the useful life of the facility. Such estimate must include a schedule setting forth a detailed computation illustrating how the estimate was computed, including every element prescribed in the definition of estimated profits;

(8) a computation showing the amortizable basis of the facility as of the first month for which the amortization deduction is elected;

(9) a statement that the facility has been certified by the Federal certifying authority (the Environmental Protection Agency), together with a copy of such certification, and a copy of the application for certification which was filed with and approved by the Environmental Protection Agency. If the facility hasn't been certified by the Environmental Protection Agency, include a statement that application has been made to the proper state certifying authority together with a copy of such application and a copy of the application filed or to be filed with the Environmental Protection Agency. Where the certification form is not filed with the return, the certification must be filed within 90 days after receipt with the director of the IRS service center with whom the return was filed.