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

(a) Allowance of deduction. Any person may choose to deduct the cost of a certified pollution control facility (defined in subsection (d)) over a 60-month period, instead of using regular depreciation. Here is how each month's deduction is figured: take the facility's amortizable basis as of the end of that month, and divide it by the number of months left in the 60-month period, counting that month itself. The result is that month's deduction. The "amortizable basis at the end of the month" used in that division is figured without first subtracting that month's own deduction. This amortization deduction replaces the normal section 167 depreciation deduction for that month — a taxpayer cannot claim both for the same month. The taxpayer chooses when the 60-month period starts: either the month after the facility is finished or acquired, or the following taxable year. (b) Election of amortization. To use this deduction, and to start the 60-month period the month after the facility is completed or acquired (or the following taxable year), the taxpayer must file a statement electing to do so with the Secretary, in whatever manner, form, and time the Secretary sets by regulation. (c) Termination of amortization deduction. A taxpayer who elected this deduction may stop it early, for the rest of the amortization period, at any time after electing it. To stop, the taxpayer files a written notice with the Secretary before the start of the month the stoppage is to begin, naming that month. Once amortization stops, the normal section 167 depreciation deduction resumes starting with that first month, and the taxpayer can no longer claim any further amortization deduction under this section for that facility. (d) Definitions and special rules. (1) "Certified pollution control facility" means a new, identifiable treatment facility used with a plant or other property that was already in operation before January 1, 1976, to abate or control water or air pollution by removing, altering, disposing of, storing, or preventing pollutants, contaminants, waste, or heat. It must also be certified three ways: (A) the state certifying authority with jurisdiction must certify to the federal certifying authority that it was built, rebuilt, or acquired in line with the state's pollution control program or requirements; (B) the federal certifying authority must certify to the Secretary that it (i) complies with applicable federal regulations, and (ii) furthers U.S. policy of cooperating with the states on water pollution under the Federal Water Pollution Control Act or air pollution under the Clean Air Act; and (C) it must not significantly (i) increase the plant's output or capacity, extend its useful life, or reduce its operating costs, or (ii) change the plant's manufacturing or production process. (2) "State certifying authority" means, for water pollution, the state water pollution control agency as defined in section 13(a) of the Federal Water Pollution Control Act, and for air pollution, the air pollution control agency as defined in section 302(b) of the Clean Air Act; an interstate agency authorized to act for a state also qualifies. (3) "Federal certifying authority" means, for water pollution, the Secretary of the Interior, and for air pollution, the Secretary of Health and Human Services. (4) "New identifiable treatment facility": (A) in general, this means tangible property that can normally be depreciated under section 167, that is clearly identifiable as a treatment facility (a building does not count unless the entire building is a treatment facility), and that was either (i) built, rebuilt, or erected by the taxpayer and completed after December 31, 1968, or (ii) acquired after December 31, 1968, if the taxpayer is the first to use it and that use began after that date; for property built over time, only the portion of the cost attributable to construction after December 31, 1968, counts. (B) For certain facilities placed in service after April 11, 2005 that qualify solely under paragraph (5), the date "December 31, 1968" in (A) is replaced with "April 11, 2005" everywhere it appears. (5) A special rule for certain air pollution control facilities: if the facility is placed in service after April 11, 2005, and is used with an electric generating plant or other property that is primarily coal-fired, then (A) paragraph (1)'s requirement that the plant have been "in operation before January 1, 1976" does not apply, and (B) if the facility is used with a plant placed in operation after December 31, 1975, the amortization period becomes 84 months instead of 60, everywhere "60" appears in subsections (a) and (b). (e) Profitmaking abatement works, etc. The federal certifying authority may not certify a facility under subsection (d)(1)(B) if it appears the facility's costs will be recovered over its useful life through profit — for example, from recovering waste materials or other income from operating the facility. (f) Amortizable basis. (1) "Amortizable basis" means the part of the facility's adjusted basis (used to figure gain) that may be amortized under this section. (2) Two special rules apply: (A) if the facility's useful life, measured from the first day a deduction is allowed, is more than 15 years, the amortizable basis is reduced to the amount that has the same ratio to the basis that would otherwise be eligible as 15 years has to the facility's actual useful life; and (B) once the amortization period has begun, the amortizable basis cannot be increased for later additions or improvements. (g) Depreciation deduction. Despite subsection (a), the normal section 167 depreciation deduction is still allowed for the part of the adjusted basis that is not the amortizable basis. (h) [Repealed]. This subsection was repealed by Pub. L. 92–178, title I, § 104(f)(2), on December 10, 1971. (i) Life tenant and remainderman. When property is held by one person for life, with the property passing to someone else afterward, the deduction under this section is computed as if the life tenant owned the property outright, and the life tenant — not the remainderman — is allowed to claim it. (j) Cross reference. For a special rule on gain from disposing of property whose adjusted basis was determined using this section, see section 1245.