26 U.S.C. § 179B — Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations

(a) Allowance of deduction. A "small business refiner" (defined in section 45H(c)(1)) that chooses to use this section can deduct 75 percent of its "qualified costs" (defined in section 45H(c)(2)) — costs it pays or incurs during the tax year that would otherwise have to be capitalized. (b) Reduced percentage. If a small business refiner's average daily domestic refinery output for the year ending December 31, 2002, was over 155,000 barrels, the 75-percentage-point figure in (a) is reduced — but not below zero. The reduction equals that percentage times the ratio of the excess over 155,000 barrels to 50,000 barrels. (c) Basis reduction. (1) The property's tax basis must be reduced by whatever part of its cost was deducted under (a). (2) For section 1245 purposes, the amount deducted under (a) for depreciable property is treated as if it were a regular depreciation deduction under section 167. (d) Coordination with other provisions. Section 280B does not apply to amounts treated as expenses under this section. (e) Election to allocate deduction to cooperative owner. (1) If a small business refiner using (a) is a cooperative organization under part I of subchapter T, and one or more of its direct owners are also part I of subchapter T organizations, the refiner may choose to give some or all of its (a) deduction to those owners. Each owner's share is based on their ownership share in the refiner. The refiner's own taxable income is not reduced under section 1382 by amounts given away this way. (2) This election must be made on a timely filed tax return for that year, and once made, is permanent for that year. (3) If any part of the deduction goes to an owner, the cooperative must give that owner written notice of the amount — before the tax return in (2) is due.