In the case of a small business refiner (as defined in section
45H(c)(1)) which elects the application of this section, there shall be allowed as a deduction an amount equal to 75 percent of qualified costs (as defined in section
45H(c)(2)) which are paid or incurred by the taxpayer during the taxable year and which are properly chargeable to capital account.
(b) Reduced percentage
In the case of a small business refiner with average daily domestic refinery runs for the 1-year period ending on December 31, 2002, in excess of 155,000 barrels, the number of percentage points described in subsection (a) shall be reduced (not below zero) by the product of such number (before the application of this subsection) and the ratio of such excess to 50,000 barrels.
(c) Basis reduction
(1) In general
For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a).
(2) Ordinary income recapture
For purposes of section
1245, the amount of the deduction allowable under subsection (a) with respect to any property which is of a character subject to the allowance for depreciation shall be treated as a deduction allowed for depreciation under section
(d) Coordination with other provisions
280B shall not apply to amounts which are treated as expenses under this section.
(e) Election to allocate deduction to cooperative owner
(1) In general
(A)a small business refiner to which subsection (a) applies is an organization to which part I of subchapter T applies, and
(B)one or more persons directly holding an ownership interest in the refiner are organizations to which part I of subchapter T apply,
the refiner may elect to allocate all or a portion of the deduction allowable under subsection (a) to such persons. Such allocation shall be equal to the person’s ratable share of the total amount allocated, determined on the basis of the person’s ownership interest in the taxpayer. The taxable income of the refiner shall not be reduced under section
1382 by reason of any amount to which the preceding sentence applies.
(2) Form and effect of election
An election under paragraph (1) for any taxable year shall be made on a timely filed return for such year. Such election, once made, shall be irrevocable for such taxable year.
(3) Written notice to owners
If any portion of the deduction available under subsection (a) is allocated to owners under paragraph (1), the cooperative shall provide any owner receiving an allocation written notice of the amount of the allocation. Such notice shall be provided before the date on which the return described in paragraph (2) is due.
Amendment by Pub. L. 110–172effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 7(e) ofPub. L. 110–172, set out as a note under section
1092 of this title.
Effective Date of 2005 Amendment
Pub. L. 109–58, title XIII, § 1324(b),Aug. 8, 2005, 119 Stat. 1015, provided that: “The amendment made by this section [amending this section] shall take effect as if included in the amendment made by section 338(a) of the American Jobs Creation Act of 2004 [Pub. L. 108–357, enacting this section].”
Pub. L. 108–357, title III, § 338(c),Oct. 22, 2004, 118 Stat. 1481, provided that: “The amendment made by this section [enacting this section and amending sections
1245 of this title] shall apply to expenses paid or incurred after December 31, 2002, in taxable years ending after such date.”
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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Description of Change
Statutes at Large
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