Tax News

CCH (cch.taxgroup.com) reports:

The Treasury has released temporary and proposed regulations governing how a "small business refiner" elects to take, and determines the amount of, a Code Sec. 179B deduction for costs of producing diesel fuel. The deduction, 75 percent of certain qualifying costs, is allowable for a tax year even if the relevant property is not placed in service until a later year. In addition to other implementing rules, the temporary regulations state which environmental protection agency rules are used when determining the deduction and provide a reduction in the allowable deduction if certain production thresholds are exceeded.
Under the temporary regulations, the election to utilize Code Sec. 179B(a) is made separately for each year and a taxpayer may elect the deduction for one year and not for another year. The election is made on the taxpayer's original Federal income tax return for the year and requires attaching an informational statement. The election is made at the entity level if taken by a partnership or an S corporation. And, the common parent of a consolidated group makes the election on behalf of eligible group members.
If an election under Code Sec. 179B(e) is made by a cooperative, the deduction amount allocated is equal to the owner's ratable share of the total deduction based on ownership interests in the electing cooperative small business refiner. Each cooperative owner must be notified of the election and their allocated amount of the deduction. If ownership interests vary during the year, the allocation must be done with a consistently applied method that accounts for such variances. If such an allocation is made to cooperative owners, the electing cooperative must reduce its Code Sec. 179B deduction in calculating its income under Code Sec. 1382 for the deduction amount allocated to its owners.
The due date for making the election is the due date (including extensions) of the taxpayer's Federal income tax return for the taxable year. The temporary regulations generally apply to tax years ending on or after June 26, 2008. However, the regulations may be applied to tax years ending after December 31, 2002, and before June 26, 2008 by using the rules provided in Notice 2006-47.
Written or electronic comments on the proposed regulations must be received by September 25, 2008. A public hearing is scheduled for October 28, 2008, at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, N.W., Washington, D.C. Outlines of topics to be discussed must be received by September 22, 2008.
T.D. 9404, 2008FED ¶47,040
Proposed Regulations, NPRM REG-143453-05, 2008FED ¶49,811
Other References:
Code Sec. 179B
CCH Reference - 2008FED ¶12,136.20
Tax Research Consultant
CCH Reference - TRC BUSEXP: 18,900
CCH Reference - TRC BUSEXP: 18,908