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Revenue Procedure Allows Brownfield Cleanup Costs to Qualify for Business Interest Expense Safe Harbor

Tuesday, November 27, 2018 - 2:00PM

The Internal Revenue Service today issued Revenue Procedure 2018-59, which provides a safe harbor for taxpayers to treat certain infrastructure trades or businesses as real property trades or businesses solely to qualify under Internal Revenue Code Section 163(j)(7)(B). That election makes the expense not subject to the limitation on business interest expense in the 2017 tax reform legislation. The revenue procedure requires those taxpayers who use the safe harbor to use the alternative depreciation system to depreciate the property. Environmental remediation costs on brownfield sites are included in the definition of “infrastructure property” in the revenue procedure.

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