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Hazardous materials affecting your tax health

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. We may have to pay environmental cleanup costs as a result of an investigation. Can we write off all of the costs on this year’s return? Dayton, Ohio

A. Maybe, but you may have to move fast. The tax law permits manufacturers to deduct cleanup expenses involving hazardous materials located on sites that meet certain requirements. (IRC Sec. 198(c)(2)(A)) Under current law, the expenses must have been paid or incurred before Jan. 1, 2010. (IRC Sec. 198(h)) Otherwise, the costs must be capitalized.

Tip: The current deduction for environmental cleanup costs might be extended by new legislation. We will keep you posted.

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