Definition of Structure

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[PS-39-93]

RIN 1545-AR63

Definition of Structure

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed regulations relating to

deductions available upon demolition of a building. These proposed

regulations reflect changes to the law made by the Tax Reform Act of

1984 and affect owners and lessees of real property who demolish

buildings. This document also provides notice of a public hearing on

these regulations.

DATES: Written comments, requests to appear and outlines of topics to

be discussed at the public hearing scheduled for October 9, 1996, must

be received by September 18, 1996.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (PS-39-93), room 5228,

Internal Revenue Service, POB 7604, Ben Franklin Station, Washington,

DC 20044. In the alternative, submissions may be hand delivered between

the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (PS-39-93), Courier's

Desk, Internal Revenue Service, 1111 Constitution Avenue NW.,

Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Bernard P.

Harvey, (202) 622-3110; concerning submissions and the hearing,

Christina Vasquez, (202) 622-6803 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed regulations under section 280B of

the Internal Revenue Code. Section 280B was added by the Tax Reform Act

of 1976, Public Law 94-455, 2124(b), 90 Stat. 1520, 1918 (Oct. 4,

1976), and significant amendments were made to the provision by the

Economic Recovery Tax Act of 1981, Public Law 97-34, 212(d)(2)(C) and

(e)(2), 95 Stat. 172, 239 (Aug. 13, 1981) (1981 Act) and the Tax Reform

Act of 1984, Public Law 98-369, 1063, 98 Stat. 494, 1047 (July 18,

1984) (1984 Act). Transition rules were provided in the Tax Reform Act

of 1986, Public Law 99-514, 1878(h), 100 Stat. 2085, 2904 (Oct. 22,

1986) (1986 Act). As originally enacted, section 280B required any

costs or losses incurred on account of the demolition of any certified

historic structure (a building or structure meeting certain

requirements) to be capitalized into the land upon which the demolished

structure was located. The 1981 Act modified the definition of

certified historic structure for purposes of section 280B from a

building or structure meeting certain requirements to a building (or

its structural components) meeting certain requirements. The 1984 Act

substituted ``any structure'' for ``certified historic structure.''

These proposed regulations define what ``structure'' means for purposes

of section 280B.

Explanation of Provisions

These proposed regulations define the term ``structure'' for

purposes of section 280B as a building and its structural components as

those terms are defined in Sec. 1.48-1(e) of the Income Tax

Regulations. Thus, under section 280B, a structure will include only a

building and its structural components and not other inherently

permanent structures such as oil and gas storage tanks, blast furnaces,

and coke ovens.

The proposed regulations rely on the legislative history underlying

the 1984 and 1986 Acts, which refer repeatedly to buildings rather than

to structures generally. In addition, the legislative history of the

1984 Act discusses the difficulty of applying the intent test of

Sec. 1.165-3 of the regulations, which applies to the demolition of

buildings, and indicates that the newly added language is meant to

eliminate this difficulty.

Proposed Effective Date

The regulations are proposed to be effective on and after the date

that final regulations are filed with the Federal Register.

Special Analyses

It has been determined that this notice of proposed rulemaking is

not a significant regulatory action as defined in EO 12866. Therefore,

a regulatory assessment is not required. It also has been determined

that section 553(b) of the Administrative Procedure Act (5 U.S.C.

chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do

not apply to these regulations, and, therefore, a Regulatory

Flexibility Analysis is not required. Pursuant to section 7805(f) of

the Internal Revenue Code, this notice of proposed rulemaking will be

submitted to the Chief Counsel for Advocacy of the Small Business

Administration for comment on its impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations,

consideration will be given to any written comments (a signed original

and eight (8) copies) that are submitted timely to the IRS. All

comments will be available for public inspection and copying.

A public hearing has been scheduled for October 9, 1996, in the

Commissioner's Conference Room. Because of access restrictions,

visitors will not be admitted beyond the Internal Revenue Building

lobby more than 15 minutes before the hearing starts.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons that wish to present oral comments at the hearing must

submit written comments and an outline of the topics to be discussed

and the time to be devoted to each topic (signed original and eight (8)

copies) by September 18, 1996.

A period of 10 minutes will be allotted to each person for making

comments.

An agenda showing the scheduling of the speakers will be prepared

after the deadline for receiving outlines has passed. Copies of the

agenda will be available free of charge at the hearing.

Drafting Information

The principal author of these regulations is Bernard P. Harvey,

Office of Assistant Chief Counsel (Passthroughs and Special

Industries). However, other personnel from the IRS and Treasury

Department participated in their development.

List of Subjects in 26 CFR Part 1

Income Taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in

part as follows:

Authority: 26 U.S.C. 7805 * * *

[[Page 31474]]

Par. 2. Section 1.280B-1 is added to read as follows:

Sec. 1.280B-1 Demolition of structures.

(a) In general. Section 280B provides that, in the case of the

demolition of any structure, no deduction otherwise allowable under

chapter 1 of subtitle A shall be allowed to the owner or lessee of such

structure for any amount expended for the demolition or any loss

sustained on account of the demolition, and that the expenditure or

loss shall be treated as properly chargeable to the capital account

with respect to the land on which the demolished structure was located.

(b) Definition of structure. For purposes of section 280B, the term

structure means a building, as defined in Sec. 1.48-1(e)(1), and the

structural components of that building, as defined in Sec. 1.48-

1(e)(2).

(c) Effective date. This section applies with respect to

demolitions occurring on or after the date that the final regulations

are filed with the Federal Register.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 96-15665 Filed 6-19-96; 8:45 am]

BILLING CODE 4830-01-P