Mold-removal costs can be expensed

✍ Scribed by Shirley Dennis-Escoffier

• Book ID: 102296949
• Publisher: John Wiley and Sons
• Year: 2006
• Tongue: English
• Weight: 51 KB
• Volume: 17
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.20238

✦ Synopsis

For businesses conducting environmental cleanup activities, the critical tax issue is whether all or some of the cleanup costs are currently deductible as expenses or whether they must be capitalized. This classification can have a dramatic impact on the economics of the cleanup project. In some good news for taxpayers with buildings requiring costly mold removal, the Internal Revenue Service recently issued a letter ruling stating that these remediation costs can be deducted as ordinary and necessary business expenses. This welcome news adds to the long line of sometimes-confusing rulings on treatment of environmental cleanup expenses that differs depending on whether the contamination occurred before or after the taxpayer acquired the property.