SECTION 2. BACKGROUND

.01 Section 198(a), as added by § 941(a) of the Taxpayer Relief Act of 1997, Pub. L. No. 105–34, 111 Stat. 788 (Aug. 5, 1997), provides that a taxpayer may elect to treat any QER expenditure as an expense that is not chargeable to the capital account, but is deductible for the taxable year in which it is paid or incurred.

of income, or that is property described in § 1221(1) in the hands of the taxpayer;

(ii) that is within a targeted area (as defined in § 198(c)(2)); and

(iii) at or on which there has been a release (or threat of release) or disposal of any hazardous substance. Section 198(c)(1)(B) provides that an area is treated as a qualified contaminated site with respect to expenditures paid or incurred during any taxable year only if the taxpayer receives a statement from an appropriate agency of the state (as defined by § 198(c)(1)(C)) in which the area is located, verifying that the area meets the requirements of § 198(c)(1)(A)(ii) and (iii) (described above).

.04 Section 198(d)(1) generally defines “hazardous substance” as any substance that is a hazardous substance as defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and any substance that is designated as a hazardous substance under § 102 of CERCLA.

.05 Section 198 is effective for expenditures paid or incurred after August 5, 1997, and on or before December 31, 2000. See § 198(h).