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University of Chicago Press




The income taxation of outlays for envi- ronmental restoration (or "remediation'') has become a hot topic once again. It elicited extensive consideration a decade ago, when the focus was on the treat- ment of expenses of surface mining re- clamation and nuclear power plant de- commissioning, now explicitly covered by Sections 468 and 468A of the Internal Revenue Code. As a formal matter, those specific matters are just examples, conspicuous by their size, of the more general question of how an income tax should account for "future costs." Al- though not currently controversial, sur- face mining affords a simple illustration. As a condition of mining coal by surface methods, a coal mine operator is uncon- ditionally required by state law to restore its site, when no longer actively mined, to a reasonable facsimile of the condition the land was in before mining operations commenced. Based on its experience, it can estimate with reasonably accuracy (1) when it will cease its mining operations, and (2) how much it will cost to reclaim the land.

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