Brownfields Tax  Incentive
             Fact  Sheet
Overview

Initially enacted in 1997 and extended through December 31, 2009, the Brownfields Tax Incentive
encourages the cleanup and reuse of brownfields. Brownfields are properties where reuse is complicated
by environmental contamination concerns. The Brownfields Tax Incentive provides the following
advantages to taxpaying stakeholders conducting environmental cleanup at brownfields sites:

D  Allows environmental cleanup costs at eligible properties to be fully deductible in the year incurred,
   rather than capitalized and spread over a period of years.
D  Improvements in 2006 expanded the types of properties eligible for the incentive to include those
   with petroleum contamination.
D  Previously filed tax returns can be amended to include deductions for past cleanup expenditures.

The Tax Incentive

Originally signed into law as part of the Tax Relief Act of August 1997, and codified through Section
198(a) of the Internal Revenue Code, the Brownfields Tax Incentive is intended to spur the cleanup and
revitalization of brownfield properties. The Brownfields Tax Incentive is applicable to properties that
meet specific land use and contamination requirements. To satisfy the land use requirement, the property
must either be held by the taxpayer incurring the eligible expenses for use in a trade or business or for
the production of income; or, the property must be properly included in the taxpayer's inventory.

To satisfy the contamination requirement, hazardous substances or petroleum must be present or
potentially present on the property. Sites listed or proposed for listing on EPA's National Priorities List
are not eligible for the tax incentive.  Taxpayers must obtain a statement from a designated state agency
verifying a property's eligibility for the tax incentive. State contacts can be found on EPA's Web site at
http://www.epa.gov/brownfields/stxcntct.htm.

In addition to extending the Brownfields Tax Incentive, amendments in December 2006 expanded its
scope to allow the deduction of expenses for the cleanup of petroleum products (e.g., crude oil, crude oil
condensates, and natural gasoline) that previously were ineligible. This new eligibility for petroleum
products applies to cleanup expenses incurred from January 1, 2006 to the tax incentive's current
expiration date of December 31, 2009.

Amended tax returns may be filed to deduct expenditures from prior tax years.  IRS guidance indicates
that such returns must be filed within three years  after the date a corporation filed its original return, or
within two years after the date a corporation paid the tax (if filing for a refund), whichever is later. The
IRS or a qualified tax professional should be consulted if there is any uncertainty as to whether prior tax
year deductions are allowable.

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Brownfields Tax Incentive Allows Developer in Milwaukee, Wisconsin to
Deduct more than $100,000 in Cleanup Costs

                                              When a developer in Milwaukee, Wisconsin
                                              purchased a former industrial property for mixed-
                                              use redevelopment, local environmental
                                              engineering firm J. Spear Associates advised the
                                              developer to make use of the Brownfields Tax
                                              Incentive—a strategy that had benefited many
                                              clients before. Assessments of the approximately
                                              one-acre site, located within the city's Historic
                                              Martin Luther King (MLK) Drive Business
                                              Improvement District, had revealed PCB
                                              contamination in groundwater. After the developer
                                              requested and  obtained a statement from the
                                              Wisconsin Department of Natural Resources that
                                              the property was a "qualified, contaminated site,"
more than $100,000 in cleanup costs became deductible under the Brownfields Tax Incentive. Mr.
Spear, head of J. Spear associates, felt that".. .the incentive really drove the project forward." The site is
now home to new commercial and residential space, and has greatly added momentum to efforts within
the Business Improvement District.
New apartments and a dentist's office built on a former
          brownfields property.
 Contact for Further Information

 U.S. EPA, Office of Brownfields and Land Revitalization (202) 566-2777.

 For additional information on the Brownfields Tax Incentive, including a Frequently Asked Questions
 (FAQ) document, guidelines, and individual case studies, please visit:
 http://www.epa.gov/brownfields/bftaxmc.htm.

 For additional information on EPA's Brownfields Program, visit the EPA Brownfields Web site at:
 http://www. epa.gov/brownfields.
United States Environmental
Protection Agency
Washington, B.C. 20460
                                  Brownfields Tax
                                  Incentive Fact Sheet
     EPA-560-F-08-311
       November 2008
www.epa.gov/brownfields/

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