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asbestos removal was the discovery that asbestos is hazardous to
human health. Accordingly, until the danger was discovered,
petitioner argues that the physical presence of the asbestos had no
effect on the building's value. Only after the danger was perceived
could the contamination affect the building's operations and reduce
its value.12
Petitioner points to Rev. Rul. 94-38, 1994-1 C.B. 35, which
cites Plainfield-Union in addressing the proper treatment of costs
to remediate soil and treat groundwater that a taxpayer had
contaminated with hazardous waste from its business. The ruling
treats such costs (other than those attributable to the construction
of groundwater treatment facilities) as currently deductible.
Respondent, on the other hand, argues that the discovery that
asbestos is hazardous and that the Douglas Street building contained
that substance is not a relevant or satisfactory reference point.
Respondent contends that the Plainfield-Union test does not apply
herein because a comparison cannot be made between the status of the
building before it contained asbestos and after the asbestos was
removed; since construction, the building has always contained
asbestos. In cases where the Plainfield-Union test has been applied
(such as Oberman Manufacturing Co. v. Commissioner, 47 T.C. 471, 483
(1967); American Bemberg Corp. v. Commissioner, 10 T.C. 361, 370
12 In its reply brief, petitioner states: "While in a
metaphysical sense the Douglas Street Building may have been
contaminated in 1970, such contamination had no discernable
impact until the hazard became known."
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