TELEPHONE POLE REMOVAL COSTS can be deducted immediately even though the poles will be replaced, the IRS said in February
This came as a surprise to many companies who had thought costs of removing property had to be added to the tax basis of the replacement property and recovered over time by depreciating the new asset. The IRS made the statement in Rev. Rul. 2000-7. The ruling is written very broadly so that it applies across industries.
Christine Turgeon, a lawyer at the US Treasury, said there are only two exceptions where removal costs cannot be deducted. Section 280B of the US tax code requires the cost of demolishing structures be added to the tax basis of the land, and IRS regulations under section 165 of the US tax code deny a deduction where someone buys an asset intending to demolish it.