Editors' Summary: The tax treatment of a company's environmental remediation costs is crucial to its determination of what the total cost of a remedial action actually is. Whether costs are deductible expenses that the company can offset against current income or are capital expenditures that it must depreciate over time can have a significant impact on its bottom line. This Article examines the Internal Revenue Service's (IRS') current and historic treatment of these expenditures. The Article begins by examining the distinction between deductibility and capitalization of costs. It then discusses the IRS' historic treatment of cleanup costs as capital expenditures and the current trend of allowing these costs to be deducted. Finally, it analyzes the tax treatment of related expenses, such as consulting and legal fees, as well as the treatment of funds established by potentially responsible parties to finance remedial work at multiparty hazardous-waste sites.