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"(3)
3 PERCENT
"(1)
IN GENERAL. --In the case of an individual who is
recognized by the Alaska Eskimo Whaling Commission
as a whaling captain charged with the responsibility
of maintaining and carrying out sanctioned whaling
activities and who engages in such activities during
the taxable year, the amount described in paragraph
(2) (to the extent such amount does not exceed
$10,000 for the taxable year) shall be treated for
purposes of this section as a charitable
contribution. "(2)
AMOUNT DESCRIBED. -- "(A)
IN GENERAL. --The amount described in this paragraph
is the aggregate of the reasonable and necessary
whaling expenses paid by the taxpayer during the
taxable year in carrying out sanctioned whaling
activities. "(B)
WHALING EXPENSES. --For purposes of subparagraph
(A), the term 'whaling expenses' includes expenses
for -- "(i)
the acquisition and maintenance of whaling boats,
weapons, and gear used in sanctioned whaling
activities, "(ii)
the supplying of food for the crew and other
provisions for carrying out such activities, and "(iii)
storage and distribution of the catch from such
activities. "(3)
SANCTIONED WHALING ACTIVITIES. --For purposes of
this subsection, the term 'sanctioned whaling
activities' means subsistence bowhead whale hunting
activities conducted pursuant to the management plan
of the Alaska Eskimo Whaling Commission. "(4)
SUBSTANTIATION OF EXPENSES. --The Secretary shall
issue guidance requiring that the taxpayer
substantiate the whaling expenses for which a
deduction is claimed under this subsection,
including by maintaining appropriate written records
with respect to the time, place, date, amount, and
nature of the expense, as well as the taxpayer's
eligibility for such deduction, and that (to the
extent provided by the Secretary) such
substantiation be provided as part of the taxpayer's
return of tax.".
"(C)
CERTAIN AIRCRAFT. --The term 'qualified property'
includes property -- "(i)
which meets the requirements of clauses (ii) and
(iii) of subparagraph (A), "(ii)
which is an aircraft which is not a transportation
property (as defined in subparagraph (B)(iii)) other
than for agricultural or firefighting purposes, "(iii)
which is purchased and on which such purchaser, at
the time of the contract for purchase, has made a
nonrefundable deposit of the lesser of -- "(I)
10 percent of the cost, or "(II)
$100,000, and "(iv)
which has -- "(I)
an estimated production period exceeding 4 months,
and "(II)
a cost exceeding $200,000.".
"(iv)
APPLICATION OF SUBPARAGRAPH. --This subparagraph
shall not apply to any property which is described
in subparagraph (C).".
"(1)
IN GENERAL. --For purposes of this title, the basis
of any property shall be reduced by the portion of
the cost of such property taken into account under
subsection (a). "(2)
ORDINARY INCOME RECAPTURE. --For purposes of section
1245, the amount of the deduction allowable under
subsection (a) with respect to any property which is
of a character subject to the allowance for
depreciation shall be treated as a deduction allowed
for depreciation under section 167.".
"(I)
expenditures for which a deduction is allowed under
section 179B.".
"Sec.
179B. Deduction for capital costs incurred in
complying with Environmental Protection Agency
sulfur regulations.".
"(1)
IN GENERAL. --The aggregate credit determined under
subsection (a) for any taxable year with respect to
any facility shall not exceed -- "(A)
25 percent of the qualified capital costs incurred
by the small business refiner with respect to such
facility, reduced by "(B)
the aggregate credits determined under this section
for all prior taxable years with respect to such
facility. "(2)
REDUCED PERCENTAGE. --In the case of a small
business refiner with average daily domestic
refinery runs for the 1-year period ending on
"(1)
SMALL BUSINESS REFINER. --The term 'small business
refiner' means, with respect to any taxable year, a
refiner of crude oil -- "(A)
with respect to which not more than 1,500
individuals are engaged in the refinery operations
of the business on any day during such taxable year,
and "(B)
the average daily domestic refinery run or average
retained production of which for all facilities of
the taxpayer for the 1-year period ending on "(2)
QUALIFIED CAPITAL COSTS. --The term 'qualified
capital costs' means, with respect to any facility,
those costs paid or incurred during the applicable
period for compliance with the applicable EPA
regulations with respect to such facility, including
expenditures for the construction of new process
operation units or the dismantling and
reconstruction of existing process units to be used
in the production of low sulfur diesel fuel,
associated adjacent or offsite equipment (including
tankage, catalyst, and power supply), engineering,
construction period interest, and sitework. "(3)
APPLICABLE EPA REGULATIONS. --The term 'applicable
EPA regulations' means the Highway Diesel Fuel
Sulfur Control Requirements of the Environmental
Protection Agency. "(4)
APPLICABLE PERIOD. --The term 'applicable period'
means, with respect to any facility, the period
beginning on "(5)
"(1)
REQUIRED. --No credit shall be allowed unless, not
later than the date which is 30 months after the
first day of the first taxable year in which the low
sulfur diesel fuel production credit is determined
with respect to a facility, the small business
refiner obtains certification from the Secretary,
after consultation with the Administrator of the
Environmental Protection Agency, that the taxpayer's
qualified capital costs with respect to such
facility will result in compliance with the
applicable EPA regulations. "(2)
CONTENTS OF APPLICATION. --An application for
certification shall include relevant information
regarding unit capacities and operating
characteristics sufficient for the Secretary, after
consultation with the Administrator of the
Environmental Protection Agency, to determine that
such qualified capital costs are necessary for
compliance with the applicable EPA regulations. "(3)
REVIEW PERIOD. --Any application shall be reviewed
and notice of certification, if applicable, shall be
made within 60 days of receipt of such application.
In the event the Secretary does not notify the
taxpayer of the results of such certification within
such period, the taxpayer may presume the
certification to be issued until so notified. "(4)
STATUTE OF LIMITATIONS. --With respect to the credit
allowed under this section -- "(A)
the statutory period for the assessment of any
deficiency attributable to such credit shall not
expire before the end of the 3-year period ending on
the date that the review period described in
paragraph (3) ends with respect to the taxpayer, and "(B)
such deficiency may be assessed before the
expiration of such 3-year period notwithstanding the
provisions of any other law or rule of law which
would otherwise prevent such assessment.
"(1)
APPORTIONMENT OF CREDIT. -- "(A)
IN GENERAL. --In the case of a cooperative
organization described in section 1381(a), any
portion of the credit determined under subsection
(a) for the taxable year may, at the election of the
organization, be apportioned among patrons eligible
to share in patronage dividends on the basis of the
quantity or value of business done with or for such
patrons for the taxable year. "(B)
"(2)
TREATMENT OF ORGANIZATIONS "(A)
ORGANIZATIONS. --The amount of the credit not
apportioned to patrons pursuant to paragraph (1)
shall be included in the amount determined under
subsection (a) for the taxable year of the
organization. "(B)
PATRONS. --The amount of the credit apportioned to
patrons pursuant to paragraph (1) shall be included
in the amount determined under subsection (a) for
the first taxable year of each patron ending on or
after the last day of the payment period (as defined
in section 1382(d)) for the taxable year of the
organization or, if earlier, for the taxable year of
each patron ending on or after the date on which the
patron receives notice from the cooperative of the
apportionment. "(3)
SPECIAL RULE. --If the amount of a credit which has
been apportioned to any patron under this subsection
is decreased for any reason -- "(A)
such amount shall not increase the tax imposed on
such patron, and "(B)
the tax imposed by this chapter on such organization
shall be increased by such amount. The
increase under subparagraph (B) shall not be treated
as tax imposed by this chapter for purposes of
determining the amount of any credit under this
chapter or for purposes of section 55.".
"(18)
the low sulfur diesel fuel production credit
determined under section 45H(a).".
"(31)
in the case of a facility with respect to which a
credit was allowed under section 45H, to the extent
provided in section 45H(d).".
"(12)
the low sulfur diesel fuel production credit
determined under section 45H(a).".
"Sec.
45H. Credit for production of low sulfur diesel
fuel.".
"(G)
ADDITIONAL CAPITAL EXPENDITURES NOT TAKEN INTO
ACCOUNT. --With respect to bonds issued after
"(1)
the credit amount, and "(2)
the qualified credit oil production and the
qualified natural gas production which is
attributable to the taxpayer.
"(1)
IN GENERAL. --The credit amount is -- "(A)
$3 per barrel of qualified crude oil production, and "(B)
50 cents per 1,000 cubic feet of qualified natural
gas production. "(2)
REDUCTION AS "(A)
IN GENERAL. --The $3 and 50 cents amounts under
paragraph (1) shall each be reduced (but not below
zero) by an amount which bears the same ratio to
such amount (determined without regard to this
paragraph) as -- "(i)
the excess (if any) of the applicable reference
price over $15 ($1.67 for qualified natural gas
production), bears to "(ii)
$3 ($0.33 for qualified natural gas production). The
applicable reference price for a taxable year is the
reference price of the calendar year preceding the
calendar year in which the taxable year begins. "(B)
INFLATION ADJUSTMENT. --In the case of any taxable
year beginning in a calendar year after 2005, each
of the dollar amounts contained in subparagraph (A)
shall be increased to an amount equal to such dollar
amount multiplied by the inflation adjustment factor
for such calendar year (determined under section
43(b)(3)(B) by substituting '2004' for '1990'). "(C)
REFERENCE PRICE. --For purposes of this paragraph,
the term 'reference price' means, with respect to
any calendar year -- "(i)
in the case of qualified crude oil production, the
reference price determined under section
29(d)(2)(C), and "(ii)
in the case of qualified natural gas production, the
Secretary's estimate of the annual average wellhead
price per 1,000 cubic feet for all domestic natural
gas.
"(1)
IN GENERAL. --The terms 'qualified crude oil
production' and 'qualified natural gas production'
mean domestic crude oil or natural gas which is
produced from a qualified marginal well. "(2)
LIMITATION ON AMOUNT OF PRODUCTION WHICH "(A)
IN GENERAL. --Crude oil or natural gas produced
during any taxable year from any well shall not be
treated as qualified crude oil production or
qualified natural gas production to the extent
production from the well during the taxable year
exceeds 1,095 barrels or barrel-of-oil equivalents
(as defined in section 29(d)(5)). "(B)
PROPORTIONATE REDUCTIONS. -- "(i)
SHORT TAXABLE YEARS. --In the case of a short
taxable year, the limitations under this paragraph
shall be proportionately reduced to reflect the
ratio which the number of days in such taxable year
bears to 365. "(ii)
WELLS NOT IN PRODUCTION ENTIRE YEAR. --In the case
of a well which is not capable of production during
each day of a taxable year, the limitations under
this paragraph applicable to the well shall be
proportionately reduced to reflect the ratio which
the number of days of production bears to the total
number of days in the taxable year. "(3)
DEFINITIONS. -- "(A)
QUALIFIED MARGINAL "(i)
the production from which during the taxable year is
treated as marginal production under section
613A(c)(6), or "(ii)
which, during the taxable year -- "(I)
has average daily production of not more than 25
barrel-of-oil equivalents (as so defined), and "(II)
produces water at a rate not less than 95 percent of
total well effluent. "(B)
CRUDE
"(1)
PRODUCTION ATTRIBUTABLE TO THE TAXPAYER. --In the
case of a qualified marginal well in which there is
more than one owner of operating interests in the
well and the crude oil or natural gas production
exceeds the limitation under subsection (c)(2),
qualifying crude oil production or qualifying
natural gas production attributable to the taxpayer
shall be determined on the basis of the ratio which
taxpayer's revenue interest in the production bears
to the aggregate of the revenue interests of all
operating interest owners in the production. "(2)
OPERATING INTEREST REQUIRED. --Any credit under this
section may be claimed only on production which is
attributable to the holder of an operating interest. "(3)
PRODUCTION FROM NONCONVENTIONAL SOURCES EXCLUDED.
--In the case of production from a qualified
marginal well which is eligible for the credit
allowed under section 29 for the taxable year, no
credit shall be allowable under this section unless
the taxpayer elects not to claim the credit under
section 29 with respect to the well.".
"(19)
the marginal oil and gas well production credit
determined under section 45I(a).".
"(3)
5-YEAR CARRYBACK FOR MARGINAL "(A)
this section shall be applied separately from the
business credit (other than the marginal oil and gas
well production credit), "(B)
paragraph (1) shall be applied by substituting '5
taxable years' for '1 taxable years' in subparagraph
(A) thereof, and "(C)
paragraph (2) shall be applied -- "(i)
by substituting '25 taxable years' for '21 taxable
years' in subparagraph (A) thereof, and "(ii)
by substituting '24 taxable years' for '20 taxable
years' in subparagraph (B) thereof.".
This document is divided into multiple parts. To reach other
parts, please use READ. You have reached Part 02 "Sec.
45I. Credit for producing oil and gas from marginal
wells.".
"(1)
ALLOCATION "(A)
IN GENERAL. --The taxable income of each domestic
corporation which is a member of a worldwide
affiliated group shall be determined by allocating
and apportioning interest expense of each member as
if all members of such group were a single
corporation. "(B)
TREATMENT OF WORLDWIDE AFFILIATED GROUP. --The
taxable income of the domestic members of a
worldwide affiliated group from sources outside the
United States shall be determined by allocating and
apportioning the interest expense of such domestic
members to such income in an amount equal to the
excess (if any) of -- "(i)
the total interest expense of the worldwide
affiliated group multiplied by the ratio which the
foreign assets of the worldwide affiliated group
bears to all the assets of the worldwide affiliated
group, over "(ii)
the interest expense of all foreign corporations
which are members of the worldwide affiliated group
to the extent such interest expense of such foreign
corporations would have been allocated and
apportioned to foreign source income if this
subsection were applied to a group consisting of all
the foreign corporations in such worldwide
affiliated group. "(C)
WORLDWIDE AFFILIATED GROUP. --For purposes of this
paragraph, the term 'worldwide affiliated group'
means a group consisting of -- "(i)
the includible members of an affiliated group (as
defined in section 1504(a), determined without
regard to paragraphs (2) and (4) of section
1504(b)), and "(ii)
all controlled foreign corporations in which such
members in the aggregate meet the ownership
requirements of section 1504(a)(2) either directly
or indirectly through applying paragraph (2) of
section 958(a) or through applying rules similar to
the rules of such paragraph to stock owned directly
or indirectly by domestic partnerships, trusts, or
estates. "(2)
ALLOCATION "(3)
TREATMENT OF TAX-EXEMPT ASSETS; BASIS OF STOCK IN
NONAFFILIATED 10-PERCENT OWNED CORPORATIONS. --The
rules of paragraphs (3) and (4) of subsection (e)
shall apply for purposes of this subsection, except
that paragraph (4) shall be applied on a worldwide
affiliated group basis. "(4)
TREATMENT OF CERTAIN FINANCIAL INSTITUTIONS. -- "(A)
IN GENERAL. --For purposes of paragraph (1), any
corporation described in subparagraph (B) shall be
treated as an includible corporation for purposes of
section 1504 only for purposes of applying this
subsection separately to corporations so described. "(B)
DESCRIPTION. --A corporation is described in this
subparagraph if -- "(i)
such corporation is a financial institution
described in section 581 or 591, "(ii)
the business of such financial institution is
predominantly with persons other than related
persons (within the meaning of subsection (d)(4)) or
their customers, and "(iii)
such financial institution is required by State or
Federal law to be operated separately from any other
entity which is not such an institution. "(C)
TREATMENT OF BANK "(i)
a bank holding company (within the meaning of
section 2(a) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(a)), "(ii)
a financial holding company (within the meaning of
section 2(p) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(p)), and "(iii)
any subsidiary of a financial institution described
in section 581 or 591, or of any such bank or
financial holding company, if such subsidiary is
predominantly engaged (directly or indirectly) in
the active conduct of a banking, financing, or
similar business, shall
be treated as a corporation described in
subparagraph (B). "(5)
ELECTION TO EXPAND FINANCIAL INSTITUTION GROUP OF
WORLDWIDE GROUP. -- "(A)
IN GENERAL. --If a worldwide affiliated group elects
the application of this subsection, all financial
corporations which -- "(i)
are members of such worldwide affiliated group, but "(ii)
are not corporations described in paragraph (4)(B), shall
be treated as described in paragraph (4)(B) for
purposes of applying paragraph (4)(A). This
subsection (other than this paragraph) shall apply
to any such group in the same manner as this
subsection (other than this paragraph) applies to
the pre-election worldwide affiliated group of which
such group is a part. "(B)
FINANCIAL CORPORATION. --For purposes of this
paragraph, the term 'financial corporation' means
any corporation if at least 80 percent of its gross
income is income described in section 904(d)(2)(D)(ii)
and the regulations thereunder which is derived from
transactions with persons who are not related
(within the meaning of section 267(b) or 707(b)(1))
to the corporation. For purposes of the preceding
sentence, there shall be disregarded any item of
income or gain from a transaction or series of
transactions a principal purpose of which is the
qualification of any corporation as a financial
corporation. "(C)
ANTI-ABUSE RULES. --In the case of a corporation
which is a member of an electing financial
institution group, to the extent that such
corporation -- "(i)
distributes dividends or makes other distributions
with respect to its stock after the date of the
enactment of this paragraph to any member of the
pre-election worldwide affiliated group (other than
to a member of the electing financial institution
group) in excess of the greater of -- "(I)
its average annual dividend (expressed as a
percentage of current earnings and profits) during
the 5-taxable-year period ending with the taxable
year preceding the taxable year, or "(II)
25 percent of its average annual earnings and
profits for such 5-taxable-year period, or "(ii)
deals with any person in any manner not clearly
reflecting the income of the corporation (as
determined under principles similar to the
principles of section 482), an
amount of indebtedness of the electing financial
institution group equal to the excess distribution
or the understatement or overstatement of income, as
the case may be, shall be recharacterized (for the
taxable year and subsequent taxable years) for
purposes of this paragraph as indebtedness of the
worldwide affiliated group (excluding the electing
financial institution group). If a corporation has
not been in existence for 5 taxable years, this
subparagraph shall be applied with respect to the
period it was in existence. "(D)
ELECTION. --An election under this paragraph with
respect to any financial institution group may be
made only by the common parent of the pre-election
worldwide affiliated group and may be made only for
the first taxable year beginning after "(E)
DEFINITIONS RELATING TO GROUPS. --For purposes of
this paragraph -- "(i)
"(ii) ELECTING FINANCIAL INSTITUTION GROUP. --The term 'electing financial institution group' means the group of corporations to which this subsection applies separately by reason of the application of paragraph (4)(A) and which includes financial | |
