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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 280 Introduced in Senate (IS)]

109th CONGRESS
  1st Session
                                 S. 280

     To amend the Internal Revenue Code of 1986 to provide for the 
 amortization of delay rental payments and geological and geophysical 
                             expenditures.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 3, 2005

Mrs. Hutchison introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
     To amend the Internal Revenue Code of 1986 to provide for the 
 amortization of delay rental payments and geological and geophysical 
                             expenditures.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. AMORTIZATION OF DELAY RENTAL PAYMENTS.

    (a) In General.--Section 167 of the Internal Revenue Code of 1986 
(relating to depreciation) is amended by redesignating subsection (h) 
as subsection (i) and by inserting after subsection (g) the following 
new subsection:
    ``(h) Amortization of Delay Rental Payments for Domestic Oil and 
Gas Wells.--
            ``(1) In general.--Any delay rental payment paid or 
        incurred in connection with the development of oil or gas wells 
        within the United States (as defined in section 638) shall be 
        allowed as a deduction ratably over the 24-month period 
        beginning on the date that such payment was paid or incurred.
            ``(2) Half-year convention.--For purposes of paragraph (1), 
        any payment paid or incurred during the taxable year shall be 
        treated as paid or incurred on the mid-point of such taxable 
        year.
            ``(3) Exclusive method.--Except as provided in this 
        subsection, no depreciation or amortization deduction shall be 
        allowed with respect to such payments.
            ``(4) Treatment upon abandonment.--If any property to which 
        a delay rental payment relates is retired or abandoned during 
        the 24-month period described in paragraph (1), no deduction 
        shall be allowed on account of such retirement or abandonment 
        and the amortization deduction under this subsection shall 
        continue with respect to such payment.
            ``(5) Delay rental payments.--For purposes of this 
        subsection, the term `delay rental payment' means an amount 
        paid for the privilege of deferring development of an oil or 
        gas well under an oil or gas lease.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after the 
date of the enactment of this Act.

SEC. 2. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Section 167 of the Internal Revenue Code of 1986 
(relating to depreciation), as amended by this Act, is amended by 
redesignating subsection (i) as subsection (j) and by inserting after 
subsection (h) the following new subsection:
    ``(i) Amortization of Geological and Geophysical Expenditures.--
            ``(1) In general.--Any geological and geophysical expenses 
        paid or incurred in connection with the exploration for, or 
        development of, oil or gas within the United States (as defined 
        in section 638) shall be allowed as a deduction ratably over 
        the 24-month period beginning on the date that such expense was 
        paid or incurred.
            ``(2) Special rules.--For purposes of this subsection, 
        rules similar to the rules of paragraphs (2), (3), and (4) of 
        subsection (h) shall apply.''.
    (b) Conforming Amendment.--Section 263A(c)(3) of the Internal 
Revenue Code of 1986 is amended by inserting ``167(h), 167(i),'' after 
``under section''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after the 
date of the enactment of this Act.
                                 <all>
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