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104TH CONGRESS

1ST SESSION S. 35

To amend the Internal Revenue Code of 1986 to allow a tax credit for

fuels produced from offshore deep-water projects.

IN THE SENATE OF THE UNITED STATES

JANUARY 4, 1995

Mr. BREAUX (for himself and Mr. JOHNSTON) 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 allow a

tax credit for fuels produced from offshore deep-water

projects.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. CREDIT FOR FUELS PRODUCED FROM OFF4 SHORE DEEP-WATER PROJECTS.

5 (a) CREDIT ALLOWED.—Subpart D of part IV of

6 subchapter A of chapter 1 of the Internal Revenue Code

7 of 1986 (relating to business related credits) is amended

8 by adding at the end the following new section:
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1 ‘‘SEC. 45A. FUELS PRODUCED FROM OFFSHORE DEEP2 WATER PROJECTS.

3 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec4 tion 38, the offshore production credit determined under

5 this section for the taxable year shall be an amount equal

6 to—

7 ‘‘(1) $5, multiplied by

8 ‘‘(2) the barrel-of-oil equivalent of qualified

9 fuels produced during the taxable year which are at10 tributable to the taxpayer.

11 ‘‘(b) DEFINITION OF QUALIFIED FUELS.—For pur12 poses of this section, the term ‘qualified fuels’ means do13 mestic crude oil or domestic natural gas produced from

14 a property any portion of which is located under at least

15 400 meters of water.

16 ‘‘(c) OTHER DEFINITIONS.—For purposes of this

17 section—

18 ‘‘(1) BARREL.—The term ‘barrel’ means 42

19 United States gallons.

20 ‘‘(2) BARREL-OF-OIL EQUIVALENT.—The term

21 ‘barrel-of-oil equivalent’ means, with respect to a

22 fuel other than domestic crude oil, the amount of

23 that fuel with a Btu content of 5.8 million.

24 ‘‘(3) DOMESTIC CRUDE OIL AND DOMESTIC

25 NATURAL GAS.—The terms ‘domestic crude oil’ and

26 ‘domestic natural gas’ mean crude oil and natural
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1 gas produced from a property located in the United

2 States (within the meaning of section 4612(a)(4)).

3 ‘‘(4) PROPERTY.—The term ‘property’ has the

4 meaning given such term by section 614.

5 ‘‘(5) PRODUCTION ATTRIBUTABLE TO TAX6 PAYER.—The provisions of section 29(d)(3) shall

7 apply.

8 ‘‘(d) APPLICATION OF SECTION.—This section shall

9 apply with respect to qualified fuels produced after De10 cember 31, 1995, from a property which did not produce

11 oil or natural gas in commercial quantities at any time

12 before January 1, 1993.’’

13 (b) CREDIT MAY OFFSET MINIMUM TAX; NO

14 CARRYBACK.—Section 38(c) of such Code is amended by

15 adding at the end the following new paragraph:

16 ‘‘(3) SPECIAL RULES FOR OFFSHORE PRODUC17 TION CREDIT.—For purposes of this title, the por18 tion of the credit allowed by this section which is at19 tributable to the offshore production credit deter20 mined under section 45A shall be treated as a sepa21 rate credit allowed under this subpart, except that—

22 ‘‘(A) no credit carryback shall be allowed

23 with respect to such credit under section

24 39(a)(1), and
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1 ‘‘(B) the limitation under paragraph (1)

2 applicable to such credit shall be equal to the

3 excess of—

4 ‘‘(i) the taxpayer’s net income tax,

5 over

6 ‘‘(iii) the credit allowable under this

7 part (other than the portion of the credit

8 to which this paragraph applies).’’

9 (c) CONFORMING AMENDMENT.—Section 38(b) of

10 such Code is amended by striking ‘‘plus’’ at the end of

11 paragraph (7), by striking the period at the end of para12 graph (8) and inserting ‘‘, plus’’, and by adding at the

13 end the following new paragraph:

14 ‘‘(9) the offshore production credit under sec15 tion 45A(a).’’

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to production after December 31,

18 1995, in taxable years ending after such date.

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