I 
109TH CONGRESS 
1ST SESSION H. R. 3983 
To amend the Internal Revenue Code of 1986 to provide incentives to restore 
and increase oil and natural gas production. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 6, 2005 
Mr. ENGLISH of Pennsylvania introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
incentives to restore and increase oil and natural gas 
production. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Winter Readiness Act 
of 2005’’.
SEC. 2. TEMPORARY EXPENSING OF OIL AND NATURAL GAS 
EXPLORATION AND PRODUCTION PROPERTY 
AND OF COSTS TO REPAIR DAMAGES TO 
SUCH PROPERTY FROM 2005 HURRICANES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 179D the following new section: 
‘‘SEC. 179E. TEMPORARY EXPENSING OF OIL AND NATURAL 
GAS EXPLORATION AND PRODUCTION PROP-
ERTY AND OF COSTS TO REPAIR DAMAGES 
TO SUCH PROPERTY FROM 2005 HURRI-
CANES. 
‘‘(a) TREATMENT AS EXPENSES.—At the election of 
the taxpayer, there shall be allowed as a deduction an 
amount equal to the cost paid or incurred by the taxpayer 
during the taxable year— 
‘‘(1) for qualified oil and gas production prop-
erty, and 
‘‘(2) for repairs to property described in sub-
section (b)(1)(B) on account of hurricane-related 
damage arising from any Presidentially declared dis-
aster (as defined in section 1033(h)(3)(A)) during 
2005. 
The deduction under paragraph (1) with respect to any 
property shall be allowed for the taxable year in which 
such property is placed in service.
‘‘(b) QUALIFIED OIL AND GAS PRODUCTION PROP-
ERTY.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified oil and 
gas production property’ means any property— 
‘‘(A) the original use of which begins with 
the taxpayer, and 
‘‘(B) which is described in any of the fol-
lowing assets classes under Revenue Procedure 
87–56: 
‘‘(i) 13.0 (relating to assets used in 
offshore drilling for oil and gas). 
‘‘(ii) 13.1 (relating to drilling of oil 
and gas wells). 
‘‘(iii) 13.2 (relating to exploration for 
and production of petroleum and natural 
gas deposits). 
‘‘(2) APPLICATION OF SECTION.—This section 
shall apply to any property only if— 
‘‘(A)(i) no written binding contract for the 
construction of such property was in effect on 
or before [date of introduction], or 
‘‘(ii) in the case of self-constructed prop-
erty, the construction of such property did not 
commence on or before such date, and
‘‘(B) such property is placed in service be-
fore January 1, 2009. 
‘‘(3) SPECIAL RULE FOR SALE-LEASEBACKS.— 
For purposes of paragraph (1)(A), if property is— 
‘‘(A) originally placed in service after the 
date of the enactment of this section by a per-
son, and 
‘‘(B) sold and leased back by such person 
within 3 months after the date such property 
was originally placed in service, 
such property shall be treated as originally placed in 
service not earlier than the date on which such prop-
erty is used under the leaseback referred to in sub-
paragraph (B). 
‘‘(c) BASIS REDUCTION.— 
‘‘(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 ac-
count under subsection (a). 
‘‘(2) ORDINARY
INCOME
RECAPTURE.—For 
purposes of section 1245, the amount of the deduc-
tion 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 de-
duction allowed for depreciation under section 167.
‘‘(d) ELECTION.— 
‘‘(1) IN GENERAL.—An election under this sec-
tion for any taxable year shall be made on the tax-
payer’s return of the tax imposed by this chapter for 
the taxable year. 
‘‘(2) ELECTION
IRREVOCABLE.—Any election 
made under this section may not be revoked except 
with the consent of the Secretary. 
‘‘(e) ELECTION TO ALLOCATE DEDUCTION TO COOP-
ERATIVE OWNER.—A rule similar to the rule of section 
179C(g) shall apply for purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 263(a)(1) of such Code is amended 
by striking ‘‘or’’ at the end of subparagraph (J), by 
striking the period at the end of subparagraph (K) 
and inserting ‘‘, or’’, and by inserting after subpara-
graph (K) the following new subparagraph: 
‘‘(L) expenditures for which a deduction is 
allowed under section 179E.’’. 
(2) Section 263A(c)(3)(B) of such Code is 
amended by inserting ‘‘179E,’’ after ‘‘179B,’’. 
(3) Section 312(k)(3)(B) of such Code is 
amended by striking ‘‘or 179D’’ each place it ap-
pears in the heading and text and inserting ‘‘179D, 
or 179E’’.
(4) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (36), by 
striking the period at the end of paragraph (37) and 
inserting ‘‘, or’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(38) to the extent provided in section 
179E(c).’’. 
(5) Section 1245(a) of such Code is amended 
by inserting ‘‘179E,’’ after ‘‘179D,’’ both places it 
appears in paragraphs (2)(C) and (3)(C). 
(6) The table of sections for part VI of sub-
chapter B of chapter 1 of such Code is amended by 
inserting after the item relating to section 179C the 
following new item: 
‘‘Sec. 179E. Temporary expensing of oil and natural gas exploration and pro-
duction property and of costs to repair damages to such prop-
erty from 2005 hurricanes.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to costs paid or incurred after the 
date of the enactment of this Act in taxable years ending 
after such date. 
SEC. 3. 10-YEAR CARRYBACK OF NET OPERATING LOSSES 
FROM 2005 HURRICANE-DAMAGED OIL AND 
GAS FACILITIES. 
(a) IN GENERAL.—Paragraph (1) of section 172(b) 
of the Internal Revenue Code of 1986 (relating to net op-
erating loss deduction) is amended by adding at the end 
the following new subparagraph: 
‘‘(J) 2005 LOSSES FROM HURRICANE-DAM-
AGED OIL AND GAS FACILITIES.—In the case of 
a taxpayer which has a 2005 hurricane-dam-
aged oil and gas facility loss (as defined in sub-
section (j)) for a taxable year, such loss shall be 
a net operating loss carryback to each of the 10 
taxable years preceding the taxable year of such 
loss.’’. 
(b) 2005 Hurricane-Damaged Oil and Gas Facility 
Loss.—Section 172 of such Code is amended by redesig-
nating subsections (j) and (k) as subsections (k) and (l), 
respectively, and by inserting after subsection (i) the fol-
lowing new subsection: 
‘‘(j) 2005 Hurricane-Damaged Oil and Gas Facility 
Loss.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘2005 hurricane- 
damaged oil and gas facility loss’ means the lesser 
of— 
‘‘(A) the amount of the net operating loss 
for such taxable year, or 
‘‘(B) the sum of— 
‘‘(i) the amount of the loss allowed by 
section 165 for the taxable year for any
loss sustained by reason of hurricane-re-
lated damage— 
‘‘(I) arising from any Presi-
dentially declared disaster (as defined 
in 
section 
1033(h)(3)(A)) 
during 
2005, and 
‘‘(II) to any property of the tax-
payer which is described in section 
179E(b)(1)(B), and 
‘‘(ii) the deduction allowed by section 
179E(a)(2) for the taxable year. 
‘‘(2) 
COORDINATION
WITH
SUBSECTION 
(b)(2).—For purposes of applying subsection (b)(2), 
a 2005 hurricane-damaged oil and gas facility loss 
for any taxable year shall be treated in a manner 
similar to the manner in which a specified liability 
loss is treated. 
‘‘(3) ELECTION.—Any taxpayer entitled to a 
10-year carryback under subsection (b)(1)(J) from 
any loss year may elect to have the carryback period 
with respect to such loss year determined without re-
gard to subsection (b)(1)(J). Such election shall be 
made in such manner as may be prescribed by the 
Secretary and shall be made by the due date (includ-
ing extensions of time) for filing the taxpayer’s re-
turn for the taxable year of the net operating loss. 
Such election, once made for any taxable year, shall 
be irrevocable for such taxable year.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to net operating losses for taxable 
years ending after the date of the enactment of this Act. 
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