graph (11) and inserting ‘‘, plus’’, and by adding at the
end the following new paragraph:
‘‘(12) the new and marginal oil and gas well
production credit determined under section 45C(a).’’
(c) CREDIT ALLOWED AGAINST REGULAR AND MINI-
MUM TAX.—
(1) IN GENERAL.—Subsection (c) of section 38
(relating to limitation based on amount of tax) is
amended by redesignating paragraph (3) as para-
graph (4) and by inserting after paragraph (2) the
following new paragraph:
‘‘(3) SPECIAL RULES FOR OIL AND GAS PRO-
DUCTION CREDIT.—
‘‘(A) IN GENERAL.—In the case of the oil
and gas production credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to the
credit, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraph (A) shall not
apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the oil and
gas production credit).
‘‘(B) OIL
AND
GAS
PRODUCTION
CRED-
IT.—For purposes of this subsection, the term
‘oil and gas production credit’ means the credit
allowable under subsection (a) by reason of sec-
tion 45C(a).’’
(2) CONFORMING AMENDMENT.—Subclause (II)
of section 38(c)(2)(A)(ii) is amended by inserting
‘‘or the oil and gas production credit’’ after ‘‘em-
ployment credit’’.
(d) COORDINATION WITH SECTION 29.—Section
29(a) is amended by striking ‘‘There’’ and inserting ‘‘At
the election of the taxpayer, there’’.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
is amended by adding at the end the following item:
‘‘Sec. 45C. Credit for producing oil and gas from new wells and marginal
wells.’’
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to production after the date of the
enactment of this Act.
TITLE II—MODIFICATIONS TO
PERCENTAGE DEPLETION
SEC. 201. ELIMINATION OF NET INCOME LIMITATION ON
PERCENTAGE DEPLETION FOR OIL AND GAS.
(a) ELIMINATION.—
(1) IN GENERAL.—Paragraph (1) of subsection
(d) of section 613A (relating to the limitation based
on taxable income for percentage depletion in the
case of oil and gas wells) is repealed.
(2) OTHER PRODUCTION.—The second sentence
of subsection (a) of section 613 (relating to percent-
age depletion) is amended to read as follows: ‘‘Ex-
cept in the case of oil and gas wells, such allowance
shall not exceed 50 percent of the taxpayer’s taxable
income from the property (computed without allow-
ance for depletion).’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
SEC. 202. ALL MARGINAL PRODUCTION ELIGIBLE FOR PER-
CENTAGE DEPLETION.
(a) IN GENERAL.—Paragraph (6) of section 613A(c)
(relating to marginal production) is amended to read as
follows:
‘‘(6) SEPARATE
APPLICATION
TO
MARGINAL
PRODUCTION.—
‘‘(A) IN GENERAL.—Except as provided in
subsection (d)—
‘‘(i) the allowance for depletion under
section 611 with respect to all of a tax-
payer’s marginal production of domestic
crude oil and domestic natural gas shall be
computed in accordance with section 613,
except that, for purposes of section 613(a),
the applicable percentage shall be sub-
stituted for the percentage specified in sec-
tion 613(b), and
‘‘(ii) such marginal production shall
not be taken into account under paragraph
(1), including for purposes of determining
the taxpayer’s average daily production of
domestic crude oil or domestic natural gas
eligible for application of paragraph (1).
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A), the term ‘appli-
cable percentage’ means the percentage (not
greater than 25 percent) equal to the sum of—
‘‘(i) 15 percent, plus