I
104TH CONGRESS
1ST SESSION
H. R. 985
To provide tax incentives to encourage production of oil and gas within
the United States, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 16, 1995
Mr. LARGENT (for himself, Mr. ISTOOK, Mr. BREWSTER, Mr. LUCAS, Mr.
WATTS of Oklahoma, and Mr. COBURN) introduced the following bill;
which was referred to the Committee on Ways and Means
A BILL
To provide tax incentives to encourage production of oil
and gas within the United States, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Domestic Oil and Gas Production Tax Incentive Act’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this title an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; amendment of 1986 code; table of contents.
TITLE I—PRODUCTION CREDIT
Sec. 101. Tax credit for marginal and new domestic oil and natural gas produc-
tion.
TITLE II—MODIFICATIONS TO PERCENTAGE DEPLETION
Sec. 201. Elimination of net income limitation on percentage depletion for oil
and gas.
Sec. 202. All marginal production eligible for percentage depletion.
Sec. 203. Allocation of depletable quantities.
Sec. 204. Percentage depletion rate for marginal production.
TITLE III—OTHER PROVISIONS
Sec. 301. Election to expense geological and geophysical expenditures.
Sec. 302. Enhanced oil recovery credit.
Sec. 303. Election for optional 5-year writeoff of intangible drilling costs.
Sec. 304. Allocation of deductions in determining net income.
TITLE I—PRODUCTION CREDIT
SEC. 101. TAX CREDIT FOR MARGINAL AND NEW DOMESTIC
OIL AND NATURAL GAS PRODUCTION.
(a) CREDIT FOR PRODUCING OIL AND GAS FROM
NEW WELLS AND MARGINAL WELLS.—Subpart D of part
IV of subchapter A of chapter 1 (relating to business cred-
its) is amended by adding at the end the following new
section:
‘‘SEC. 45C. CREDIT FOR PRODUCING OIL AND GAS FROM
NEW WELLS AND MARGINAL WELLS.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the new and marginal well production credit for any tax-
able year is an amount equal to the product of—
‘‘(1) the credit amount, and
‘‘(2) the qualified crude oil production and the
qualified natural gas production which is attrib-
utable to the taxpayer.
‘‘(b) CREDIT AMOUNT.—For purposes of this sec-
tion—
‘‘(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 OIL AND GAS PRICES IN-
CREASE.—
‘‘(A) IN GENERAL.—The $3 and 50 cents
amounts under paragraph (1) shall each be re-
duced (but not below zero) by an amount which
bears the same ratio to such amount (deter-
mined without regard to this paragraph) as—
‘‘(i) the excess of the applicable ref-
erence price over $14 ($2.49 for qualified
natural gas production), bears to