
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC613A]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                     Subchapter I--Natural Resources
 
                           PART I--DEDUCTIONS
 
Sec. 613A. Limitations on percentage depletion in case of oil 
        and gas wells
        

(a) General rule

    Except as otherwise provided in this section, the allowance for 
depletion under section 611 with respect to any oil or gas well shall be 
computed without regard to section 613.

(b) Exemption for certain domestic gas wells

                           (1) In general

        The allowance for depletion under section 611 shall be computed 
    in accordance with section 613 with respect to--
            (A) regulated natural gas, and
            (B) natural gas sold under a fixed contract,

    and 22 percent shall be deemed to be specified in subsection (b) of 
    section 613 for purposes of subsection (a) of that section.

               (2) Natural gas from geopressured brine

        The allowance for depletion under section 611 shall be computed 
    in accordance with section 613 with respect to any qualified natural 
    gas from geopressured brine, and 10 percent shall be deemed to be 
    specified in subsection (b) of section 613 for purposes of 
    subsection (a) of such section.

                           (3) Definitions

        For purposes of this subsection--

        (A) Natural gas sold under a fixed contract

            The term ``natural gas sold under a fixed contract'' means 
        domestic natural gas sold by the producer under a contract, in 
        effect on February 1, 1975, and at all times thereafter before 
        such sale, under which the price for such gas cannot be adjusted 
        to reflect to any extent the increase in liabilities of the 
        seller for tax under this chapter by reason of the repeal of 
        percentage depletion for gas. Price increases after February 1, 
        1975, shall be presumed to take increases in tax liabilities 
        into account unless the taxpayer demonstrates to the contrary by 
        clear and convincing evidence.

        (B) Regulated natural gas

            The term ``regulated natural gas'' means domestic natural 
        gas produced and sold by the producer, before July 1, 1976, 
        subject to the jurisdiction of the Federal Power Commission, the 
        price for which has not been adjusted to reflect to any extent 
        the increase in liability of the seller for tax under this 
        chapter by reason of the repeal of percentage depletion for gas. 
        Price increases after February 1, 1975, shall be presumed to 
        take increases in tax liabilities into account unless the 
        taxpayer demonstrates the contrary by clear and convincing 
        evidence.

        (C) Qualified natural gas from geopressured brine

            The term ``qualified natural gas from geopressured brine'' 
        means any natural gas--
                (i) which is determined in accordance with section 503 
            of the Natural Gas Policy Act of 1978 to be produced from 
            geopressured brine, and
                (ii) which is produced from any well the drilling of 
            which began after September 30, 1978, and before January 1, 
            1984.

(c) Exemption for independent producers and royalty owners

                           (1) In general

        Except as provided in subsection (d), the allowance for 
    depletion under section 611 shall be computed in accordance with 
    section 613 with respect to--
            (A) so much of the taxpayer's average daily production of 
        domestic crude oil as does not exceed the taxpayer's depletable 
        oil quantity; and
            (B) so much of the taxpayer's average daily production of 
        domestic natural gas as does not exceed the taxpayer's 
        depletable natural gas quantity;

    and 15 percent shall be deemed to be specified in subsection (b) of 
    section 613 for purposes of subsection (a) of that section.

                    (2) Average daily production

        For purposes of paragraph (1)--
            (A) the taxpayer's average daily production of domestic 
        crude oil or natural gas for any taxable year, shall be 
        determined by dividing his aggregate production of domestic 
        crude oil or natural gas, as the case may be, during the taxable 
        year by the number of days in such taxable year, and
            (B) in the case of a taxpayer holding a partial interest in 
        the production from any property (including an interest held in 
        a partnership) such taxpayer's production shall be considered to 
        be that amount of such production determined by multiplying the 
        total production of such property by the taxpayer's percentage 
        participation in the revenues from such property.

                     (3) Depletable oil quantity

        (A) In general

            For purposes of paragraph (1), the taxpayer's depletable oil 
        quantity shall be equal to--
                (i) the tentative quantity determined under subparagraph 
            (B), reduced (but not below zero) by
                (ii) except in the case of a taxpayer making an election 
            under paragraph (6)(B), the taxpayer's average daily 
            marginal production for the taxable year.

        (B) Tentative quantity

            For purposes of subparagraph (A), the tentative quantity is 
        1,000 barrels.

              (4) Daily depletable natural gas quantity

        For purposes of paragraph (1), the depletable natural gas 
    quantity of any taxpayer for any taxable year shall be equal to 
    6,000 cubic feet multiplied by the number of barrels of the 
    taxpayer's depletable oil quantity to which the taxpayer elects to 
    have this paragraph apply. The taxpayer's depletable oil quantity 
    for any taxable year shall be reduced by the number of barrels with 
    respect to which an election under this paragraph applies. Such 
    election shall be made at such time and in such manner as the 
    Secretary shall by regulations prescribe.

             [(5) Repealed. Pub. L. 101-508, title XI, 
             Sec. 11815(a)(1)(C), Nov. 5, 1990, 104 Stat. 1388-
                                    557]

      (6) Oil and natural gas produced from marginal properties

        (A) In general

            Except as provided in subsection (d) and subparagraph (B), 
        the allowance for depletion under section 611 shall be computed 
        in accordance with section 613 with respect to--
                (i) so much of the taxpayer's average daily marginal 
            production of domestic crude oil as does not exceed the 
            taxpayer's depletable oil quantity (determined without 
            regard to paragraph (3)(A)(ii)), and
                (ii) so much of the taxpayer's average daily marginal 
            production of domestic natural gas as does not exceed the 
            taxpayer's depletable natural gas quantity (determined 
            without regard to paragraph (3)(A)(ii)),

        and the applicable percentage shall be deemed to be specified in 
        subsection (b) of section 613 for purposes of subsection (a) of 
        that section.

        (B) Election to have paragraph apply to pro rata portion of 
                marginal production

            If the taxpayer elects to have this subparagraph apply for 
        any taxable year, the rules of subparagraph (A) shall apply to 
        the average daily marginal production of domestic crude oil or 
        domestic natural gas of the taxpayer to which paragraph (1) 
        would have applied without regard to this paragraph.

        (C) Applicable percentage

            For purposes of subparagraph (A), the term ``applicable 
        percentage'' means the percentage (not greater than 25 percent) 
        equal to the sum of--
                (i) 15 percent, plus
                (ii) 1 percentage point for each whole dollar by which 
            $20 exceeds the reference price for crude oil for the 
            calendar year preceding the calendar year in which the 
            taxable year begins.

        For purposes of this paragraph, the term ``reference price'' 
        means, with respect to any calendar year, the reference price 
        determined for such calendar year under section 29(d)(2)(C).

        (D) Marginal production

            The term ``marginal production'' means domestic crude oil or 
        domestic natural gas which is produced during any taxable year 
        from a property which--
                (i) is a stripper well property for the calendar year in 
            which the taxable year begins, or
                (ii) is a property substantially all of the production 
            of which during such calendar year is heavy oil.

        (E) Stripper well property

            For purposes of this paragraph, the term ``stripper well 
        property'' means, with respect to any calendar year, any 
        property with respect to which the amount determined by 
        dividing--
                (i) the average daily production of domestic crude oil 
            and domestic natural gas from producing wells on such 
            property for such calendar year, by
                (ii) the number of such wells,

        is 15 barrel equivalents or less.

        (F) Heavy oil

            For purposes of this paragraph, the term ``heavy oil'' means 
        domestic crude oil produced from any property if such crude oil 
        had a weighted average gravity of 20 degrees API or less 
        (corrected to 60 degrees Fahrenheit).

        (G) Average daily marginal production

            For purposes of this subsection--
                (i) the taxpayer's average daily marginal production of 
            domestic crude oil or natural gas for any taxable year shall 
            be determined by dividing the taxpayer's aggregate marginal 
            production of domestic crude oil or natural gas, as the case 
            may be, during the taxable year by the number of days in 
            such taxable year, and
                (ii) in the case of a taxpayer holding a partial 
            interest in the production from any property (including any 
            interest held in any partnership), such taxpayer's 
            production shall be considered to be that amount of such 
            production determined by multiplying the total production of 
            such property by the taxpayer's percentage participation in 
            the revenues from such property.

        (H) Temporary suspension of taxable income limit with respect to 
                marginal production

            The second sentence of subsection (a) of section 613 shall 
        not apply to so much of the allowance for depletion as is 
        determined under subparagraph (A) for any taxable year beginning 
        after December 31, 1997, and before January 1, 2002.

                          (7) Special rules

        (A) Production of crude oil in excess of depletable oil quantity

            If the taxpayer's average daily production of domestic crude 
        oil exceeds his depletable oil quantity, the allowance under 
        paragraph (1)(A) with respect to oil produced during the taxable 
        year from each property in the United States shall be that 
        amount which bears the same ratio to the amount of depletion 
        which would have been allowable under section 613(a) for all of 
        the taxpayer's oil produced from such property during the 
        taxable year (computed as if section 613 applied to all of such 
        production at the rate specified in paragraph (1) or (6), as the 
        case may be) as his depletable oil quantity bears to the 
        aggregate number of barrels representing the average daily 
        production of domestic crude oil of the taxpayer for such year.

        (B) Production of natural gas in excess of depletable natural 
                gas quantity

            If the taxpayer's average daily production of domestic 
        natural gas exceeds his depletable natural gas quantity, the 
        allowance under paragraph (1)(B) with respect to natural gas 
        produced during the taxable year from each property in the 
        United States shall be that amount which bears the same ratio to 
        the amount of depletion which would have been allowable under 
        section 613(a) for all of the taxpayers \1\ natural gas produced 
        from such property during the taxable year (computed as if 
        section 613 applied to all of such production at the rate 
        specified in paragraph (1) or (6), as the case may be) as the 
        amount of his depletable natural gas quantity in cubic feet 
        bears to the aggregate number of cubic feet representing the 
        average daily production of domestic natural gas of the taxpayer 
        for such year.
---------------------------------------------------------------------------
    \1\ So in original. Probably should be ``taxpayer's''.
---------------------------------------------------------------------------

        (C) Taxable income from the property

            If both oil and gas are produced from the property during 
        the taxable year, for purposes of subparagraphs (A) and (B) the 
        taxable income from the property, in applying the taxable income 
        limitation in section 613(a), shall be allocated between the oil 
        production and the gas production in proportion to the gross 
        income during the taxable year from each.

        (D) Partnerships

            In the case of a partnership, the depletion allowance shall 
        be computed separately by the partners and not by the 
        partnership. The partnership shall allocate to each partner his 
        proportionate share of the adjusted basis of each partnership 
        oil or gas property. The allocation is to be made as of the 
        later of the date of acquisition of the oil or gas property by 
        the partnership, or January 1, 1975. A partner's proportionate 
        share of the adjusted basis of partnership property shall be 
        determined in accordance with his interest in partnership 
        capital or income and, in the case of property contributed to 
        the partnership by a partner, section 704(c) (relating to 
        contributed property) shall apply in determining such share. 
        Each partner shall separately keep records of his share of the 
        adjusted basis in each oil and gas property of the partnership, 
        adjust such share of the adjusted basis for any depletion taken 
        on such property, and use such adjusted basis each year in the 
        computation of his cost depletion or in the computation of his 
        gain or loss on the disposition of such property by the 
        partnership. For purposes of section 732 (relating to basis of 
        distributed property other than money), the partnership's 
        adjusted basis in mineral property shall be an amount equal to 
        the sum of the partners' adjusted basis in such property as 
        determined under this paragraph.

       (8) Business under common control; members of the same 
                                   family

        (A) Component members of controlled group treated as one 
                taxpayer

            For purposes of this subsection, persons who are members of 
        the same controlled group of corporations shall be treated as 
        one taxpayer.

        (B) Aggregation of business entities under common control

            If 50 percent or more of the beneficial interest in two or 
        more corporations, trusts, or estates is owned by the same or 
        related persons (taking into account only persons who own at 
        least 5 percent of such beneficial interest), the tentative 
        quantity determined under paragraph (3)(B) shall be allocated 
        among all such entities in proportion to the respective 
        production of domestic crude oil during the period in question 
        by such entities.

        (C) Allocation among members of the same family

            In the case of individuals who are members of the same 
        family, the tentative quantity determined under paragraph (3)(B) 
        shall be allocated among such individuals in proportion to the 
        respective production of domestic crude oil during the period in 
        question by such individuals.

        (D) Definition and special rules

            For purposes of this paragraph--
                (i) the term ``controlled group of corporations'' has 
            the meaning given to such term by section 1563(a), except 
            that section 1563(b)(2) shall not apply and except that 
            ``more than 50 percent'' shall be substituted for ``at least 
            80 percent'' each place it appears in section 1563(a),
                (ii) a person is a related person to another person if 
            such persons are members of the same controlled group of 
            corporations or if the relationship between such persons 
            would result in a disallowance of losses under section 267 
            or 707(b), except that for this purpose the family of an 
            individual includes only his spouse and minor children.
                (iii) the family of an individual includes only his 
            spouse and minor children, and
                (iv) each 6,000 cubic feet of domestic natural gas shall 
            be treated as 1 barrel of domestic crude oil.

             (9) Special rule for fiscal year taxpayers

        In applying this subsection to a taxable year which is not a 
    calendar year, each portion of such taxable year which occurs during 
    a single calendar year shall be treated as if it were a short 
    taxable year.

           (10) Certain production not taken into account

        In applying this subsection, there shall not be taken into 
    account the production of natural gas with respect to which 
    subsection (b) applies.

                   (11) Subchapter S corporations

        (A) Computation of depletion allowance at shareholder level

            In the case of an S corporation, the allowance for depletion 
        with respect to any oil or gas property shall be computed 
        separately by each shareholder.

        (B) Allocation of basis

            The S corporation shall allocate to each shareholder his pro 
        rata share of the adjusted basis of the S corporation in each 
        oil or gas property held by the S corporation. The allocation 
        shall be made as of the later of the date of acquisition of the 
        property by the S corporation, or the first day of the first 
        taxable year of the S corporation to which the Subchapter S 
        Revision Act of 1982 applies. Each shareholder shall separately 
        keep records of his share of the adjusted basis in each oil and 
        gas property of the S corporation, adjust such share of the 
        adjusted basis for any depletion taken on such property, and use 
        such adjusted basis each year in the computation of his cost 
        depletion or in the computation of his gain or loss on the 
        disposition of such property by the S corporation. In the case 
        of any distribution of oil or gas property to its shareholders 
        by the S corporation, the corporation's adjusted basis in the 
        property shall be an amount equal to the sum of the 
        shareholders' adjusted bases in such property, as determined 
        under this subparagraph.

(d) Limitations on application of subsection (c)

               (1) Limitation based on taxable income

        The deduction for the taxable year attributable to the 
    application of subsection (c) shall not exceed 65 percent of the 
    taxpayer's taxable income for the year computed without regard to--
            (A) any depletion on production from an oil or gas property 
        which is subject to the provisions of subsection (c),
            (B) any net operating loss carryback to the taxable year 
        under section 172,
            (C) any capital loss carryback to the taxable year under 
        section 1212, and
            (D) in the case of a trust, any distributions to its 
        beneficiary, except in the case of any trust where any 
        beneficiary of such trust is a member of the family (as defined 
        in section 267(c)(4)) of a settlor who created inter vivos and 
        testamentary trusts for members of the family and such settlor 
        died within the last six days of the fifth month in 1970, and 
        the law in the jurisdiction in which such trust was created 
        requires all or a portion of the gross or net proceeds of any 
        royalty or other interest in oil, gas, or other mineral 
        representing any percentage depletion allowance to be allocated 
        to the principal of the trust.

    If an amount is disallowed as a deduction for the taxable year by 
    reason of application of the preceding sentence, the disallowed 
    amount shall be treated as an amount allowable as a deduction under 
    subsection (c) for the following taxable year, subject to the 
    application of the preceding sentence to such taxable year. For 
    purposes of basis adjustments and determining whether cost depletion 
    exceeds percentage depletion with respect to the production from a 
    property, any amount disallowed as a deduction on the application of 
    this paragraph shall be allocated to the respective properties from 
    which the oil or gas was produced in proportion to the percentage 
    depletion otherwise allowable to such properties under subsection 
    (c).

                       (2) Retailers excluded

        Subsection (c) shall not apply in the case of any taxpayer who 
    directly, or through a related person, sells oil or natural gas 
    (excluding bulk sales of such items to commercial or industrial 
    users), or any product derived from oil or natural gas (excluding 
    bulk sales of aviation fuels to the Department of Defense)--
            (A) through any retail outlet operated by the taxpayer or a 
        related person, or
            (B) to any person--
                (i) obligated under an agreement or contract with the 
            taxpayer or a related person to use a trademark, trade name, 
            or service mark or name owned by such taxpayer or a related 
            person, in marketing or distributing oil or natural gas or 
            any product derived from oil or natural gas, or
                (ii) given authority, pursuant to an agreement or 
            contract with the taxpayer or a related person, to occupy 
            any retail outlet owned, leased, or in any way controlled by 
            the taxpayer or a related person.

    Notwithstanding the preceding sentence this paragraph shall not 
    apply in any case where the combined gross receipts from the sale of 
    such oil, natural gas, or any product derived therefrom, for the 
    taxable year of all retail outlets taken into account for purposes 
    of this paragraph do not exceed $5,000,000. For purposes of this 
    paragraph, sales of oil, natural gas, or any product derived from 
    oil or natural gas shall not include sales made of such items 
    outside the United States, if no domestic production of the taxpayer 
    or a related person is exported during the taxable year or the 
    immediately preceding taxable year.

                         (3) Related person

        For purposes of this subsection, a person is a related person 
    with respect to the taxpayer if a significant ownership interest in 
    either the taxpayer or such person is held by the other, or if a 
    third person has a significant ownership interest in both the 
    taxpayer and such person. For purposes of the preceding sentence, 
    the term ``significant ownership interest'' means--
            (A) with respect to any corporation, 5 percent or more in 
        value of the outstanding stock of such corporation,
            (B) with respect to a partnership, 5 percent or more 
        interest in the profits or capital of such partnership, and
            (C) with respect to an estate or trust, 5 percent or more of 
        the beneficial interests in such estate or trust.

    For purposes of determining a significant ownership interest, an 
    interest owned by or for a corporation, partnership, trust, or 
    estate shall be considered as owned directly both by itself and 
    proportionately by its shareholders, partners, or beneficiaries, as 
    the case may be.

                    (4) Certain refiners excluded

        If the taxpayer or a related person engages in the refining of 
    crude oil, subsection (c) shall not apply to such taxpayer if on any 
    day during the taxable year the refinery runs of the taxpayer and 
    such person exceed 50,000 barrels.

    (5) Percentage depletion not allowed for lease bonuses, etc.

        In the case of any oil or gas property to which subsection (c) 
    applies, for purposes of section 613, the term ``gross income from 
    the property'' shall not include any lease bonus, advance royalty, 
    or other amount payable without regard to production from property.

(e) Definitions

    For purposes of this section--

                            (1) Crude oil

        The term ``crude oil'' includes a natural gas liquid recovered 
    from a gas well in lease separators or field facilities.

                           (2) Natural gas

        The term ``natural gas'' means any product (other than crude 
    oil) of an oil or gas well if a deduction for depletion is allowable 
    under section 611 with respect to such product.

                            (3) Domestic

        The term ``domestic'' refers to production from an oil or gas 
    well located in the United States or in a possession of the United 
    States.

                             (4) Barrel

        The term ``barrel'' means 42 United States gallons.

(Added Pub. L. 94-12, title V, Sec. 501(a), Mar. 29, 1975, 89 Stat. 47; 
amended Pub. L. 94-455, title XIX, Secs. 1901(a)(86), 1906(b)(13)(A), 
title XXI, Sec. 2115(a)-(c)(1), (d), (e), Oct. 4, 1976, 90 Stat. 1779, 
1834, 1907-1909; Pub. L. 95-30, title I, Sec. 102(b)(7), May 23, 1977, 
91 Stat. 138; Pub. L. 95-618, title IV, Sec. 403(a)(2)(B), (b), Nov. 9, 
1978, 92 Stat. 3204; Pub. L. 96-603, Sec. 3(a), Dec. 28, 1980, 94 Stat. 
3511; Pub. L. 97-354, Sec. 3(a), Oct. 19, 1982, 96 Stat. 1687; Pub. L. 
97-448, title II, Sec. 202(d), Jan. 12, 1983, 96 Stat. 2396; Pub. L. 98-
369, div. A, title I, Secs. 25(b), 71(b), July 18, 1984, 98 Stat. 506, 
589; Pub. L. 99-514, title I, Sec. 104(b)(9), title IV, Sec. 412(a)(1), 
Oct. 22, 1986, 100 Stat. 2105, 2227; Pub. L. 101-508, title XI, 
Secs. 11521(a), (b), 11522(b)(1), 11523(a), (b), 11815(a), Nov. 5, 1990, 
104 Stat. 1388-485 to 1388-487, 1388-557; Pub. L. 104-188, title I, 
Sec. 1702(e)(2), Aug. 20, 1996, 110 Stat. 1870; Pub. L. 105-34, title 
IX, Sec. 972(a), Aug. 5, 1997, 111 Stat. 897; Pub. L. 106-170, title V, 
Sec. 504(a), Dec. 17, 1999, 113 Stat. 1921.)

                       References in Text

    Section 503 of the Natural Gas Policy Act of 1978, referred to in 
subsec. (b)(3)(C)(i), which was classified to section 3413 of Title 15, 
Commerce and Trade, was repealed by Pub. L. 101-60, Sec. 3(b)(5), July 
26, 1989, 103 Stat. 159, effective Jan. 1, 1993.
    The Subchapter S Revision Act of 1982, referred to in subsec. 
(c)(11)(B), is Pub. L. 97-354, Oct. 19, 1982, 96 Stat. 1669, which is 
classified principally to subchapter S (Sec. 1361 et seq.) of chapter 1 
of this title. For complete classification of this Act to the Code, see 
Short Title of 1982 Amendments note set out under section 1 of this 
title and Tables.


                               Amendments

    1999--Subsec. (c)(6)(H). Pub. L. 106-170 substituted ``January 1, 
2002'' for ``January 1, 2000''.
    1997--Subsec. (c)(6)(H). Pub. L. 105-34 added subpar. (H).
    1996--Subsec. (c)(3)(A)(i). Pub. L. 104-188 struck out ``the table 
contained in'' before ``subparagraph (B)''.
    1990--Subsec. (c)(1). Pub. L. 101-508, Sec. 11815(a)(1)(A), 
substituted ``15 percent'' for ``the applicable percentage (determined 
in accordance with the table contained in paragraph (5))'' in concluding 
provisions.
    Subsec. (c)(3)(A). Pub. L. 101-508, Sec. 11523(b)(2), struck out at 
end ``Clause (ii) shall not apply after December 31, 1983.''
    Subsec. (c)(3)(A)(ii). Pub. L. 101-508, Sec. 11523(b)(1), added cl. 
(ii) and struck out former cl. (ii) which read as follows: ``the 
taxpayer's average daily secondary or tertiary production for the 
taxable year.''
    Subsec. (c)(3)(B). Pub. L. 101-508, Sec. 11815(a)(1)(B), amended 
subpar. (B) generally, substituting present provisions for provisions 
which set out a phase-out table for determining tentative quantity in 
barrels.
    Subsec. (c)(5). Pub. L. 101-508, Sec. 11815(a)(1)(C), struck out 
par. (5) which provided table of applicable percentages for purposes of 
par. (1).
    Subsec. (c)(6). Pub. L. 101-508, Sec. 11523(a), amended par. (6) 
generally, providing for an increase in percentage depletion allowance 
for marginal production, and substituting provisions relating to oil and 
gas produced from marginal properties for former provisions which 
related to oil and gas resulting from secondary or tertiary processes.
    Subsec. (c)(7)(A), (B). Pub. L. 101-508, Sec. 11815(a)(2)(A), 
substituted ``specified in paragraph (1)'' for ``specified in paragraph 
(5)''.
    Subsec. (c)(7)(C). Pub. L. 101-508, Sec. 11522(b)(1), substituted 
``taxable income'' for ``50-percent'' before ``limitation''.
    Subsec. (c)(7)(E). Pub. L. 101-508, Sec. 11815(a)(1)(C), struck out 
subpar. (E) which provided special rules relating to production from 
secondary or tertiary recovery processes.
    Subsec. (c)(8)(B), (C). Pub. L. 101-508, Sec. 11815(a)(2)(B), which 
directed amendment of subpars. (B) and (C) by substituting ``determined 
under paragraph (3)(B)'' for ``determined under the table contained in 
paragraph (3)(B)'', was executed by making the substitution for 
``determined under the table in paragraph (3)(B)'' as the probable 
intent of Congress.
    Subsec. (c)(9). Pub. L. 101-508, Sec. 11815(a)(2)(B), which directed 
amendment of par. (9) by substituting ``determined under paragraph 
(3)(B)'' for ``determined under the table contained in paragraph 
(3)(B)'', could not be executed because that phrase did not appear after 
execution of amendment by Pub. L. 101-508, Sec. 11521(a). See below.
    Pub. L. 101-508, Sec. 11521(a), redesignated par. (11) as (9) and 
struck out former par. (9) which related to transfer of oil or gas 
property.
    Subsec. (c)(10). Pub. L. 101-508, Sec. 11521(a), redesignated par. 
(12) as (10) and struck out former par. (10) which related to transfers 
by individuals to corporations.
    Subsec. (c)(11). Pub. L. 101-508, Sec. 11521(a), redesignated par. 
(13) as (11). Former par. (11) redesignated (9).
    Subsec. (c)(11)(C), (D). Pub. L. 101-508, Sec. 11521(b), struck out 
subpars. (C) and (D) which related to coordination with the transfer 
rules of former pars. (9) and (10).
    Subsec. (c)(12), (13). Pub. L. 101-508, Sec. 11521(a), redesignated 
pars. (12) and (13) as (10) and (11), respectively.
    1986--Subsec. (d)(1). Pub. L. 99-514, Sec. 104(b)(9), struck out 
``(reduced in the case of an individual by the zero bracket amount)'' 
after ``taxable income'' in introductory provisions.
    Subsec. (d)(5). Pub. L. 99-514, Sec. 412(a)(1), added par. (5).
    1984--Subsec. (c)(2). Pub. L. 98-369, Sec. 25(b)(1), struck out last 
sentence providing that in applying this paragraph, there shall not be 
taken into account any production of crude oil or natural gas resulting 
from secondary or tertiary processes (as defined in regulations 
prescribed by the Secretary).
    Subsec. (c)(3)(A). Pub. L. 98-369, Sec. 25(b)(2), inserted at end 
``Clause (ii) shall not apply after December 31, 1983.''
    Subsec. (c)(7)(D). Pub. L. 98-369, Sec. 71(b), substituted 
``property contributed to the partnership by a partner, section 704(c) 
(relating to contributed property) shall apply in determining such 
share'' for ``an agreement described in section 704(c)(2) (relating to 
effect of partnership agreement on contributed property), such share 
shall be determined by taking such agreement into account'' in fourth 
sentence.
    Subsec. (c)(7)(E). Pub. L. 98-369, Sec. 25(b)(3), inserted at end 
``This subparagraph shall not apply after December 31, 1983.''
    Subsec. (c)(9)(A). Pub. L. 98-369, Sec. 25(b)(4), substituted ``this 
subsection'' for ``paragraph (1)''.
    1983--Subsec. (c)(10)(E). Pub. L. 97-448, Sec. 202(d)(1), inserted 
provision that ``oil and gas property'' includes, in the case of any 
property, necessary production equipment for such property which is in 
place when the property is transferred.
    Subsec. (d)(2). Pub. L. 97-448, Sec. 202(d)(2), inserted 
``(excluding bulk sales of aviation fuels to the Department of 
Defense)'' after ``any product derived from oil or natural gas''.
    1982--Subsec. (c)(13). Pub. L. 97-354 added par. (13).
    1980--Subsec. (c)(10) to (12). Pub. L. 96-603 added par. (10) and 
redesignated former pars. (10) and (11) as (11) and (12), respectively.
    1978--Subsec. (b)(1)(C). Pub. L. 95-618, Sec. 403(a)(2)(B), struck 
out subpar. (C) which related to a computation in accordance with 
section 613 with respect to any geothermal deposit in the United States 
or in a possession of the United States which is determined to be a gas 
well.
    Subsec. (b)(2), (3). Pub. L. 95-618, Sec. 403(b)(1), (2), added par. 
(2), redesignated former par. (2) as (3) and, as so redesignated, added 
subpar. (C).
    1977--Subsec. (d)(1). Pub. L. 95-30 inserted ``(reduced in the case 
of an individual by the zero bracket amount)'' after ``the taxpayer's 
taxable income'' in introductory provisions.
    1976--Subsec. (b)(1)(C). Pub. L. 94-455, Sec. 1901(a)(86)(A), struck 
out ``within the meaning of section 613(b)(1)(A)'' after ``determined to 
be a gas well''.
    Subsec. (c)(2), (4). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out 
``or his delegate'' after ``Secretary''.
    Subsec. (c)(6)(A)(i). Pub. L. 94-455, Sec. 1901(a)(86)(B), 
substituted ``determined without'' for ``determined with''.
    Subsec. (c)(7)(D). Pub. L. 94-455, Sec. 2115(c)(1), inserted 
provision relating to the method to be employed by the partners in 
computing the depletion allowance.
    Subsec. (c)(7)(E). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out 
``or his delegate'' after ``Secretary''.
    Subsec. (c)(9)(B). Pub. L. 94-455, Sec. 2115(b)(1), (e), added cls. 
(iii) to (vi) and provision following cl. (vi).
    Subsec. (d)(1). Pub. L. 94-455, Sec. 2115(b)(2), substituted in 
subpar. (A) reference to any depletion on production from an oil or gas 
property which is subject to the provisions of subsection (c) for 
reference to depletion with respect to production of oil and gas subject 
to the provisions of subsection (c), and added subpar. (D).
    Subsec. (d)(2). Pub. L. 94-455, Sec. 2115(a), inserted ``(excluding 
bulk sales of such items to commercial or industrial users)'' before ``, 
or any product derived'' and inserted provisions following subpar. (B) 
relating to the application of this paragraph where combined gross 
receipts from the sale of oil, natural gas, or any product derived 
therefrom, for the taxable year of all retail outlets taken into account 
do not exceed $5,000,000 and relating to the exclusion of sales made 
outside the United States.
    Subsec. (d)(3). Pub. L. 94-455, Sec. 2115(d), inserted provision 
following subpar. (C) relating to the determination of a significant 
ownership interest of a corporation, partnership, trust, or estate.


                    Effective Date of 1999 Amendment

    Pub. L. 106-170, title V, Sec. 504(b), Dec. 17, 1999, 113 Stat. 
1921, provided that: ``The amendment made by this section [amending this 
section] shall apply to taxable years beginning after December 31, 
1999.''


                    Effective Date of 1997 Amendment

    Section 972(b) of Pub. L. 105-34 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to taxable years 
beginning after December 31, 1997.''


                    Effective Date of 1996 Amendment

    Amendment by Pub. L. 104-188 effective, except as otherwise 
expressly provided, as if included in the provision of the Revenue 
Reconciliation Act of 1990, Pub. L. 101-508, title XI, to which such 
amendment relates, see section 1702(i) of Pub. L. 104-188, set out as a 
note under section 38 of this title.


                    Effective Date of 1990 Amendment

    Section 11521(c) of Pub. L. 101-508 provided that: ``The amendments 
made by this section [amending this section] shall apply to transfers 
after October 11, 1990.''
    Amendment by section 11522(b)(1) of Pub. L. 101-508 applicable to 
taxable years beginning after Dec. 31, 1990, see section 11522(c) of 
Pub. L. 101-508, set out as a note under section 613 of this title.
    Section 11523(c) of Pub. L. 101-508 provided that: ``The amendments 
made by this section [amending this section] shall apply to taxable 
years beginning after December 31, 1990.''


                    Effective Date of 1986 Amendment

    Amendment by section 104(b)(9) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. 
L. 99-514, set out as a note under section 1 of this title.
    Amendment by section 412(a)(1) of Pub. L. 99-514 applicable to 
amounts received or accrued after Aug. 16, 1986, in taxable years ending 
after such date, see section 412(a)(3) of Pub. L. 99-514, set out as a 
note under section 613 of this title.


                    Effective Date of 1984 Amendment

    Section 25(c)(2) of Pub. L. 98-369 provided that: ``The amendments 
made by subsection (b) [amending this section] shall take effect on 
January 1, 1984.''
    Amendment by section 71(b) of Pub. L. 98-369 applicable with respect 
to property contributed to the partnership after Mar. 31, 1984, in 
taxable years ending after such date, see section 71(c) of Pub. L. 98-
369, set out as a note under section 704 of this title.


                    Effective Date of 1983 Amendment

    Amendment by section 202(d)(1) of Pub. L. 97-448 applicable to 
transfers in taxable years ending after Dec. 31, 1974, but only for 
purposes of applying this section to periods after Dec. 31, 1979, and 
amendment by section 202(d)(2) of Pub. L. 97-448 applicable to bulk 
sales after Sept. 18, 1982, see section 203(b)(3) of Pub. L. 97-448, set 
out as a note under section 6652 of this title.


                    Effective Date of 1982 Amendment

    Amendment by Pub. L. 97-354 applicable to taxable years beginning 
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an 
Effective Date note under section 1361 of this title.


                    Effective Date of 1980 Amendment

    Section 3(b) of Pub. L. 96-603, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The amendments 
made by subsection (a) [amending this section] shall apply to transfers 
in taxable years ending after December 31, 1974, but only for purposes 
of applying section 613A of the Internal Revenue Code of 1986 [formerly 
I.R.C. 1954] to periods after December 31, 1979.''


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-618 effective on Oct. 1, 1978, and 
applicable to taxable years ending on or after such date, see section 
403(c) of Pub. L. 95-618, set out as a note under section 613 of this 
title.


                    Effective Date of 1977 Amendment

    Amendment by Pub. L. 95-30 applicable to taxable years beginning 
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out as a 
note under section 1 of this title.


                    Effective Date of 1976 Amendment

    Amendment by section 1901(a)(86) of Pub. L. 94-455 effective for 
taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. 
L. 94-455, set out as a note under section 2 of this title.
    Section 2115(f) of Pub. L. 94-455 provided that: ``The amendments 
made by this section [amending this section and sections 703 and 705 of 
this title] shall take effect on January 1, 1975, and shall apply to 
taxable years ending after December 31, 1974.''


                             Effective Date

    Section 501(c) of Pub. L. 94-12 provided that: ``The amendments made 
by this section [enacting this section and amending sections 613 and 703 
of this title] shall take effect on January 1, 1975, and shall apply to 
taxable years ending after December 31, 1974.''


                            Savings Provision

    For provisions that nothing in amendment by section 11815(a) of Pub. 
L. 101-508 be construed to affect treatment of certain transactions 
occurring, property acquired, or items of income, loss, deduction, or 
credit taken into account prior to Nov. 5, 1990, for purposes of 
determining liability for tax for periods ending after Nov. 5, 1990, see 
section 11821(b) of Pub. L. 101-508, set out as a note under section 29 
of this title.

                          Transfer of Functions

    Federal Power Commission terminated and its functions, personnel, 
property, funds, etc., transferred to Secretary of Energy (except for 
certain functions which were transferred to Federal Energy Regulatory 
Commission) by sections 7151(b), 7171(a), 7172(a), 7291, and 7293 of 
Title 42, The Public Health and Welfare.


                    Coordination With Other Provision

    Section 403(d) of Pub. L. 95-618 provided that: ``Any allowance for 
depletion allowed by reason of the amendments made by subsection (b) 
[amending this section] shall not be treated as a credit, exemption, 
deduction, or comparable adjustment applicable to the computation of any 
Federal tax which is specifically allowable with respect to any high-
cost natural gas (or category thereof) for purposes of section 107(d) of 
the Natural Gas Policy Act of 1978 [section 3317(d) of Title 15, 
Commerce and Trade].''

                  Section Referred to in Other Sections

    This section is referred to in sections 56, 57, 291, 613, 705, 776, 
954, 993, 1202, 1367, 1446, 4994 of this title; title 42 section 6247b.
