H.R. 3924 – Refinery Expansion Act of 2005

109th CONGRESS

1st Session

H. R. 3924

IN THE HOUSE OF REPRESENTATIVES

September 27, 2005

Mr. Tiahrt 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 tax incentives for oil refineries, oil and gas pipelines, and petroleum storage facilities.

Short title

This Act may be cited as the Refinery Expansion Act of 2005.

100 percent expensing or 5-year depreciation of costs of refinery property which increase refinery output by at least 5 percent

(a)

Expensing

Subsection (a) of section 179C of the Internal Revenue Code of 1986 (relating to election to expense certain refineries) is amended to read as follows:

(a)

Treatment as expenses

(1)

In general

Except in the case of refinery property to which subsection (e) applies, a taxpayer may elect to treat 50 percent of the cost of qualified refinery property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the qualified refinery property is placed in service.

(2)

Property to which subsection (e) applies

In the case of refinery property to which subsection (e) applies, a taxpayer may elect to treat 100 percent of the cost of such property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which such cost is paid or incurred by the taxpayer.

(b)

5-year depreciation

Subparagraph (B) of section 168(e)(3) of such Code (relating to classification of property) is amended by striking and at the end of clause (v), by striking the period at the end clause (vi) and inserting , and, and by inserting after clause (vi) the following new clause:

(vii)

refinery property the cost of which would have been eligible for expensing under section 179C(a)(2) but for the absence of an election under section 179C.

(c)

Effective date

The amendments made by this section shall take effect as if included in the amendments made by section 1323 of the Energy Policy Act of 2005.

Depreciation recovery period for oil and gas pipelines reduced to 7 years

(a)

In general

Subparagraph (C) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to classification of property) is amended by striking and at the end of clause (iv), by redesignating clause (v) as clause (vi), and by inserting after clause (iv) the following new clause:

(v)

any oil or natural gas distribution line the original use of which commences with the taxpayer after April 11, 2005, and which is placed in service before January 1, 2011, and

(b)

Conforming amendments

(1)

Subparagraph (E) of section 168(e)(3) of such Code is amended by adding and at the end of clause (vi), by striking , and at the end of clause (vii) and inserting a period, and by striking clause (viii).

(2)

The table contained in section 168(g)(3)(B) of such Code (relating to special rule for certain property assigned to classes) is amended—

(A)

by striking the item relating to subparagraph (E)(viii), and

(B)

by inserting after the item relating to subparagraph (C)(vii) the following new item:

(C)(v)35

(c)

Effective date

The amendments made by this section shall take effect as if included in section 1325 of the Energy Policy Act of 2005.

5-year depreciation recovery period for petroleum storage facilities

(a)

In general

Subparagraph (B) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to classification of property), as amended by section 2, is amended by striking and at the end of clause (vi), by striking the period at the end clause (vii) and inserting , and, and by inserting after clause (vii) the following new clause:

(viii)

a storage facility (not including a building and its structural components) used in connection with the distribution of petroleum or any primary product of petroleum if—

(I)

the original use of such facility commences with the taxpayer after the date of the enactment of this clause, and

(II)

such facility is placed in service before January 1, 2011.

(b)

Effective date

(1)

In general

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

(2)

Exception

The amendments made by this section shall not apply to any property with respect to which the taxpayer or a related party has entered into a binding contract for the construction thereof on or before such date, or, in the case of self-constructed property, has started construction on or before such date.

Temporary suspension of depreciation recapture on section 1245 refinery property

(a)

In general

Subsection (b) of section 1245 of the Internal Revenue Code of 1986 (relating to exceptions and limitations) is amended by adding at the end the following new paragraph:

(9)

Refinery property being upgraded

Subsection (a) shall not apply to property—

(A)

which, before the date of the enactment of this paragraph, was used by the taxpayer in the processing liquid fuel from crude oil or qualified fuels (as defined in section 45K(c)) at a refinery located in the United States,

(B)

which is disposed of before January 1, 2012, and

(C)

which is replaced by the taxpayer with upgraded equipment which increases the refinery's overall output, decreases the refinery's pollution output, or results in cleaner-burning fuel.

(b)

Effective date

The amendment made by this section shall apply to dispositions after the date of the enactment of this Act in taxable years ending after such date.

Refinery Expansion Act of 2005

Legislative Activity

Bill Text