[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 280 Introduced in Senate (IS)]
109th CONGRESS
1st Session
S. 280
To amend the Internal Revenue Code of 1986 to provide for the
amortization of delay rental payments and geological and geophysical
expenditures.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 3, 2005
Mrs. Hutchison introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for the
amortization of delay rental payments and geological and geophysical
expenditures.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. AMORTIZATION OF DELAY RENTAL PAYMENTS.
(a) In General.--Section 167 of the Internal Revenue Code of 1986
(relating to depreciation) is amended by redesignating subsection (h)
as subsection (i) and by inserting after subsection (g) the following
new subsection:
``(h) Amortization of Delay Rental Payments for Domestic Oil and
Gas Wells.--
``(1) In general.--Any delay rental payment paid or
incurred in connection with the development of oil or gas wells
within the United States (as defined in section 638) shall be
allowed as a deduction ratably over the 24-month period
beginning on the date that such payment was paid or incurred.
``(2) Half-year convention.--For purposes of paragraph (1),
any payment paid or incurred during the taxable year shall be
treated as paid or incurred on the mid-point of such taxable
year.
``(3) Exclusive method.--Except as provided in this
subsection, no depreciation or amortization deduction shall be
allowed with respect to such payments.
``(4) Treatment upon abandonment.--If any property to which
a delay rental payment relates is retired or abandoned during
the 24-month period described in paragraph (1), no deduction
shall be allowed on account of such retirement or abandonment
and the amortization deduction under this subsection shall
continue with respect to such payment.
``(5) Delay rental payments.--For purposes of this
subsection, the term `delay rental payment' means an amount
paid for the privilege of deferring development of an oil or
gas well under an oil or gas lease.''.
(b) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after the
date of the enactment of this Act.
SEC. 2. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.
(a) In General.--Section 167 of the Internal Revenue Code of 1986
(relating to depreciation), as amended by this Act, is amended by
redesignating subsection (i) as subsection (j) and by inserting after
subsection (h) the following new subsection:
``(i) Amortization of Geological and Geophysical Expenditures.--
``(1) In general.--Any geological and geophysical expenses
paid or incurred in connection with the exploration for, or
development of, oil or gas within the United States (as defined
in section 638) shall be allowed as a deduction ratably over
the 24-month period beginning on the date that such expense was
paid or incurred.
``(2) Special rules.--For purposes of this subsection,
rules similar to the rules of paragraphs (2), (3), and (4) of
subsection (h) shall apply.''.
(b) Conforming Amendment.--Section 263A(c)(3) of the Internal
Revenue Code of 1986 is amended by inserting ``167(h), 167(i),'' after
``under section''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after the
date of the enactment of this Act.
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