26 U.S.C. § 43 — Enhanced oil recovery credit

Page 243 TITLE 26—INTERNAL REVENUE CODE § 43 (iv) 490270742387293 ....... $48,000 (v) 4927074218234 ........... $32,000 (vi) 49270742274019 ........ $36,000 (vii) 51460742345074 ....... $53,000. ‘‘(C) DETERMINATION OF ADJUSTED BASIS.—The ad- justed basis of any building to which this paragraph applies for purposes of section 42 of such Code shall be its adjusted basis as of the close of the taxable year ending before the first taxable year of the credit pe- riod for such building. ‘‘(D) CERTAIN RULES TO APPLY.—Rules similar to the rules of subparagraph (E) of paragraph (2) shall apply for purposes of this paragraph. ‘‘(4) DEFINITIONS.—For purposes of this subsection, terms used in such subsection which are also used in section 42 of the Internal Revenue Code of 1986 (as added by this section) shall have the meanings given such terms by such section 42. ‘‘(5) TRANSITIONAL RULE.—In the case of any rehabili- tation expenditures incurred with respect to units lo- cated in the neighborhood strategy area within the community development block grant program in Ft. Wayne, Indiana— ‘‘(A) the amendments made by this section [enact- ing this section and amending sections 38 and 55 of this title] shall not apply, and ‘‘(B) paragraph (1) of section 167(k) of the Internal Revenue Code of 1986, shall be applied as if it did not contain the phrase ‘and before January 1, 1987’. The number of units to which the preceding sentence applies shall not exceed 150.’’ § 43. Enhanced oil recovery credit (a) General rule For purposes of section 38, the enhanced oil re- covery credit for any taxable year is an amount equal to 15 percent of the taxpayer’s qualified enhanced oil recovery costs for such taxable year. (b) Phase-out of credit as crude oil prices in- crease (1) In general The amount of the credit determined under subsection (a) for any taxable year shall be re- duced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as— (A) the amount by which the reference price for the calendar year preceding the cal- endar year in which the taxable year begins exceeds $28, bears to (B) $6. (2) Reference price For purposes of this subsection, the term ‘‘reference price’’ means, with respect to any calendar year, the reference price determined for such calendar year under section 45K(d)(2)(C). (3) Inflation adjustment (A) In general In the case of any taxable year beginning in a calendar year after 1991, there shall be substituted for the $28 amount under para- graph (1)(A) an amount equal to the product of— (i) $28, multiplied by (ii) the inflation adjustment factor for such calendar year. (B) Inflation adjustment factor The term ‘‘inflation adjustment factor’’ means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding cal- endar year and the denominator of which is the GNP implicit price deflator for 1990. For purposes of the preceding sentence, the term ‘‘GNP implicit price deflator’’ means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Com- merce. Not later than April 1 of any calendar year, the Secretary shall publish the infla- tion adjustment factor for the preceding cal- endar year. (c) Qualified enhanced oil recovery costs For purposes of this section— (1) In general The term ‘‘qualified enhanced oil recovery costs’’ means any of the following: (A) Any amount paid or incurred during the taxable year for tangible property— (i) which is an integral part of a quali- fied enhanced oil recovery project, and (ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable under this chapter. (B) Any intangible drilling and develop- ment costs— (i) which are paid or incurred in connec- tion with a qualified enhanced oil recovery project, and (ii) with respect to which the taxpayer may make an election under section 263(c) for the taxable year. (C) Any qualified tertiary injectant ex- penses (as defined in section 193(b)) which are paid or incurred in connection with a qualified enhanced oil recovery project and for which a deduction is allowable for the taxable year. (D) Any amount which is paid or incurred during the taxable year to construct a gas treatment plant which— (i) is located in the area of the United States (within the meaning of section 638(1)) lying north of 64 degrees North lati- tude, (ii) prepares Alaska natural gas for transportation through a pipeline with a capacity of at least 2,000,000,000,000 Btu of natural gas per day, and (iii) produces carbon dioxide which is in- jected into hydrocarbon-bearing geological formations. (2) Qualified enhanced oil recovery project For purposes of this subsection— (A) In general The term ‘‘qualified enhanced oil recovery project’’ means any project— (i) which involves the application (in ac- cordance with sound engineering prin- ciples) of 1 or more tertiary recovery methods (as defined in section 193(b)(3)) which can reasonably be expected to result in more than an insignificant increase in the amount of crude oil which will ulti- mately be recovered, (ii) which is located within the United States (within the meaning of section 638(1)), and Page 244 TITLE 26—INTERNAL REVENUE CODE § 43 (iii) with respect to which the first injec- tion of liquids, gases, or other matter com- mences after December 31, 1990. (B) Certification A project shall not be treated as a quali- fied enhanced oil recovery project unless the operator submits to the Secretary (at such times and in such manner as the Secretary provides) a certification from a petroleum engineer that the project meets (and con- tinues to meet) the requirements of subpara- graph (A). (3) At-risk limitation For purposes of determining qualified en- hanced oil recovery costs, rules similar to the rules of section 49(a)(1), section 49(a)(2), and section 49(b) shall apply. (4) Special rule for certain gas displacement projects For purposes of this section, immiscible non- hydrocarbon gas displacement shall be treated as a tertiary recovery method under section 193(b)(3). (5) Alaska natural gas For purposes of paragraph (1)(D)— (A) In general The term ‘‘Alaska natural gas’’ means nat- ural gas entering the Alaska natural gas pipeline (as defined in section 168(i)(16) (de- termined without regard to subparagraph (B) thereof)) which is produced from a well— (i) located in the area of the State of Alaska lying north of 64 degrees North latitude, determined by excluding the area of the Alaska National Wildlife Refuge (in- cluding the continental shelf thereof with- in the meaning of section 638(1)), and (ii) pursuant to the applicable State and Federal pollution prevention, control, and permit requirements from such area (in- cluding the continental shelf thereof with- in the meaning of section 638(1)). (B) Natural gas The term ‘‘natural gas’’ has the meaning given such term by section 613A(e)(2). (d) Other rules (1) Disallowance of deduction Any deduction allowable under this chapter for any costs taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such costs. (2) Basis adjustments For purposes of this subtitle, if a credit is determined under this section for any expendi- ture with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expendi- ture shall be reduced by the amount of the credit so allowed. (e) Election to have credit not apply (1) In general A taxpayer may elect to have this section not apply for any taxable year. (2) Time for making election An election under paragraph (1) for any tax- able year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (de- termined without regard to extensions). (3) Manner of making election An election under paragraph (1) (or revoca- tion thereof) shall be made in such manner as the Secretary may by regulations prescribe. (Added Pub. L. 101–508, title XI, § 11511(a), Nov. 5, 1990, 104 Stat. 1388–483; amended Pub. L. 106–554, § 1(a)(7) [title III, § 317(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–645; Pub. L. 108–357, title VII, § 707(a), (b), Oct. 22, 2004, 118 Stat. 1550; Pub. L. 109–58, title XIII, § 1322(a)(3)(B), Aug. 8, 2005, 119 Stat. 1011; Pub. L. 109–135, title IV, § 412(i), Dec. 21, 2005, 119 Stat. 2637.) INFLATION ADJUSTED ITEMS FOR CERTAIN TAX YEARS For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table below. Editorial Notes PRIOR PROVISIONS A prior section 43 was renumbered section 32 of this title. Another prior section 43 was renumbered section 37 of this title. AMENDMENTS 2005—Subsec. (b)(2). Pub. L. 109–58 substituted ‘‘sec- tion 45K(d)(2)(C)’’ for ‘‘section 29(d)(2)(C)’’. Subsec. (c)(5). Pub. L. 109–135 reenacted heading with- out change and amended text generally. Prior to amendment, text read as follows: ‘‘For purposes of paragraph (1)(D)— ‘‘(1) IN GENERAL.—The term ‘Alaska natural gas’ means natural gas entering the Alaska natural gas pipeline (as defined in section 168(i)(16) (determined without regard to subparagraph (B) thereof)) which is produced from a well— ‘‘(A) located in the area of the State of Alaska lying north of 64 degrees North latitude, deter- mined by excluding the area of the Alaska National Wildlife Refuge (including the continental shelf thereof within the meaning of section 638(1)), and ‘‘(B) pursuant to the applicable State and Federal pollution prevention, control, and permit require- ments from such area (including the continental shelf thereof within the meaning of section 638(1)). ‘‘(2) NATURAL GAS.—The term ‘natural gas’ has the meaning given such term by section 613A(e)(2).’’ 2004—Subsec. (c)(1)(D). Pub. L. 108–357, § 707(a), added subpar. (D). Subsec. (c)(5). Pub. L. 108–357, § 707(b), added par. (5). 2000—Subsec. (c)(1)(C). Pub. L. 106–554 inserted ‘‘(as defined in section 193(b))’’ after ‘‘expenses’’ and struck out ‘‘under section 193’’ after ‘‘allowable’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–58 applicable to credits de- termined under the Internal Revenue Code of 1986 for taxable years ending after Dec. 31, 2005, see section 1322(c)(1) of Pub. L. 109–58, set out as a note under sec- tion 45K of this title. EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108–357, title VII, § 707(c), Oct. 22, 2004, 118 Stat. 1550, provided that: ‘‘The amendment made by Page 245 TITLE 26—INTERNAL REVENUE CODE § 44 this section [amending this section] shall apply to costs paid or incurred in taxable years beginning after De- cember 31, 2004.’’ EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106–554, § 1(a)(7) [title III, § 317(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–645, provided that: ‘‘The amendment made by this section [amending this sec- tion] shall take effect as if included in section 11511 of the Revenue Reconciliation Act of 1990 [Pub. L. 101–508].’’ EFFECTIVE DATE Pub. L. 101–508, title XI, § 11511(d), Nov. 5, 1990, 104 Stat. 1388–485, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [enacting this section and amending sections 38, 39, 196, and 6501 of this title] shall apply to costs paid or incurred in taxable years beginning after December 31, 1990. ‘‘(2) SPECIAL RULE FOR SIGNIFICANT EXPANSION OF PROJECTS.—For purposes of section 43(c)(2)(A)(iii) of the Internal Revenue Code of 1986 (as added by subsection (a)), any significant expansion after December 31, 1990, of a project begun before January 1, 1991, shall be treat- ed as a project with respect to which the first injection commences after December 31, 1990.’’ INFLATION ADJUSTED ITEMS FOR CERTAIN YEARS Provisions relating to inflation adjustment of items in this section for certain years were contained in the following: 2024—Internal Revenue Notice 2024–61. 2023—Internal Revenue Notice 2023–57. 2022—Internal Revenue Notice 2022–19. 2021—Internal Revenue Notice 2021–47. 2020—Internal Revenue Notice 2020–31. 2019—Internal Revenue Notice 2019–36. 2018—Internal Revenue Notice 2018–49. 2017—Internal Revenue Notice 2017–25. 2016—Internal Revenue Notice 2016–44. 2015—Internal Revenue Notice 2015–64. 2014—Internal Revenue Notice 2014–64. 2013—Internal Revenue Notice 2013–50. 2012—Internal Revenue Notice 2012–49. 2011—Internal Revenue Notice 2011–57. 2010—Internal Revenue Notice 2010–72. 2009—Internal Revenue Notice 2009–73. 2008—Internal Revenue Notice 2008–72. 2007—Internal Revenue Notice 2007–64. 2006—Internal Revenue Notice 2006–62. 2005—Internal Revenue Notice 2005–56. 2004—Internal Revenue Notice 2004–49. 2003—Internal Revenue Notice 2003–43. 2002—Internal Revenue Notice 2002–53. 2001—Internal Revenue Notice 2001–54. 2000—Internal Revenue Notice 2000–51. 1999—Internal Revenue Notice 99–45. 1998—Internal Revenue Notice 98–41. 1997—Internal Revenue Notice 97–39. 1996—Internal Revenue Notice 96–41. § 44. Expenditures to provide access to disabled individuals (a) General rule For purposes of section 38, in the case of an el- igible small business, the amount of the disabled access credit determined under this section for any taxable year shall be an amount equal to 50 percent of so much of the eligible access expend- itures for the taxable year as exceed $250 but do not exceed $10,250. (b) Eligible small business For purposes of this section, the term ‘‘eligi- ble small business’’ means any person if— (1) either— (A) the gross receipts of such person for the preceding taxable year did not exceed $1,000,000, or (B) in the case of a person to which sub- paragraph (A) does not apply, such person employed not more than 30 full-time em- ployees during the preceding taxable year, and (2) such person elects the application of this section for the taxable year. For purposes of paragraph (1)(B), an employee shall be considered full-time if such employee is employed at least 30 hours per week for 20 or more calendar weeks in the taxable year. (c) Eligible access expenditures For purposes of this section— (1) In general The term ‘‘eligible access expenditures’’ means amounts paid or incurred by an eligible small business for the purpose of enabling such eligible small business to comply with applicable requirements under the Americans With Disabilities Act of 1990 (as in effect on the date of the enactment of this section). (2) Certain expenditures included The term ‘‘eligible access expenditures’’ in- cludes amounts paid or incurred— (A) for the purpose of removing architec- tural, communication, physical, or transpor- tation barriers which prevent a business from being accessible to, or usable by, indi- viduals with disabilities, (B) to provide qualified interpreters or other effective methods of making aurally delivered materials available to individuals with hearing impairments, (C) to provide qualified readers, taped texts, and other effective methods of making visually delivered materials available to in- dividuals with visual impairments, (D) to acquire or modify equipment or de- vices for individuals with disabilities, or (E) to provide other similar services, modi- fications, materials, or equipment. (3) Expenditures must be reasonable Amounts paid or incurred for the purposes described in paragraph (2) shall include only expenditures which are reasonable and shall not include expenditures which are unneces- sary to accomplish such purposes. (4) Expenses in connection with new construc- tion are not eligible The term ‘‘eligible access expenditures’’ shall not include amounts described in para- graph (2)(A) which are paid or incurred in con- nection with any facility first placed in serv- ice after the date of the enactment of this sec- tion. (5) Expenditures must meet standards The term ‘‘eligible access expenditures’’ shall not include any amount unless the tax- payer establishes, to the satisfaction of the Secretary, that the resulting removal of any barrier (or the provision of any services, modi- fications, materials, or equipment) meets the standards promulgated by the Secretary with