Winter Readiness Act of 2005 - Amends the Internal Revenue Code to allow a taxpayer election to expense (i.e., deduct in the current taxable year) all costs for qualified oil and gas production property placed in service before January 1, 2009, and for repairs to such property for hurricane-related damage. Defines "qualified oil and gas production property" to include assets used in offshore drilling for oil and gas, and for exploration and production of petroleum and natural gas deposits.
Allows a 10-year carryback of net operating losses incurred in 2005 for hurricane-damaged oil and gas facilities.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3983 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 3983
To amend the Internal Revenue Code of 1986 to provide incentives to
restore and increase oil and natural gas production.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 6, 2005
Mr. English of Pennsylvania 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 incentives to
restore and increase oil and natural gas production.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Winter Readiness Act of 2005''.
SEC. 2. TEMPORARY EXPENSING OF OIL AND NATURAL GAS EXPLORATION AND
PRODUCTION PROPERTY AND OF COSTS TO REPAIR DAMAGES TO
SUCH PROPERTY FROM 2005 HURRICANES.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section
179D the following new section:
``SEC. 179E. TEMPORARY EXPENSING OF OIL AND NATURAL GAS EXPLORATION AND
PRODUCTION PROPERTY AND OF COSTS TO REPAIR DAMAGES TO
SUCH PROPERTY FROM 2005 HURRICANES.
``(a) Treatment as Expenses.--At the election of the taxpayer,
there shall be allowed as a deduction an amount equal to the cost paid
or incurred by the taxpayer during the taxable year--
``(1) for qualified oil and gas production property, and
``(2) for repairs to property described in subsection
(b)(1)(B) on account of hurricane-related damage arising from
any Presidentially declared disaster (as defined in section
1033(h)(3)(A)) during 2005.
The deduction under paragraph (1) with respect to any property shall be
allowed for the taxable year in which such property is placed in
service.
``(b) Qualified Oil and Gas Production Property.--For purposes of
this section--
``(1) In general.--The term `qualified oil and gas
production property' means any property--
``(A) the original use of which begins with the
taxpayer, and
``(B) which is described in any of the following
assets classes under Revenue Procedure 87-56:
``(i) 13.0 (relating to assets used in
offshore drilling for oil and gas).
``(ii) 13.1 (relating to drilling of oil
and gas wells).
``(iii) 13.2 (relating to exploration for
and production of petroleum and natural gas
deposits).
``(2) Application of section.--This section shall apply to
any property only if--
``(A)(i) no written binding contract for the
construction of such property was in effect on or
before [date of introduction], or
``(ii) in the case of self-constructed property,
the construction of such property did not commence on
or before such date, and
``(B) such property is placed in service before
January 1, 2009.
``(3) Special rule for sale-leasebacks.--For purposes of
paragraph (1)(A), if property is--
``(A) originally placed in service after the date
of the enactment of this section by a person, and
``(B) sold and leased back by such person within 3
months after the date such property was originally
placed in service,
such property shall be treated as originally placed in service
not earlier than the date on which such property is used under
the leaseback referred to in subparagraph (B).
``(c) Basis Reduction.--
``(1) In general.--For purposes of this title, the basis of
any property shall be reduced by the portion of the cost of
such property taken into account under subsection (a).
``(2) Ordinary income recapture.--For purposes of section
1245, the amount of the deduction allowable under subsection
(a) with respect to any property which is of a character
subject to the allowance for depreciation shall be treated as a
deduction allowed for depreciation under section 167.
``(d) Election.--
``(1) In general.--An election under this section for any
taxable year shall be made on the taxpayer's return of the tax
imposed by this chapter for the taxable year.
``(2) Election irrevocable.--Any election made under this
section may not be revoked except with the consent of the
Secretary.
``(e) Election to Allocate Deduction to Cooperative Owner.--A rule
similar to the rule of section 179C(g) shall apply for purposes of this
section.''.
(b) Conforming Amendments.--
(1) Section 263(a)(1) of such Code is amended by striking
``or'' at the end of subparagraph (J), by striking the period
at the end of subparagraph (K) and inserting ``, or'', and by
inserting after subparagraph (K) the following new
subparagraph:
``(L) expenditures for which a deduction is allowed
under section 179E.''.
(2) Section 263A(c)(3)(B) of such Code is amended by
inserting ``179E,'' after ``179B,''.
(3) Section 312(k)(3)(B) of such Code is amended by
striking ``or 179D'' each place it appears in the heading and
text and inserting ``179D, or 179E''.
(4) Section 1016(a) of such Code is amended by striking
``and'' at the end of paragraph (36), by striking the period at
the end of paragraph (37) and inserting ``, or'', and by adding
at the end the following new paragraph:
``(38) to the extent provided in section 179E(c).''.
(5) Section 1245(a) of such Code is amended by inserting
``179E,'' after ``179D,'' both places it appears in paragraphs
(2)(C) and (3)(C).
(6) The table of sections for part VI of subchapter B of
chapter 1 of such Code is amended by inserting after the item
relating to section 179C the following new item:
``Sec. 179E. Temporary expensing of oil and natural gas exploration and
production property and of costs to repair
damages to such property from 2005
hurricanes.''.
(c) Effective Date.--The amendments made by this section shall
apply to costs paid or incurred after the date of the enactment of this
Act in taxable years ending after such date.
SEC. 3. 10-YEAR CARRYBACK OF NET OPERATING LOSSES FROM 2005 HURRICANE-
DAMAGED OIL AND GAS FACILITIES.
(a) In General.--Paragraph (1) of section 172(b) of the Internal
Revenue Code of 1986 (relating to net operating loss deduction) is
amended by adding at the end the following new subparagraph:
``(J) 2005 losses from hurricane-damaged oil and
gas facilities.--In the case of a taxpayer which has a
2005 hurricane-damaged oil and gas facility loss (as
defined in subsection (j)) for a taxable year, such
loss shall be a net operating loss carryback to each of
the 10 taxable years preceding the taxable year of such
loss.''.
(b) 2005 Hurricane-Damaged Oil and Gas Facility Loss.--Section 172
of such Code is amended by redesignating subsections (j) and (k) as
subsections (k) and (l), respectively, and by inserting after
subsection (i) the following new subsection:
``(j) 2005 Hurricane-Damaged Oil and Gas Facility Loss.--For
purposes of this section--
``(1) In general.--The term `2005 hurricane-damaged oil and
gas facility loss' means the lesser of--
``(A) the amount of the net operating loss for such
taxable year, or
``(B) the sum of--
``(i) the amount of the loss allowed by
section 165 for the taxable year for any loss
sustained by reason of hurricane-related
damage--
``(I) arising from any
Presidentially declared disaster (as
defined in section 1033(h)(3)(A))
during 2005, and
``(II) to any property of the
taxpayer which is described in section
179E(b)(1)(B), and
``(ii) the deduction allowed by section
179E(a)(2) for the taxable year.
``(2) Coordination with subsection (b)(2).--For purposes of
applying subsection (b)(2), a 2005 hurricane-damaged oil and
gas facility loss for any taxable year shall be treated in a
manner similar to the manner in which a specified liability
loss is treated.
``(3) Election.--Any taxpayer entitled to a 10-year
carryback under subsection (b)(1)(J) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(J). Such
election shall be made in such manner as may be prescribed by
the Secretary and shall be made by the due date (including
extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss. Such election, once
made for any taxable year, shall be irrevocable for such
taxable year.''.
(c) Effective Date.--The amendments made by this section shall
apply to net operating losses for taxable years ending after the date
of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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