“To amend the Internal Revenue Code of 1986 to modify certain percentage depletion rules with respect to oil and gas wells.”
No CRS summary available for this bill.
This section modifies the percentage depletion allowance for marginal oil and gas properties (i.e., low-production wells), effective for taxable years beginning after December 31, 2026, by (1) revising the applicable percentage rate under IRC §613A(c)(6)(C) to 15% plus 1 percentage point for each whole dollar by which $70 exceeds the reference price for crude oil for the prior calendar year (capped at 25%), with the $70 amount increased after 2027 by the Producer Price Index for Drilling Oil and Gas Wells; (2) eliminating the taxable income limitations under IRC §§613(a) and 613A(d)(1) for such depletion (thus, the deduction may exceed 100% of net income from the property); and (3) increasing the depletable oil quantity threshold under IRC §613A(c)(3)(B) to 2,000 barrels (from 1,000 barrels), allowing higher-production properties to qualify as marginal.