Treasury Regulations (26 C.F.R.)
26 CFR § 1.613A-2
Exemption for certain domestic gas wells.
# (a)
The allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to:
(1) Regulated natural gas (as defined in paragraph (c) of § 1.613A-7),
(2) Natural gas sold under a fixed contract (as defined in paragraph (d) of § 1.613A-7), and
(3) Any geothermal deposit in the United States or in a possession of the United States that is determined to be a gas well within the meaning of former section 613(b)(1)(A) (as in effect before enactment of the Tax Reduction Act of 1975) for taxable years ending after December 31, 1974, and before October 1, 1978 (see section 613(e) for depletion on geothermal deposits thereafter),
# (b)
For taxable years ending after September 30, 1978, the allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to any qualified natural gas from geopressured brine (as defined in paragraph (e) of § 1.613A-7), and 10 percent shall be deemed to be specified in section 613(b) for purposes of section 613(a).
# (c)
For special rules applicable to partnerships, S corporations, trusts, and estates, see paragraphs (e), (f), and (g) of § 1.613A-3.
# (d)
The provisions of this section may be illustrated by the following examples:
Example 1.
A is a producer of natural gas which is sold by A under a contract in effect on February 1, 1975. The contract provides for an increase in the price of the gas sold under the contract to the highest price paid to a producer for natural gas in the area. The gas sold by A qualifies under section 613A(b)(1)(B) for percentage depletion as gas sold under a fixed contract until its price increases, but is presumed not to qualify thereafter unless A demonstrates by clear and convincing evidence that the price increase in no event takes increases in tax liabilities into account.
Example 2.
B is a producer of natural gas which is sold by B under a contract in effect on February 1, 1975. The contract provides that beginning January 1, 1980, the price of the gas may be renegotiated. Such a provision does not disqualify gas from qualifying for the exemption under section 613A(b)(1)(B) with respect to the gas sold prior to January 1, 1980. However, gas sold on or after January 1, 1980, does not qualify for the exemption whether or not the price of the gas is renegotiated.
[T.D. 8348, 56 FR 21939, May 13, 1991, as amended by T.D. 8437, 57 FR 43899, Sept. 23, 1992; 58 FR 6678, Feb. 1, 1993]
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In this part (40 sections)
- 1.611-0 · Regulatory authority.
- 1.611-1 · Allowance of deduction for depletion.
- 1.611-2 · Rules applicable to mines, oil and gas wells, and other…
- 1.611-3 · Rules applicable to timber.
- 1.611-4 · Depletion as a factor in computing earnings and profits for…
- 1.611-5 · Depreciation of improvements.
- 1.612-1 · Basis for allowance of cost depletion.
- 1.612-2 · Allowable capital additions in case of mines.
- 1.612-3 · Depletion; treatment of bonus and advanced royalty.
- 1.612-4 · Charges to capital and to expense in case of oil and gas…
- 1.612-5 · Charges to capital and to expense in case of geothermal wells.
- 1.613-1 · Percentage depletion; general rule.
- 1.613-2 · Percentage depletion rates.
- 1.613-3 · Gross income from the property.
- 1.613-4 · Gross income from the property in the case of minerals other…
- 1.613-5 · Taxable income from the property.
- 1.613-6 · Statement to be attached to return when depletion is claimed…
- 1.613-7 · Application of percentage depletion rates provided in section…
- 1.613A-0 · Limitations on percentage depletion in the case of oil and…
- 1.613A-1 · Post-1974 limitations on percentage depletion in case of oil…
- 1.613A-2 · Exemption for certain domestic gas wells.
- 1.613A-3 · Exemption for independent producers and royalty owners.
- 1.613A-4 · Limitations on application of § 1.613A-3 exemption.
- 1.613A-5 · Election under section 613A(c)(4).
- 1.613A-6 · Recordkeeping requirements.
- 1.613A-7 · Definitions.
- 1.614-0 · Introduction.
- 1.614-1 · Definition of property.
- 1.614-2 · Election to aggregate separate operating mineral interests…
- 1.614-3 · Rules relating to separate operating mineral interests in the…
- 1.614-4 · Treatment under the Internal Revenue Code of 1939 with…
- 1.614-5 · Special rules as to aggregating nonoperating mineral…
- 1.614-6 · Rules applicable to basis, holding period, and abandonment…
- 1.614-7 · Extension of time for performing certain acts.
- 1.614-8 · Elections with respect to separate operating mineral…
- 1.615-1 · Pre-1970 exploration expenditures.
- 1.615-2 · Deduction of pre-1970 exploration expenditures in the year…
- 1.615-3 · Election to defer pre-1970 exploration expenditures.
- 1.615-4 · Limitation of amount deductible.
- 1.615-5 · Time for making election with respect to returns due on or…