President Barack Obama's budget proposal has directly targeted the small independent oil and gas industry. The campaign promise to levy a windfall profits tax on "major" oil producers has been abandoned and in its place major tax increases on small producers have been proposed. The proposed repeal of the expensing of intangible drilling costs and percentage depletion are devastating to the small domestic exploration and production business. These tax "preferences" are available to companies that produce less than 1,000 barrels per day (bpd). Contextually, Exxon Mobil produces about 4 million barrels per day, whereas our company produces 500 barrels per day.
... major integrated oil companies, the percentage depletion allowance authorized as a deduction from...
The Federal Circuit Court of Appeals upheld a Claims Court decision in Hill, which may affect the alternative minimum tax (AMT) on excess percentage depletion. The court found the old Sec. 57(a)(8), now Sec. 57(a)(1), in effect during 1981 and 1982, applied for both depletable and depreciable property. This may be the basis for refund claims, especially for hard-rock and coal mining operators. The case will, however, be reheard by the Federal Circuit.
announces the applicable percentage under Section 613A to be used in determining percentage depletion for marginal properties for the 2007 calendar year.
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