Subtitle D -- Repeal Oil Subsidies
...Sec. 434. Section 199 Deduction Not Allowed With Respect to Oil, Natural Gas, or Primary Products Thereof
Section 199, Internal Revenue Code of 1986, as amended (click here)
The “Domestic Production Deduction”
Jack C. Butler, Esq.
Hm. This is interesting. The WTO ruled against the narcisstic laws of Republicans to prevent taxation of domestic oil and gas production. But, in retaliation the Bush/Cheney Republican Congress in 2004 circumvented the WTO ruling. Well, that isn't nice at all. Predictable, of course. Nice, no.
In 2004, to ameliorate the repeal of a tax benefit for U.S. exporters (in response to a World Trade Organization ruling that the "extraterritorial income exclusion" violated international trade laws), Congress created a new deduction for U.S. businesses. The deduction, allowed by Code Sec. 199 for both the regular tax and the alternative minimum tax (AMT), doesn't have an official taxcode name. It's been referred to as "the U.S. production activities deduction," the "domestic production deduction," and the "domestic manufacturing deduction." It appears that from the literature “domestic production deduction” is the more prevalently used name. Throughout this presentation we will call the deduction the “199 deduction”.
The 199 deduction is allowed to all taxpayers - - individuals, C corporations, farming
cooperatives, estates, trusts, and their beneficiaries. The deduction is allowed to partners and the owners of S corporations (not to partnerships or the S corporations themselves), and may be passed through by farming cooperatives to their patrons. And, it's fully available to taxpayers who don't export.
Oh, dig this, the deduction goes up instead of down. I would think the largest investment period is the beginning, yes? Yes. But, that isn't the way it is structured. Oh, wait a minute. Oh, how tricky can the Republicans be?
-for years 2005, 2006: 3% of lesser of (a) qualified production activities income
or (b) taxable income for the taxable year.
· for 2007 through 2009: 6% of lesser of (a) qualified production activities
income or (b) taxable income for the taxable year.
· for 2010 and beyond: 9% of lesser of (a) qualified production activities income
or (b) taxable income for the taxable year.
Why provide all the deduction in the first year? The first year is when the costs without deduction can be taken off the income. So, by deferring the deduction to later years, the petroleum industry maximizes it's first year expenses as leveraged against incomes and then takes greater deductions when costs are down. How very, very clever.
This is an offset, so it is to increase the monies received and/or kept by the USA Treasury. This is more of the subsidies received by the petroleum industry. It is amazing the monies this industry DOES NOT pay to the USA Treasury on domestic production of land 'the people' lease to them.
Section 434 reads:
(a) In General.—Subparagraph (B) of section 199(c)(4) of the Internal Revenue Code of
1986 (relating to income attributable to domestic production activities) is amended--
Sec. 435. Repeal Oil and Gas Working Interest Exception to Passive Activity Rules
That just ends everything on New Years Eve 2012
Sec. 436. Uniform Seven-Year Amortization for Geological and Geophysical Expenditures
Sec. 437. Repeal Enhanced Oil Recovery Credit
Self explanatory through New Years Eve 2012. See these credits are suppose to give incentive to the activity. Let me ask this, "Does anyone believe the petroleum industry WON'T recover oil?" Could BP make it more clearer that every drop of the oil recovered from the Deepwater Horizon will go to USA shores? Honestly, now does the petroleum industry actually need an incentive?
Sec. 438. Repeal Marginal Well Production Credit
Oh, this one is beautiful. MARGINAL WELLS is what hydrualic frackering is all about. Hello? Do we want fracking? Do we care about marginal wells? Do we as a country give a flyin' hoot if the lousy stuff is left in the ground? NOOOOoooooooo........
Do we actually believe the petroleum industry WON'T FRACK without this incentive? NOOOOooooooooooo..........
I'll pick up with Subtitle E of Title IV next.
...Sec. 434. Section 199 Deduction Not Allowed With Respect to Oil, Natural Gas, or Primary Products Thereof
Section 199, Internal Revenue Code of 1986, as amended (click here)
The “Domestic Production Deduction”
Jack C. Butler, Esq.
Hm. This is interesting. The WTO ruled against the narcisstic laws of Republicans to prevent taxation of domestic oil and gas production. But, in retaliation the Bush/Cheney Republican Congress in 2004 circumvented the WTO ruling. Well, that isn't nice at all. Predictable, of course. Nice, no.
In 2004, to ameliorate the repeal of a tax benefit for U.S. exporters (in response to a World Trade Organization ruling that the "extraterritorial income exclusion" violated international trade laws), Congress created a new deduction for U.S. businesses. The deduction, allowed by Code Sec. 199 for both the regular tax and the alternative minimum tax (AMT), doesn't have an official taxcode name. It's been referred to as "the U.S. production activities deduction," the "domestic production deduction," and the "domestic manufacturing deduction." It appears that from the literature “domestic production deduction” is the more prevalently used name. Throughout this presentation we will call the deduction the “199 deduction”.
The 199 deduction is allowed to all taxpayers - - individuals, C corporations, farming
cooperatives, estates, trusts, and their beneficiaries. The deduction is allowed to partners and the owners of S corporations (not to partnerships or the S corporations themselves), and may be passed through by farming cooperatives to their patrons. And, it's fully available to taxpayers who don't export.
Oh, dig this, the deduction goes up instead of down. I would think the largest investment period is the beginning, yes? Yes. But, that isn't the way it is structured. Oh, wait a minute. Oh, how tricky can the Republicans be?
-for years 2005, 2006: 3% of lesser of (a) qualified production activities income
or (b) taxable income for the taxable year.
· for 2007 through 2009: 6% of lesser of (a) qualified production activities
income or (b) taxable income for the taxable year.
· for 2010 and beyond: 9% of lesser of (a) qualified production activities income
or (b) taxable income for the taxable year.
Why provide all the deduction in the first year? The first year is when the costs without deduction can be taken off the income. So, by deferring the deduction to later years, the petroleum industry maximizes it's first year expenses as leveraged against incomes and then takes greater deductions when costs are down. How very, very clever.
This is an offset, so it is to increase the monies received and/or kept by the USA Treasury. This is more of the subsidies received by the petroleum industry. It is amazing the monies this industry DOES NOT pay to the USA Treasury on domestic production of land 'the people' lease to them.
Section 434 reads:
(a) In General.—Subparagraph (B) of section 199(c)(4) of the Internal Revenue Code of
1986 (relating to income attributable to domestic production activities) is amended--
SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES. (click here)
- (c) QUALIFIED PRODUCTION ACTIVITIES INCOME- For purposes of this section--
- (4) DOMESTIC PRODUCTION GROSS RECEIPTS-
(B) Exceptions.--Such term shall not include gross
receipts of the taxpayer which are derived from--
(i) the sale of food and beverages prepared
by the taxpayer at a retail establishment,
(ii) the transmission or distribution of
electricity, natural gas, or potable water, or
(iii) the lease, rental, license, sale,
exchange, or other disposition of land. - (1) by striking “or” at the end of clause (ii),
- (2) by striking the period at the end of clause (iii) and inserting in lieu thereof “,
- or”, and
- (3) by adding at the end thereof the following new clause:
- “(iv) the production, refining, processing, transportation, or distribution of
- oil, natural gas, or any primary product (within the meaning of subsection (d)(9))
- thereof.”.
Sec. 435. Repeal Oil and Gas Working Interest Exception to Passive Activity Rules
That just ends everything on New Years Eve 2012
Sec. 436. Uniform Seven-Year Amortization for Geological and Geophysical Expenditures
(a) In General.—Paragraph (1) of section 167(h) of the Internal Revenue Code of 1986
(relating to amortization of geological and geophysical expenditures) is amended by striking “24-month” and inserting in lieu thereof “7-year”.
Maybe I covered this section before, but, it extends the 24 month (2 years) to 7 years, hence lowering the amount of deduction annually. Two years is ridiculous. That is a frank gift to the petroleum industry.
Self explanatory through New Years Eve 2012. See these credits are suppose to give incentive to the activity. Let me ask this, "Does anyone believe the petroleum industry WON'T recover oil?" Could BP make it more clearer that every drop of the oil recovered from the Deepwater Horizon will go to USA shores? Honestly, now does the petroleum industry actually need an incentive?
Sec. 438. Repeal Marginal Well Production Credit
Oh, this one is beautiful. MARGINAL WELLS is what hydrualic frackering is all about. Hello? Do we want fracking? Do we care about marginal wells? Do we as a country give a flyin' hoot if the lousy stuff is left in the ground? NOOOOoooooooo........
Do we actually believe the petroleum industry WON'T FRACK without this incentive? NOOOOooooooooooo..........
I'll pick up with Subtitle E of Title IV next.
