Page:United States Statutes at Large Volume 100 Part 3.djvu/417

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2225

SEC. 406. RETENTION OF CAPITAL GAINS TREATMENT FOR SALES OF DAIRY CATTLE UNDER MILK PRODUCTION TERMINATION PROGRAM.

The amendments made by subtitles A and B of title III shall not apply to any gain from the sale of dairy cattle under a valid contract with the United States Department of Agriculture under the milk production termination program to the extent such gain is properly taken into account under the taxpayer's method of accounting after January 1, 1987, and before September 1, 1987.

Subtitle B—Treatment of Oil, Gas, Geothermal, and Hard Minerals SEC. 411. TREATMENT OF INTANGIBLE DRILLING COSTS AND MINERAL EXPLORATION AND DEVELOPMENT COSTS. (a) TREATMENT UNDER SECTION 291.— (1) INCREASE IN PERCENTAGE DISALLOWANCE.—Paragraph (1) of

section 291(b) (relating to special rules for treatment of intangible drilling costs and mineral exploration and development costs) is amended by striking out "20 percent" and inserting in lieu thereof "30 percent". (2) TREATMENT OF DISALLOWED AMOUNT.—Subsection (b) of

section 291 is amended by striking out paragraphs (2), (3), (4), (5), and (6) and inserting in lieu thereof the following new paragraphs: "(2) AMORTIZATION OF AMOUNTS NOT ALLOWABLE AS DEDUC-

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TiONS UNDER PARAGRAPH (1).—The amount not allowable as a deduction under section 263(c), 616(a), or 617(a) (as the case may be) for any taxable year by reason of paragraph (1) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred. "(3) DISPOSITIONS.—For purposes of section 1254, any deduction under paragraph (2) shall be treated as a deduction allowable under section 263(c), 616(a), or 617(a) (whichever is appropriate). "(4) INTEGRATED OIL COMPANY DEFINED.—For purposes of this subsection, the term 'integrated oil company' means, with respect to any taxable year, any producer (within the meaning of section 4996(a)(l)) of crude oil other than an independent producer (within the meaning of section 4992(b)). "(5) COORDINATION WITH COST DEPLETION.—The portion of the

adjusted basis of any property which is attributable to amounts to which paragraph (1) applied shall not be taken into account for purposes of determining depletion under section 611." (b) TREATMENT OF COSTS INCURRED OUTSIDE THE UNITED STATES.— (1) INTANGIBLE DRILUNG AND DEVELOPMENT COSTS.—

(A) IN GENERAL.—Section 263 (relating to capital expenditures) is amended by adding at the end thereof the following new subsection: "(i) SPECIAL RULES FOR INTANGIBLE DRILLING AND DEVELOPMENT COSTS INCURRED OUTSIDE THE UNITED STATES.—In the case of intan-

gible drilling and development costs paid or incurred with respect to an oil, gas, or geothermal well located outside the United States— "(1) subsection (c) shall not apply, and

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