Page:United States Statutes at Large Volume 100 Part 3.djvu/525

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2333

on the basis of respective fair market values) of the amount referred to in clause (iiXII). "(5) OTHER DEFINITIONS.—For purposes of paragraph (4)— "(A) BOOK PURPOSES.—The term 'book purposes' means

the treatment for purposes of preparing the applicable financial statement referred to in subsection (f). "(B) EARNINGS AND PROFITS.—The term 'earnings and profits' means earnings and profits computed for purposes of subchapter C. "(C) PRESENT VALUE.—Present value shall be determined as of the time the property is placed in service (or, if later, as of the beginning of the first taxable year beginning after 1989) and under regulations prescribed by the Secretary. "(D) TREATMENT OF ALTERNATIVE MINIMUM TAXABLE

INCOME.—The treatment of any item for purposes of computing alternative minimum taxable income shall be determined without regard to this subsection. "(6) EXCEPTION FOR CERTAIN CORPORATIONS.—This subsection shall not apply to any S corporation, regulated investment company, real estate investment trust, or REMIC. "SEC. 57. ITEMS OF TAX PREFERENCE.

"(a) GENERAL RULE.—For purposes of this part, the items of tax preference determined under this section are— "(1) DEPLETION.—With respect to each property (as defined in section 614), the excess of the deduction for depletion allowable under section 611 for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year). "(2) INTANGIBLE DRILLING COSTS.— "(A) IN GENERAL.—With respect to all oil, gas, and geo-

thermal properties of the taxpayer, the amount (if any) by which the amount of the excess intangible drilling costs arising in the taxable year is greater than 65 percent of the net income of the taxpayer from oil, gas, and geothermal properties for the taxable year. "(B) EXCESS INTANGIBLE DRILLING COSTS.—For purposes of

subparagraph (A), the amount of the excess intangible drilling costs arising in the taxable year is the excess of— "(i) the intangible drilling and development costs paid or incurred in connection with oil, gas, and geothermal wells (other than costs incurred in drilling a nonproductive well) allowable under section 263(c) or 291(b) for the taxable year, over "(ii) the amount which would have been allowable for the taxable year if such costs had been capitalized and straight line recovery of intangibles (as defined in subsection (b)) had been used with respect to such costs. "(C) NET INCOME FROM OIL, GAS, AND GEOTHERMAL PROP-

ERTIES.—For purposes of subparagraph (A), the amount of the net income of the taxpayer from oil, gas, and geothermal properties for the taxable year is the excess of— "(i) the aggregate amount of gross income (within the meaning of section 613(a)) from all oil, gas, and geothermal properties of the taxpayer received or accrued by the taxpayer during the taxable year, over

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