Page:United States Statutes at Large Volume 90 Part 2.djvu/163

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1631

by section 9 0 4 (a)(2) shall apply and the per-country limitation provided by subsection (a)(1) shall not apply."

Ante, p. 1620.

(c) T A X CREDIT FOR PRODUCTION-SHARING CONTRACTS.—

26 USC 907

(1) For purposes of section 901 of the I n t e r n a l Revenue Code note, of 1954. there shall be treated as income, w a r profits, and excess profits tuxes to be taken into account under section 907(a) of such Code amounts designated as income taxes of a foreign government by such government (which otherwise would not be treated as taxes for purposes of section 901 of such Code) with respect to production-sharing contracts for the extraction of foreign oil or gas. (2) The amounts specified in paragraph (1) shall not exceed the lesser of— (A) the product of the foreign oil and gas extraction income with respect to all such production-sharing contracts multiplied by the sum of the normal tax rate and the surtax rate for the taxable year specified in section 11 of such Code, or (B) the excess of the total amount of foreign oil and gas extraction income (as defined in section 907(c)(1) of such Code) for the taxable year multiplied by the sum of the normal tax rate and the surtax rate for the taxable year specified in section 11 of such Code over the amount of any income, war profits, and excess profits taxes paid or accrued (or deemed to have been p a i d) without regard to paragraph (1) during the taxable year with respect to foreign oil and gas extraction income. (3) The production-sharing contracts taken into account for purposes of paragraph (1) shall be those contracts which were entered into before April 8, 1976, for the sharing of foreign oil and gas production with a foreign government (or an entity owned by such government) with respect to which amounts claimed as taxes paid or accrued to such foreign government for taxable years beginning before June 30, 1976, will not be disallowed as taxes. No such contract shall be taken into account for any taxable year ending after December 31, 1977. (d)

CARRYBACK AND CARRYOVER OF DISALLOWED CREDITS.—

(1) IN GENERAL.—Section 907 (as amended by section 1032) is 26 USC 907. amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: "(f)

CARRYBACK AND CARRYOVER OF DISALLOWED CREDITS.—

" (1) IN GENERAL.—If the amount of the oil and gas extraction taxes paid or accrued during any taxable year exceeds the limitation provided by subsection (a) for such taxable year (hereinafter in this subsection referred to as the 'unused credit year '), SO much of such excess as does not exceed 2 percent of foreign oil and gas extraction income for such taxable year shall be deemed to be oil and gas extraction taxes paid or accrued in the second preceding taxable year, in the first preceding taxable year, and in the first, second, t h i r d, fourth, or fifth succeeding taxable year, in that order and to the extent not deemed tax paid or accrued in a prior taxable year by reason of the limitation imposed by paragraph (2). Such amount deemed paid or accrued in any taxable year may be availed of only as a tax credit and not as a deduction and only if the taxpayer for such year chooses to have the benefits of this subpart as to taxes paid or accrued for that year to foreign countries or possessions. For purposes of t h i s

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