Page:United States Statutes at Large Volume 94 Part 1.djvu/287

 PUBLIC LAW 96-223—APR. 2, 1980

94 STAT. 237

"(B) within any tier, on the basis of the removal prices for such person's domestic crude oil in such tier removed during such quarter, beginning with the highest of such prices. "(d) QUALIFIED PRODUCTION OF OIL DEFINED.—For purposes of this section— "(1) IN GENERAL.—An independent producer's qualified production of oil for any quarter is the number of barrels of taxable crude oil— "(A) of which such person is the producer, "(B) which is removed during such quarter, "(C) which is tier 1 oil or tier 2 oil, and "(D) which is attributable to the independent producer's working interest in a property. "(2) WORKING INTEREST DEFINED.—

"(A) IN GENERAL.—The term 'working interest' means an operating mineral interest (within the meaning of section 614(d))—

26 USC 614.

"(i) which was in existence as such an interest on January 1, 1980, or "(ii) which is attributable to a qualified overriding royalty interest. "(B) QUALIFIED OVERRIDING ROYALTY INTEREST.—For pur-

poses of subparagraph (A)(ii), the term 'qualified overriding royalty interest' means an overriding royalty interest in existence as such an interest on January 1, 1980, but only if on February 20, 1980, there was in existence a binding contract under which such interest was to be converted into an operating mineral interest (within the meaning of section 614(d)). "(3) PRODUCTION FROM TRANSFERRED PROPERTY.—

"(A) IN GENERAL.—Except as otherwise provided in this paragraph, in the case of a transfer on or after January 1, 1980, of an interest in any property, the qualified production of the transferee shall not include any production attributable to such interest. "(B) SMALL PRODUCER TRANSFER EXEMPTION.—

"(i) IN GENERAL.—Subparagraph (A) shall not apply to any transfer of an interest in property if the transferee establishes (in such manner as may be prescribed by the Secretary by regulations) that at no time after December 31, 1979, has the property been held by a person who was a disqualified transferor for any quarter ending after September 30, 1979, and ending before the date such person transferred the interest. "(ii) DISQUALIFIED TRANSFEROR.—The term 'disqualified transferor' means, with respect to any quarter, any person who— "(I) had qualified production for such quarter which exceeded such person's independent producer amount for such quarter, or "(II) was not an independent producer for such quarter, "(iii) SPECIAL RULES.—For purposes of this paragraph— "(I) PROPERTY HELD BY PARTNERSHIPS.—Property

held by a partnership at any time shall be treated as owned proportionately by the partners of such partnership at such time.

�