[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2072 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2072

To amend the Internal Revenue Code of 1986 to exclude from gross income 
 gain from oil and gas produced from certain recovered inactive wells.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 26, 1997

Mr. Thornberry introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to exclude from gross income 
 gain from oil and gas produced from certain recovered inactive wells.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Inactive Well Recovery Act''.

SEC. 2. EXCLUSION OF CERTAIN AMOUNTS RECEIVED FROM RECOVERED INACTIVE 
              WELLS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 138 as section 
139 and by inserting after section 137 the following new section:

``SEC. 138. OIL OR GAS PRODUCED FROM A RECOVERED INACTIVE WELL.

    ``(a) In General.--Gross income does not include income 
attributable to independent producer oil from a recovered inactive 
well.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Independent producer oil.--The term `independent 
        producer oil' means crude oil or natural gas in which the 
        economic interest of the independent producer is attributable 
        to an operating mineral interest (within the meaning of section 
        614(d)), overriding royalty interest, production payment, net 
        profits interest, or similar interest.
            ``(2) Crude oil and natural gas.--The terms `crude oil' and 
        `natural gas' have the meanings given such terms by section 
        613A(e).
            ``(3) Recovered inactive well.--The term `recovered 
        inactive well' means a well if--
                    ``(A) throughout the 2-year period ending on the 
                date of the enactment of this section, such well is 
                inactive or has been plugged and abandoned, as 
                determined by the agency of the State in which such 
                well is located that is responsible for regulating such 
                wells, and
                    ``(B) during the 5-year period beginning on the 
                date of the enactment of this section, such well 
                resumes producing crude oil or natural gas.
            ``(4) Independent producer.--The term `independent 
        producer' means a producer of crude oil or natural gas whose 
        allowance for depletion is determined under section 613A(c).
    ``(c) Deductions.--No deductions directly connected with amounts 
excluded from gross income by subsection (a) shall be allowed.
    ``(d) Election.--
            ``(1) In general.--This section shall apply for any fiscal 
        year only at the election of the taxpayer.
            ``(2) Manner.--Such election shall be made, in accordance 
        with regulations prescribed by the Secretary, not later than 
        the time prescribed for filing the return (including extensions 
        thereof) and shall be made annually on a property-by-property 
        basis.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 138 and inserting the following:

                              ``Sec. 138. Oil or gas produced from a 
                                        recovered inactive well.
                              ``Sec. 139. Cross references to other 
                                        Acts.''

    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
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