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Oil and gas, marginal well factors, percentage depletion for 2019

Oil and gas, marginal well factors for 2019

The Internal Revenue Bulletin 2019-23 (dated June 3, 2019) includes the following IRS notices providing information for taxpayers involved in the oil and gas sector.

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  • Notice 2019-36 provides the inflation adjustment factor and phase-out amount for the enhanced oil recovery credit for 2019. The notice concludes that because the reference price for the 2019 cal­endar year ($61.41) exceeds $28 multiplied by the inflation adjustment factor for the 2018 calendar year ($28 multiplied by 1.7334 = $12.88), the enhanced oil recovery credit for qualified costs paid or incurred in 2019 is phased out com­pletely by using a particular ratio. Read TaxNewsFlash

  • Notice 2019-37 provides the applicable reference price for qualified natural gas production from qualified marginal wells during tax years beginning in 2018. The notice reflects an estimate of the annual aver­age wellhead price per 1000 cubic feet for all domestic nat­ural gas for purposes of the credit in section 45I for calendar year 2018, is $2.68 per 1000 cubic feet (meaning the section 45I credit is $0.00 per 1,000 cubic feet of qualified natural gas produced from marginal wells).

  • Notice 2019-38 provides that the applicable percentage for purposes of determining the percentage depletion on marginal properties for 2019 is 15%.


Read the IRS notices in IRB 2019-23 [PDF 1.2 MB]

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