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IRS practice unit: Overview of the enhanced oil recovery tax credit

Overview of the enhanced oil recovery tax credit

The IRS Large Business and International (LB&I) division publicly released a “practice unit”—part of a series of IRS examiner “job aides” and training materials intended to describe for IRS agents leading practices about tax concepts in general and specific types of transactions.

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The title of this “concept unit” (as this practice unit is referred to by the IRS) is: Overview of the enhanced oil recovery tax credit

Read the practice unit on the IRS practice unit webpage (posting date of January 28, 2020).


Background

Congress enacted section 43 in 1990 to provide an investment credit for certain costs a taxpayer pays or incurs for qualified enhanced oil recovery (EOR) projects. The amount of the credit is a maximum of 15% of the qualified expenditures the taxpayer makes, but can be less (as described in the practice unit). The enhanced oil recovery credit becomes part of the general business credit. The taxpayer claims the credit on Form 8830, Enhanced Oil Recovery Credit. Large corporations and partnerships usually claim the credit.

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