Energy - Fossil Fuels

Natural Gas Distribution Lines

Created by the Tax Reform Act of 1986, the Modified Accelerated Cost Recovery System (MACRS) is the system within the Internal Revenue Code for determining the depreciable lives of assets. Businesses “recover” the costs of tangible property (assets) by making annual deductions from their taxable income for depreciation over the specified life of the property. […]

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Expensing of Exploration and Development Costs, Oil and Gas

Expensing of costs associated with exploration and development refers to the ability of some extractive industries to deduct these costs fully from their taxable income immediately or as they are incurred rather than waiting for those activities to generate income. This is an exception to general tax rules, which normally require companies to capitalize these […]

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Oil Royalty Relief – Deep Water

Oil and gas companies that drill on public lands or in federal waters pay royalties for the oil and gas they extract. The amount of royalties they pay depends on the amount extracted, the market price for oil and gas, and the royalty rate. Typically, the government sets limits on the amount of oil and […]

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Excess of Percentage Over Cost Depletion, Other Fuels

Businesses are generally allowed to recoup capital costs associated with acquiring or creating an asset by deducting these costs from their taxable income. Typically, the costs are depreciated—deducted each year in proportion to the remaining useful life of the asset, corresponding to the income it generates. For natural resource assets, the costs of acquiring the […]

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Expensing of Tertiary Injectants

Tertiary recovery, sometimes called “enhanced oil recovery,” refers to a variety of methods used to increase the productivity of an oil and gas reservoir by injecting materials into the formation to increase the reservoir pressure, increase the mobility of the remaining hydrocarbons within the formation, or increase separation between injected fluids (used for secondary recovery) […]

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Credit for Investment in Clean Coal Facilities

An investment tax credit is available for power generation projects that use integrated gasification combined cycle (IGCC) or certain other coal-based electricity generation technologies. IGCC and other advanced coal projects must separate and sequester at least 65 percent of the project’s total carbon emissions and gasification projects must separate and sequester at least 75 percent […]

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Deductions for Foreign Tax – Dual Capacity

To prevent double taxation, current tax law allows U.S.-based corporations to receive a credit against their U.S. tax liability for the taxes they pay to foreign countries on income earned abroad—the Foreign Tax Credit (FTC). Special rules for claiming the FTC apply to companies called Dual Capacity taxpayers that pay a foreign levy and receive […]

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Fossil Energy Research and Development Program

In the Department of Energy (DOE), the Office of Fossil Energy manages the Fossil Energy Research and Development Program (FER&D), which includes the R&D Programs in Advanced Coal Energy Systems & Carbon Capture Utilization and Storage (CCUS), Natural Gas Technologies and Unconventional Fossil Energy Technologies; as well as funding for the operations, infrastructure and R&D […]

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