Enhanced Oil Recovery (EOR) Credit

§ 43. Enhanced oil recovery credit(a) General ruleFor purposes of section 38, the enhanced oil recovery credit for any taxable year is an amount equal to 15 percent of the taxpayer’s qualified enhanced oil recovery costs for such taxable year. (b) Phase-out of credit as crude oil prices increase(1) In generalThe amount of the credit determined under subsection (a) for any taxable year shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as—(A) the amount by which the reference price for the calendar year preceding the calendar year in which the taxable year begins exceeds $28, bears to (B) $6. (2) Reference priceFor purposes of this subsection, the term “reference price” means, with respect to any calendar year, the reference price determined for such calendar year under section 45K(d)(2)(C). (3) Inflation adjustment(A) In generalIn the case of any taxable year beginning in a calendar year after 1991, there shall be substituted for the $28 amount under paragraph (1)(A) an amount equal to the product of—(i) $28, multiplied by (ii) the inflation adjustment factor for such calendar year. (B) Inflation adjustment factorThe term “inflation adjustment factor” means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. For purposes of the preceding sentence, the term “GNP implicit price deflator” means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Commerce. Not later than April 1 of any calendar year, the Secretary shall publish the inflation adjustment factor for the preceding calendar year. (c) Qualified enhanced oil recovery costsFor purposes of this section—(1) In generalThe term “qualified enhanced oil recovery costs” means any of the following:(A) Any amount paid or incurred during the taxable year for tangible property—(i) which is an integral part of a qualified enhanced oil recovery project, and (ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable under this chapter. (B) Any intangible drilling and development costs—(i) which are paid or incurred in connection with a qualified enhanced oil recovery project, and (ii) with respect to which the taxpayer may make an election under section 263(c) for the taxable year. (C) Any qualified tertiary injectant expenses (as defined in section 193(b)) which are paid or incurred in connection with a qualified enhanced oil recovery project and for which a deduction is allowable for the taxable year. (D) Any amount which is paid or incurred during the taxable year to construct a gas treatment plant which—(i) is located in the area of the United States (within the meaning of section 638(1)) lying north of 64 degrees North latitude,