Title II — H.R. 4753 (Introduced in House)

Sec. 201 Prohibition on using last-in, first-out accounting for major integrated oil companies

(a)

In general— Section 472 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(h) Major integrated oil companies—Notwithstanding any other provision of this section, a major integrated oil company (as defined in section 167(h)(5)(B)) may not use the method provided in subsection (b) in inventorying of any goods.”

(b)

Effective date and special rule—

(1)

In general— The amendment made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act.

(2)

Change in method of accounting— In the case of any taxpayer required by the amendment made by this section to change its method of accounting for its first taxable year beginning after the date of the enactment of this Act—

(A)

such change shall be treated as initiated by the taxpayer,

(B)

such change shall be treated as made with the consent of the Secretary of the Treasury, and

(C)

the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account ratably over a period (not greater than 8 taxable years) beginning with such first taxable year.

Sec. 202 Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers

(a)

In general— Section 901 of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

“(n) Special rules relating to major integrated oil companies which are dual capacity taxpayers

“(1) General rule—Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a major integrated oil company (as defined in section 167(h)(5)(B)) to a foreign country or possession of the United States for any period shall not be considered a tax—

“(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

“(B) to the extent such amount exceeds the amount (determined in accordance with regulations) which—

“(i) is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or

“(ii) would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.

“(2) Dual capacity taxpayer—For purposes of this subsection, the term dual capacity taxpayer means, with respect to any foreign country or possession of the United States, a person who—

“(A) is subject to a levy of such country or possession, and

“(B) receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.

“(3) Generally applicable income tax—For purposes of this subsection—

“(A) In general—The term generally applicable income tax means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.

“(B) Exceptions—Such term shall not include a tax unless it has substantial application, by its terms and in practice, to—

“(i) persons who are not dual capacity taxpayers, and

“(ii) persons who are citizens or residents of the foreign country or possession.”

(b)

Effective Date—

(1)

In general— The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.

(2)

Contrary treaty obligations upheld— The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.

Sec. 203 Limitation on section 199 deduction attributable to oil, natural gas, or primary products thereof

(a)

Denial of deduction— Paragraph (4) of section 199(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(E) Special rule for certain oil and gas income—In the case of any taxpayer who is a major integrated oil company (as defined in section 167(h)(5)(B)) for the taxable year, the term domestic production gross receipts shall not include gross receipts from the production, transportation, or distribution of oil, natural gas, or any primary product (within the meaning of subsection (d)(9)) thereof.”

(b)

Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2013.

Sec. 204 Limitation on deduction for intangible drilling and development costs

(a)

In general— Section 263(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: “This subsection shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company (as defined in section 167(h)(5)(B)).”.

(b)

Effective date— The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2013.

Sec. 205 Limitation on percentage depletion allowance for oil and gas wells

(a)

In general— Section 613A of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(f) Application with respect to major integrated oil companies—In the case of any taxable year in which the taxpayer is a major integrated oil company (as defined in section 167(h)(5)(B)), the allowance for percentage depletion shall be zero.”

(b)

Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2013.

Sec. 206 Limitation on deduction for tertiary injectants

(a)

In general— Section 193 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(d) Application with respect to major integrated oil companies—This section shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company (as defined in section 167(h)(5)(B)).”

(b)

Effective date— The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2013.

Title II — Repeal of fossil fuel subsidies for big oil companies

II Repeal of fossil fuel subsidies for big oil companies