Page:United States Statutes at Large Volume 104 Part 2.djvu/897

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PUBLIC LAW 101-508 —NOV. 5, 1990 104 STAT. 1388-489 "(ii) the total intangible drilling and development costs with respect to which the taxpayer may make an election under section 263(c) for the taxable year. " (5) MARGINAL PRODUCTION DEPLETION PREFERENCE. — For purposes of this subsection, the term 'marginal production depletion preference' means the amount by which alternative minimum taxable income would be reduced if it were computed as if section 57(a)(1) and subsection (g)(4)(G) did not apply to any allowance for depletion determined under section 613A(c)(6). "(6) QUALIFIED EXPLORATORY COSTS.— For purposes of this subsection— "(A) IN GENERAL.—The term 'qualified exploratory costs' means intangible drilling and development costs of a taxpayer other than an integrated oil company which— "(i) the taxpayer may elect to deduct as expenses under section 263(c), and "(ii) are paid or incurred in connection with the drilling of an exploratory well located in the United States (within the meaning of section 638(1)). "(B) EXPLORATORY WELL.— The term 'exploratory well' means any of the following oil or gas wells: "(i) An oil or gas well which is completed (or if not completed, with respect to which drilling operations cease) before the completion of any other well which— "(I) is located within 1.25 miles from the well, and "(II) is capable of production in commercial quantities, "(ii) An oil or gas well which is not described in clause (i) but which has a total depth which is at least 800 feet below the deepest completion depth of any well within 1.25 miles which is capable of production in commercial quantities. "(iii) An oil or gas well capable of production in commercial quantities which is not described in clause (i) or (ii) but which is completed into a new reservoir, except that this clause shall not apply to a gas well if the gas is produced (or to be produced) from Devonian shale, coal seams, or a tight formation (determined in a manner similar to the manner under section 29(c)(2)). A well shall not be treated as an exploratory well unless the operator submits to the Secretary (at such time and in such manner as the Secretary may provide) a certification from a petroleum engineer that the well is described in one of the preceding clauses. "(C) CERTAIN COSTS NOT INCLUDED. —The term 'qualified exploratory costs' shall not include any cost paid or incurred— "(i) in constructing, acquiring, transporting, erecting, or installing an offshore platform, or "(ii) with respect to the drilling of a well from an offshore platform unless it is the first well which penetrates a reservoir. "(D) INTEGRATED OIL COMPANY. — For purposes of this paragraph, the term 'integrated oil company means, with respect to any taxable year, any producer of crude oil to 9-194O-91-29:QL3Part2