12 2 STA T .385 2 PUBLIC LA W 11 0– 3 4 3 —O CT. 3 , 2008 SEC.402 .E LIM I NAT I O NO F T H E D IFFE R ENT TREATMENT OF FOREI G N OIL AND GAS E X TRACTION INCOME AND FOREIGN OIL RELATED INCOME FOR PU RPOSES OF THE FOREIGN TAX CREDIT. (a)INGE NE RAL.—Subsection s(a)an d (b) o f section 907 ( r e l atin g tos p ecial rules in case of foreign oil and gas inco m e) are amended to read as follo w s
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‘(a) R E DUCTIO NIN AM OUNT ALLO W EDA SF OREI G N T A XU NDER SECTION 90 1 .—In appl y ing section 901 , t h e amount of any foreign oil and gas ta x es paid or accrued (or deemed to ha v e been paid) during the taxable year which would (but for this subsection) be ta k en into account for purposes of section 901 shall be reduced by the amount (if any) by which the amount of such taxes exceeds the product of— ‘‘(1) the amount of the combined foreign oil and gas income for the taxable year, ‘‘( 2 ) multiplied by— ‘‘(A) in the case of a corporation, the percentage which ise q ual to the highest rate of tax specified under section 11(b), or ‘‘( B ) in the case of an individual, a fraction the numer - ator of which is the tax against which the credit under section 901(a) is taken and the denominator of which is the taxpayer ’ s entire taxable income. ‘‘(b) C OM B INED FOREIGN O IL AND GAS INCOME
FOREIGN OIL AND GAS TAXES.—For purposes of this section— ‘‘(1) COMBINED F OREIGN OIL AND GAS INCOME.—The term ‘combined foreign oil and gas income’ means, with respect to any taxable year, the sum of— ‘‘(A) foreign oil and gas extraction income, and ‘‘(B) foreign oil related income. ‘‘(2) FOREIGN OIL AND GAS TAXES.—The term ‘foreign oil and gas taxes’ means, with respect to any taxable year, the sum of— ‘‘(A) oil and gas extraction taxes, and ‘‘(B) any income, war profits, and excess profits taxes paid or accrued (or deemed to have been paid or accrued under section 902 or 9 6 0) during the taxable year with respect to foreign oil related income (determined without regard to subsection (c)( 4 )) or loss which would be taken into account for purposes of section 901 without regard to this section.’’. (b) RECA P TURE OF FOREIGN OIL AND GAS L OSSES.— P aragraph (4) of section 907(c) (relating to recapture of foreign oil and gas extraction losses by recharacteri z ing later extraction income) is amended to read as follows: ‘‘(4) RECAPTURE OF FOREIGN OIL AND GAS LOSSES B Y RE- C H ARACTERI Z ING LATER COMBINED FOREIGN OIL AND GAS INCOME.— ‘‘(A) IN GENERAL.—The combined foreign oil and gas income of a taxpayer for a taxable year (determined without regard to this paragraph) shall be reduced— ‘‘(i) first by the amount determined under subpara- graph (B), and ‘‘(ii) then by the amount determined under subparagraph (C). 26USC907.
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