89 STAT. 52
PUBLIC LAW 94-12—MAR. 29, 1975 determined under the table contained i n paragraph (3) (B) is allocated under paragraph (8) between the transferor and transferee. " ( 1 0) SPECIAL RUUE FOR FISCAL YEAR TAXPAYERS.—In a p p l y i n g
this subsection to a taxable year which is not a calendar year, each portion of such taxable year which occurs during a single calendar year shall be treated as if i t were a short taxable year. "(11)
CERTAIlSr PRODUCTION NOT TAKEN INTO ACCOUNT.—In
a p p l y i n g this subsection, there shall not be taken into account the production of n a t u r a l g a s with respect to which subsection (b) applies. " (d) LIMITATIONS ON APPLICATION OF SUBSECTION (C). — " (1) L I M I T A T I O N BASED ON TAXABLE I N C O M E. — The deduction
26 USC 172. 26 USC 1212.
for the taxable year attributable to the application of subsection (C) shall not exceed 65 percent of the taxpayer's taxable income for the year computed without regard to — (A) depletion with respect to production of oil and g a s subject to the provisions of subsection (c), " (B) any n e t operating loss carryback to the taxable year under section 172, and " (C) any capital loss carryback to the taxable year under section 1212. I f an amount is disallowed as a deduction for the taxable year by reason of application of the preceding sentence, the disallowed amount shall be treated as an amount allowable as a deduction under subsection (c) for the following taxable year, subject to the application of the preceding sentence to such taxable year. For purposes of basis adjustments and determining whether cost depletion exceeds percentage depletion with respect to the production from a property, any amount disallowed as a deduction on the application of this paragraph shall be allocated to the respective properties from which the oil or ^as was produced i n proportion to the percentage depletion otherwise allowable to such properties under subsection (c). " (2) RETAILERS EXCLUDED.—Subsection (c) shall not a p p l y in
the case of any tax p a y e r Avho directly, or through a related person, sells oil or n a t u r a l gas, or any product derived from oil or n a t u r a l gas— " (A) through any retail outlet operated by the taxpayer or a related person, or " (B) to any person— " (i) obligated under a n agreement o r contract w i t h the tax p a y e r or a related person to use a trade m a r k, trade name, o r service m a r k o r name owned by such tax p a y e r o r a related person, in m a r k e t i n g or distributing oil or natural gas or any product derived from oil or n a t u r a l gas, or " (ii) given authority, pursuant to an agreement or contract with the tax p a y e r or a related person, to occupy any retail outlet owned, leased, or in any way controlled by the tax p a y e r o r a related person. " (3) RELATED PERSON.—For purposes of this subsection, a person is a related person with respect to the taxpayer if a significant ownership interest i n either the taxpayer or such person is held by the other, or if a t h i r d person has a significant ownership interest in both the tax p a y e r and such person. For purposes of the
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