Nielson-True Partnership, True Oil Company, Tax Matters Partner - Page 1

                                   109 T.C. No. 6                                     

                               UNITED STATES TAX COURT                                

                     NIELSON-TRUE PARTNERSHIP, TRUE OIL COMPANY,                      
                  TAX MATTERS PARTNER, Petitioner v. COMMISSIONER                     
                           OF INTERNAL REVENUE, Respondent                            

               Docket Nos. 12069-95, 3980-96.      Filed September 9, 1997.           

                    P owned an interest in two wells in the same tight                
               formation gas field.  The field had been established                   
               under statutory procedures as a tight formation field.                 
               One well had been certified as producing tight                         
               formation gas under the established Federal statutory                  
               procedures, and the other had not.  Congress provided a                
               tax credit incentive to develop, among other fuels,                    
               tight formation gas.  Sec. 29(c)(2)(A), I.R.C.,                        
               requires that, as a prerequisite to the credit, "the                   
               determination of whether any gas is produced from * * *                
               a tight formation shall be made in accordance with                     
               section 503 of the Natural Gas Policy Act of 1978                      
               [NGPA]", Pub. L. 95-621, 92 Stat. 3350, 3397, 15 U.S.C.                
               sec. 3413 (1988).  NGPA sec. 503 was also the                          
               procedural route to qualifying individual tight                        
               formation gas wells for incentive (higher than ceiling)                
               price treatment administered by the Federal Energy                     
               Regulatory Commission (FERC).  Under NGPA sec. 503,                    

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