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United States. See sec. 4986(a). Under the Windfall Profit Tax
Act, the applicable tax rate is applied to the windfall profit
per barrel. The windfall profit per barrel is generally
calculated under section 4988(a) by subtracting the applicable
adjusted base price of each crude barrel of oil, and a severance
tax adjustment, from the removal price. After this calculation
has been performed, section 4988(b)(1) limits the taxable
windfall profit on any barrel of crude oil to not more than 90
percent of the net income attributable to that barrel of oil.
Pursuant to section 4988(b)(2), the NIL attributable to a
barrel of oil for WPT purposes is generally calculated by
determining "taxable income from the property" from which a
barrel is produced for the taxable year, divided by the number of
barrels of taxable crude oil from such property taken into
account for such taxable year. In computing the "taxable income
from the property", a taxpayer deducts both direct and indirect
(overhead) expenditures related to that property.
The term "taxable income from the property" generally has
the same meaning that it has for purposes of the NIL on the
deduction for percentage depletion under section 613(a).17 As
17 Sec. 4988(b) provides, in pertinent part, as follows:
SEC. 4988(b)(3). Taxable income from the property.--For
purposes of this subsection--
(A) In general.--Except as otherwise provided in this
paragraph, the taxable income from the property shall be
(continued...)
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