114 T.C. No. 4
UNITED STATES TAX COURT
S/V DRILLING PARTNERS,
SNYDER ARMCLAR GAS COMPANY, TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14163-98. Filed February 23, 2000.
Sec. 29, I.R.C., provides a credit for fuel
produced from nonconventional sources, including gas
produced from geopressurized brine, Devonian shale,
coal seams, or a tight formation.
In 1993 and 1994, S/V, a partnership, sold 32,410
barrels of oil equivalent (BOE’s) of natural gas
produced from nonconventional sources described under
sec. 29, I.R.C. S/V sold 15,483 BOE’s of gas produced
from a tight formation that was not Devonian shale and
16,927 BOE’s of gas produced from both a tight
formation and Devonian shale.
Held: S/V is allowed a credit for 32,410 BOE’s of
natural gas. The credit rate is (1) 15,483 times $3,
and (2) 16,927 times $3 indexed as provided in the
first sentence of sec. 29(b)(2), I.R.C.
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