S/V Drilling Partners, Snyder Armclar Gas Company, Tax Matters Partners - Page 10

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          those sources qualifies under section 29(c)(1), S/V is entitled             
          to claim a credit based on that 16,927 BOE’s of natural gas.                
               A taxpayer may claim a section 29 credit only for                      
          nonconventional fuel sold to an unrelated person during the                 
          taxable year.  See sec. 29(a)(2)(A).  This requirement suggests             
          double credits are not allowed because a producer would not sell            
          the same fuel twice.  Similarly, section 29(d)(5) defines BOE as            
          an amount of fuel that contains 5.8 million Btu’s.  This                    
          definition implies that double credits are not allowed for a BOE            
          of fuel because the effect would be to give a credit for each 2.9           
          million Btu’s.  Petitioner contends that the holding of True Oil            
          Co. v. Commissioner, 170 F.3d 1294 (10th Cir. 1999), affg.                  
          Nielson-True Partnership v. Commissioner, 109 T.C. 112 (1997), is           
          contrary to our conclusion.  We disagree.  True Oil Co. did not             
          involve whether the taxpayer was entitled to a double credit.               
               Section 29(c)(2)(A) provides that FERC, under NGPA,                    
          determines gas production classifications.  We held in True Oil             
          Co. v. Commissioner, supra, that FERC (not the taxpayer) must               
          determine gas production classifications.  Petitioner contends              
          that our result is inconsistent with the NGPA and True Oil Co. v.           
          Commissioner, supra.  We disagree.  We do not dispute that FERC             
          determines gas production classification.                                   

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