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IRS Publishes Oil Recovery Credit Inflation Adjustment Factors.

NOV. 15, 2010

Notice 2010-72; 2010-46 I.R.B. 661

DATED NOV. 15, 2010
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Citations: Notice 2010-72; 2010-46 I.R.B. 661
2010 Section 43 Inflation Adjustment

Part III. Administrative, Procedural, and Miscellaneous

Section 43(b)(3)(B) of the Internal Revenue Code requires the Secretary to publish an inflation adjustment factor. The enhanced oil recovery credit under § 43 for any taxable year is reduced if the "reference price," determined under § 45K(d)(2)(C), for the calendar year preceding the calendar year in which the taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year. The credit is phased out in any taxable year in which the reference price for the preceding calendar year exceeds $28 (as adjusted) by at least $6.

The term "inflation adjustment factor" means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990.

Because the reference price for the 2009 calendar year ($56.39) exceeds $28 multiplied by the inflation adjustment factor for the 2009 calendar year ($42.57) by $13.82, the enhanced oil recovery credit for qualified costs paid or incurred in 2010 is phased out completely.

Table 1 contains the GNP implicit price deflator used for the 2010 calendar year, as well as the previously published GNP implicit price deflators used for the 1991 through 2009 calendar years.

                           Notice  2010-72  TABLE  1

 

                          GNP IMPLICIT PRICE DEFLATORS

 

 ______________________________________________________________________________

 

 

          Calendar Year              GNP Implicit Price Deflator

 

 ______________________________________________________________________________

 

 

               1990                      112.9    (used for 1991)

 

               1991                      117.0    (used for 1992)

 

               1992                      120.9    (used for 1993)

 

               1993                      124.1    (used for 1994)

 

               1994                      126.0    (used for 1995)*

 

               1995                      107.5    (used for 1996)

 

               1996                      109.7    (used for 1997)**

 

               1997                      112.35   (used for 1998)

 

               1998                      112.64   (used for 1999)***

 

               1999                      104.59   (used for 2000)

 

               2000                      106.89   (used for 2001)

 

               2001                      109.31   (used for 2002)

 

               2002                      110.63   (used for 2003)

 

               2003                      105.67   (used for 2004)****

 

               2004                      108.23   (used for 2005)

 

               2005                      112.129  (used for 2006)

 

               2006                      116.036  (used for 2007)

 

               2007                      119.656  (used for 2008)

 

               2008                      122.407  (used for 2009)

 

               2009                      109.764  (used for 2010)*****

 

 

                              FOOTNOTES TO TABLE 1

 

 

      * Beginning in 1995, the GNP implicit price deflator was rebased

 

 relative to 1992. The 1990 GNP implicit price deflator used to compute the

 

 1996 § 43 inflation adjustment factor is 93.6.

 

 

      ** Beginning in 1997, two digits follow the decimal point in the

 

 GNP implicit price deflator. The 1990 GNP price deflator used to compute the

 

 1998 § 43 inflation adjustment factor is 93.63.

 

 

      *** Beginning in 1999, the GNP implicit price deflator was

 

 rebased relative to 1996. The 1990 GNP implicit price deflator used to

 

 compute the 2000 § 43 inflation adjustment factor is 86.53.

 

 

      **** Beginning in 2003, the GNP implicit price deflator was

 

 rebased, and the 1990 GNP implicit price deflator used to compute the 2004

 

 § 43 inflation adjustment factor is 81.589.

 

 

      ***** Beginning in 2009, the GNP implicit price deflator was

 

 rebased, and the 1990 GNP implicit price deflator used to compute the 2010

 

 § 43 inflation adjustment factor is 72.199.

 

 

                          END OF FOOTNOTES TO TABLE 1

 

 

Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 2010 calendar year as well as the previously published inflation adjustment factors and phase-out amounts for taxable years beginning in the 1991 through 2009 calendar years.

                            2010-72 TABLE 2

 

          INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS

 

 __________________________________________________________________

 

 

   Calendar           Inflation Adjustment           Phase-out

 

    Year                    Factor                     Amount

 

 __________________________________________________________________

 

 

    1991                  1.0000                         0

 

    1992                  1.0363                         0

 

    1993                  1.0708                         0

 

    1994                  1.0992                         0

 

    1995                  1.1160                         0

 

    1996                  1.1485                         0

 

    1997                  1.1720                         0

 

    1998                  1.1999                         0

 

    1999                  1.2030                         0

 

    2000                  1.2087                         0

 

    2001                  1.2353                         0

 

    2002                  1.2633                         0

 

    2003                  1.2785                         0

 

    2004                  1.2952                         0

 

    2005                  1.3266                         0

 

    2006                  1.3743                    100  percent

 

    2007                  1.4222                    100  percent

 

    2008                  1.4666                    100  percent

 

    2009                  1.5003                    100  percent

 

    2010                  1.5203                    100  percent

 

 

DRAFTING INFORMATION

The principal author of this notice is Martha S. McRee of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Ms. McRee at (202) 622-3110 (not a toll-free call).

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