H.R. 1329 - Surface Transportation Investment Act of 2021

TITLE I — CLOSE BIG OIL TAX LOOPHOLES

Sec. 2. Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers.

Sec. 3. Limitation on deduction for intangible drilling and development costs; amortization of disallowed amounts.

Sec. 4. Limitation on percentage depletion allowance for oil and gas wells.

Sec. 5. Limitation on deduction for tertiary injectants.

Sec. 6. Modification of definition of major integrated oil company.

TITLE II — TRANSPORTATION BLOCK GRANTS

Sec. 201. Use of revenue for transportation block grants.

TITLE I — CLOSE BIG OIL TAX LOOPHOLES

SEC. 2. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO MAJOR INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS.

(a) IN GENERAL. — Section 901 of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

"(n) SPECIAL RULES RELATING TO MAJOR INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS. —

"(1) GENERAL RULE. — Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a major integrated oil company (within the meaning of section 167(h)(5)) to a foreign country or possession of the United States for any period shall not be considered a tax —

"(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

"(B) to the extent such amount exceeds the amount (determined in accordance with regulations) which —

"(i) is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or

"(ii) would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.

Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).

"(2) DUAL CAPACITY TAXPAYER. — For purposes of this subsection, the term 'dual capacity taxpayer' means, with respect to any foreign country or possession of the United States, a person who —

"(A) is subject to a levy of such country or possession, and

"(B) receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.

"(3) GENERALLY APPLICABLE INCOME TAX. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'generally applicable income tax' means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.

"(B) EXCEPTIONS. — Such term shall not include a tax unless it has substantial application, by its terms and in practice, to —

"(i) persons who are not dual capacity taxpayers, and

"(ii) persons who are citizens or residents of the foreign country or possession.".

(b) EFFECTIVE DATE. —

(1) IN GENERAL. — The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.

(2) CONTRARY TREATY OBLIGATIONS UPHELD. — The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.

SEC. 3. LIMITATION ON DEDUCTION FOR INTANGIBLE DRILLING AND DEVELOPMENT COSTS; AMORTIZATION OF DISALLOWED AMOUNTS.

(a) IN GENERAL. — Section 263(c) of the Internal Revenue Code of 1986 is amended to read as follows:

"(c) INTANGIBLE DRILLING AND DEVELOPMENT COSTS IN THE CASE OF OIL AND GAS WELLS AND GEOTHERMAL WELLS. —

"(1) IN GENERAL. — Notwithstanding subsection (a), and except as provided in subsection (i), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Concurrent Resolution 50, Seventy-ninth Congress. Such regulations shall also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(2)) to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells. This subsection shall not apply with respect to any costs to which any deduction is allowed under section 59(e) or 291.

"(2) EXCLUSION. —

"(A) IN GENERAL. — This subsection shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company (within the meaning of section 167(h)(5)).

"(B) AMORTIZATION OF AMOUNTS NOT ALLOWABLE AS DEDUCTIONS UNDER SUBPARAGRAPH (A). — The amount not allowable as a deduction for any taxable year by reason of subparagraph (A) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred. For purposes of section 1254, any deduction under this subparagraph shall be treated as a deduction under this subsection.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2021.

SEC. 4. LIMITATION ON PERCENTAGE DEPLETION ALLOWANCE FOR OIL AND GAS WELLS.

(a) IN GENERAL. — Section 613A of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

"(f) APPLICATION WITH RESPECT TO MAJOR INTEGRATED OIL COMPANIES. — In the case of any taxable year in which the taxpayer is a major integrated oil company (within the meaning of section 167(h)(5)), the allowance for percentage depletion shall be zero.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 5. LIMITATION ON DEDUCTION FOR TERTIARY INJECTANTS.

(a) IN GENERAL. — Section 193 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

"(d) APPLICATION WITH RESPECT TO MAJOR INTEGRATED OIL COMPANIES. —

"(1) IN GENERAL. — This section shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company (within the meaning of section 167(h)(5)).

"(2) AMORTIZATION OF AMOUNTS NOT ALLOWABLE AS DEDUCTIONS UNDER PARAGRAPH (1). — The amount not allowable as a deduction for any taxable year by reason of paragraph (1) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2021.

SEC. 6. MODIFICATION OF DEFINITION OF MAJOR INTEGRATED OIL COMPANY.

(a) IN GENERAL. — Section 167(h)(5) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

"(C) CERTAIN SUCCESSORS IN INTEREST. — For purposes of this paragraph, the term 'major integrated oil company' includes any successor in interest of a company that was described in subparagraph (B) in any taxable year, if such successor controls more than 50 percent of the crude oil production or natural gas production of such company.".

(b) CONFORMING AMENDMENTS. —

(1) IN GENERAL. — Section 167(h)(5)(B) of the Internal Revenue Code of 1986 is amended by inserting "except as provided in subparagraph (C)," after "For purposes of this paragraph,".

(2) TAXABLE YEARS TESTED. — Section 167(h)(5)(B)(iii) of such Code is amended —

(A) by striking "does not apply by reason of paragraph (4) of section 613A(d)" and inserting "did not apply by reason of paragraph (4) of section 613A(d) for any taxable year after 2004", and

(B) by striking "does not apply" in subclause (II) and inserting "did not apply for the taxable year".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

TITLE II — TRANSPORTATION BLOCK GRANTS

SEC. 201. USE OF REVENUE FOR TRANSPORTATION BLOCK GRANTS.

(a) IN GENERAL. — Subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

"SEC. 9512. TRANSPORTATION BLOCK GRANT FUND.

"(a) ESTABLISHMENT. — There is established in the Treasury a fund to be known as the 'Transportation Block Grant Fund' consisting of such amounts as may be appropriated or credited to the fund as provided in this section or section 9602(b).

"(b) TRANSFER TO FUND. — There is hereby appropriated to the fund such amounts as the Secretary estimates are equivalent to the increase in revenue received in the Treasury by reason of the enactment of title I of the Surface Transportation Investment Act of 2021, and the amendments made thereby.

"(c) EXPENDITURES FROM THE FUND. — Amounts in the fund shall be available for making grants under the surface transportation block grant program established under section 133 of title 23, United States Code.".

(b) CLERICAL AMENDMENT. — The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following new item:

"Sec. 9512. Transportation Block Grant Fund.".