SECTION 8. DRAFTING

INFORMATION

The principal author of this notice is Paul S. Epstein of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in its development. For further information regarding this notice, contact Paul S. Epstein and Gregory Spring at (202) 622–3870 (not a toll-free call).

2005 Marginal Production Rates

Notice 2005–55

Section 613A(c)(6)(C) of the Internal Revenue Code defines the term “applicable percentage” for purposes of determining percentage depletion for oil and gas produced from marginal properties. The applicable percentage is the percentage (not greater than 25 percent) equal to the sum of 15 percent, plus one percentage point for each whole dollar by which $20 exceeds the reference price (determined under § 29(d)(2)(C)) for crude oil for the calendar year preceding the calendar year in which the taxable year begins. The reference price determined under § 29(d)(2)(C) for the 2004 calendar year is $36.75.

Table 1 contains the applicable percentages for marginal production for taxable years beginning in calendar years 1991 through 2005.

eligible to use the AUSBL method for a particular year may make a binding annual election to calculate excess interest under the AUSBL method by reference to the published 30-day average LIBOR rate for such year, rather than the actual foreign U.S. dollar borrowing rate prescribed in §1.882–5(d)(5), by using such rate to calculate its interest expense deduction on a timely filed original Federal income tax return for such year. The election provisions of §1.882–5(a)(7) shall apply on an annual basis without regard to the binding 5-year minimum period. Such taxpayers may begin using such rate for tax years ending on or after the date on which this notice is published.