SECTION 6. DRAFTING

INFORMATION

The principal author of this notice is Lauren Ross Taylor of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Ms. Taylor at (202) 622–3040 (not a toll-free call).

2006 Marginal Production Rates

Notice 2006–61

This notice announces the applicable percentage under section 613A of the Internal Revenue Code to be used in determining percentage depletion for marginal properties for the 2006 calendar year.

Section 613A(c)(6)(C) of the 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 § 45K(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 2005 calendar year is $50.26.

Table 1 contains the applicable percentages for marginal production for taxable years beginning in calendar years 1991 through 2006.

(non-qualifying tangible property usage); and

(C) at least 40 percent of the services performed for the entity by its employees are performed in one or more non-qualifying population census tracts (non-qualifying services performance).

(ii) The entity is considered to have the non-qualifying gross income amount if the entity has non-qualifying tangible property usage or non-qualifying services performance of at least 50 percent instead of 40 percent.

(iii) If the entity has no employees, the entity is considered to have the non-qualifying gross income amount as well as non-qualifying services performance if at least 85 percent of the use of the tangible property of the entity (whether owned or leased) is within one or more non-qualifying population census tracts.

(5) Rental of Real Property for the GO Zone Targeted Population . In addition, § 1.45D–1(d)(5)(ii) will be amended to provide that the rental to others of real property for the GO Zone Targeted Population that otherwise satisfies the requirements to be a qualified business will be treated as located in a low-income community if at least 50 percent of the entity’s total gross income is derived from rentals to the GO Zone Targeted Population, low-income persons as defined in section 3.03 of this notice, or some combination thereof and/or to a QALICB that meets the requirements for the GO Zone Targeted Population under section 3.04(3)(a)(i) or (ii) of this notice.