Part III. Administrative, Procedural, and Miscellaneous

2009 Section 43 Inflation Adjustment

Notice 2009–73

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.

Notice 2009–73 TABLE 1

GNP IMPLICIT PRICE DEFLATORS

Because the reference price for the 2008 calendar year ($94.03) exceeds $28 multiplied by the inflation adjustment factor for the 2008 calendar year ($42.01) by $52.02, the enhanced oil recovery credit for qualified costs paid or incurred in 2009 is phased out completely.

Table 1 contains the GNP implicit price deflator used for the 2009 calendar year, as well as the previously published GNP implicit price deflators used for the 1991 through 2008 calendar years.

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)

• 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.

Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 2009

calendar year as well as the previously published inflation adjustment factors and phase-out amounts for taxable years be

ginning in the 1991 through 2008 calendar years.

2009–38 I.R.B. 369 September 21, 2009

Notice 2009–73 TABLE 2

INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS

Calendar Year Inflation Adjustment Factor Phase-out 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

DRAFTING INFORMATION

The principal author of this notice is Brian J. Americus of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Mr. Americus at (202) 622–3110 (not a toll-free call).

2009 Marginal Production Rates

Notice 2009–74

This notice announces the applicable percentage under § 613A of the Internal Revenue Code to be used in determining percentage depletion for marginal properties for the 2009 calendar year.

Section 613A(c)(6)(C) defines the term “applicable percentage” for purposes of determining percentage depletion for oil and gas produced from marginal properties. The applicable percentage is the per

centage (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 § 45K(d)(2)(C) for the 2008 calendar year is $94.03.

Table 1 contains the applicable percentages for marginal production for taxable years beginning in calendar years 1991 through 2009.

September 21, 2009 370 2009–38 I.R.B.

Notice 2009–74 Table 1

APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION

Calendar Year Applicable Percentage

1991 15 percent 1992 18 percent 1993 19 percent 1994 20 percent 1995 21 percent 1996 20 percent 1997 16 percent 1998 17 percent 1999 24 percent 2000 19 percent 2001 15 percent 2002 15 percent 2003 15 percent 2004 15 percent 2005 15 percent 2006 15 percent 2007 15 percent 2008 15 percent 2009 15 percent

occurred. See Superior Coach of Fla., Inc. v. Commissioner, 80 T.C. 895, 912 (1983). In computing the net § 481(a) adjustment, a taxpayer must take into account all relevant accounts. For example, the § 481(a) adjustment for a change in the proper time for deducting salary bonuses under § 461 should reflect any necessary adjustments for amounts of salary bonuses capitalized to inventory under § 263A.

Example . A taxpayer that is not required to use inventories uses the overall cash receipts and disbursements method and changes to an overall accrual method. The taxpayer has $120,000 of income earned but not yet received (accounts receivable) and $100,000 of expenses incurred but not yet paid (accounts payable) as of the end of the taxable year preceding the year of change. A positive § 481(a) adjustment of $20,000 ($120,000 accounts receivable less $100,000 accounts payable) is required as a result of the change.

.02 Changes to section 3.08, Definition of “under examination.”

(1) Change to section 3.08(1)(a) . Section 3.08(1)(a) of Rev. Proc. 2008–52 is modified to read as follows:

(1) In general . (a) Except as provided in sections 3.08(2), (3), (4), (5) and (6) of this revenue procedure, an examination of a taxpayer with respect to a federal income tax return begins on the date the taxpayer is contacted in any manner by a representative of the Internal Revenue Service (Service) for the purpose of scheduling any type of

The principal author of this notice is Brian J. Americus of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Mr. Americus at (202) 622–3110 (not a toll-free call).

26 CFR 601.204: Changes in accounting periods and in methods of accounting. (Also: Part I, §§ 118, 162, 167, 168, 263A, 446, 451; 461, 471, 472, 481, 904, 953; 1.118–2, 1.162–3, 1.162–4, 1.446–1, 1.446–5, 1.461–1, 1.471–2.)

Rev. Proc. 2009–39