SECTION 4. CALCULATION OF
Internal Revenue Bulletin 2020-21 · 2026-10-03 edition · updated 2026-10-04 · United States
CREDIT AMOUNT
Under § 45I(b)(1)(B) and (2)(B), the tentative credit amount used to calculate the MWC for taxable years beginning in calendar year 2019 is 65 cents per Mcf ($0.50 x 1.3015 inflation adjustment fac
1 https://data.bls.gov/cgi-bin/srgate. The BLS publishes indexes and not actual or average prices.
Bulletin No. 2020–21 839 May 18, 2020
tor). To determine the credit amount for purposes of § 45I(a)(1), the tentative credit amount must be reduced as provided by § 45I(b)(2)(A).
Pursuant to § 45I(b)(2)(A), the tentative credit amount for taxable years
beginning in calendar year 2019 is reduced (but not below zero) by an amount (§ 45I(b)(2) Reduction Amount) which bears the same ratio to the tentative credit amount as (i) the excess (if any) of the applicable reference price over $2.17
($1.67 x 1.3015 inflation adjustment factor), bears to (ii) $0.43 ($0.33 x 1.3015 inflation adjustment factor). Accordingly, the § 45I(b)(2) Reduction Amount (as adjusted for inflation) is computed as follows:
§ 45 I ( b )(2) Red. Amount App. Ref. Price – 2.17
0.65 0.43
Solving for the § 45 I ( b )(2) Red. Amount yields the following formula:
0.65 x ( App. Ref. Price – 2.17) § 45 I ( b )(2) Red. Amount = 0.43
Using the applicable reference price of $2.55, the § 45I(b)(2) Reduction Amount is $0.57. Therefore, the credit amount used to calculate the MWC for taxable years beginning in calendar year 2019 is $0.08 per mcf ($0.65 - $0.57).
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