SLS 161ES-143 ORIGINAL
2016 First Extraordinary Session
SENATE BILL NO. 23
BY SENATOR MORRELL
TAX/INCOME/CORPORATE. Limits the deduction for intangible drilling and
development costs used in the computation of the Louisiana net income of a corporation.
(Item #5)(gov sig)
1 AN ACT
2 To enact R.S. 47:287.743(D), relative to the computation of Louisiana net income; to
3 modify the deduction for intangible drilling and development costs; to provide for
4 an effective date; and to provide for related matters.
5 Be it enacted by the Legislature of Louisiana:
6 Section 1. R.S. 47:287.743(D) is hereby enacted to read as follows:
7 ยง287.743. Deductions from gross income; charges in case of oil and gas wells
8 * * *
9 D.(1) Notwithstanding any other provision of law to the contrary, the
10 allowable deduction under this Section for oil and natural gas wells for which
11 the oil or natural gas severance tax horizontal drilling exemption under R.S.
12 47:633(7)(d) has been utilized shall only include intangible drilling and
13 development costs used to calculate "payout of well cost" as follows:
14 (a) When the exemption under R.S. 47:633(7)(d) is one hundred percent,
15 no deduction under this Section for intangible drilling and development costs
16 shall be taken.
17 (b) When the exemption under R.S. 47:633(7)(d) is eighty percent, twenty
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 23
SLS 161ES-143 ORIGINAL
1 percent of the deduction for intangible drilling and development costs otherwise
2 authorized under this Section may be taken.
3 (c) When the exemption under R.S. 47:633(7)(d) is sixty percent, forty
4 percent of the deduction for intangible drilling and development costs otherwise
5 authorized under this Section may be taken.
6 (d) When the exemption under R.S. 47:633(7)(d) is forty percent, sixty
7 percent of the deduction for intangible drilling and development costs otherwise
8 authorized under this Section may be taken.
9 (e) When the exemption under R.S. 47:633(7)(d) is twenty percent, eighty
10 percent of the deduction for intangible drilling and development costs otherwise
11 authorized under this Section may be taken.
12 (f) When the exemption under R.S. 47:633(7)(d) is not taken, or not
13 authorized by law, one hundred percent of the deduction for intangible drilling
14 and development costs otherwise authorized under this Section may be taken.
15 (g) "Payout of well cost" shall have the same meaning as provided in R.S.
16 47:633(7)(d) and the regulations thereunder.
17 (2) The provisions of this Subsection shall supercede and control to the
18 extent of conflict with any other provision of law.
19 Section 2. This Act shall be known as the "Kennedy Plan".
20 Section 3. The provisions of this Act shall be applicable to taxable periods beginning
21 on or after January 1, 2016.
22 Section 4. This Act shall become effective upon signature by the governor or, if not
23 signed by the governor, upon expiration of the time for bills to become law without signature
24 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
25 vetoed by the governor and subsequently approved by the legislature, this Act shall become
26 effective on the day following such approval.
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Leonore Heavey.
DIGEST
SB 23 Original 2016 First Extraordinary Session Morrell
Present law authorizes a corporate income tax deduction for intangible drilling and well
costs.
Present law provides an exemption from oil and gas severance tax for horizontal wells that
continues for 24 months or until payout of well cost is met, whichever comes first. The
current rate of this exemption is 100%; however, the rate fluctuates with the market price
of oil and gas.
Proposed law modifies the corporate income tax deduction by disallowing the deduction for
any intangible drilling and well costs that are used to calculate well cost payout for purposes
of the horizontal drilling severance tax exemption.
Applicable to taxable periods beginning on or after January 1, 2016.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 47:287.743(D))
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.