[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.907(a)-0]

[Page 747-748]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.907(a)-0  Introduction (for taxable years beginning after December 31, 1982).

    (a) Effective dates. The provisions of Secs. 1.907(a)-0 through 
1.907(f)-1 apply to taxable years beginning after December 31, 1982. For 
provisions that apply to taxable years beginning before January 1, 1983, 
see Secs. 1.907(a)-0A through 1.907(f)-1A.
    (b) Key terms. For purposes of the regulations under section 907--
    (1) FOGEI means foreign oil and gas extraction income.
    (2) FORI means foreign oil related income.
    (3) FOGEI taxes mean foreign oil and gas extraction taxes as defined 
in section 907(c)(5).
    (4) FORI taxes means foreign taxes on foreign oil related income. 
See Sec. 1.907(c)-3.
    (c) FOGEI tax limitation. Section 907(a) limits the foreign tax 
credit for taxes paid or accrued on FOGEI. See Sec. 1.907(a)-1.
    (d) Reduction of creditable FORI taxes. Section 907(b) 
recharacterizes FORI taxes as non-creditable deductible expenses to the 
extent that the foreign law imposing the FORI taxes is structured, or in 
fact operates, so that the amount of tax imposed with respect to FORI 
will be materially greater, over a reasonable period of time, than the 
amount generally imposed on income that is neither FOGEI nor FORI. See 
Sec. 1.907(b)-1.
    (e) FOGEI and FORI. FOGEI includes the taxable income from the 
extraction of minerals from oil or gas wells by a taxpayer (or another 
person) and from the sale or exchange of assets used in the extraction 
business. FORI includes taxable income from the activities of processing 
oil and gas into their primary products, transporting or distributing 
oil and gas and their primary products, and from the disposition of 
assets used in these activities. For this purpose, a disposition 
includes only a sale or exchange. FOGEI and FORI may also include 
taxable income from the performance of related services or from the 
lease of related property and certain dividends, interest, or amounts 
described in section 951(a). See Secs. 1.907(c)-1 through 1.907(c)-3.
    (f) Posted prices. Certain sales prices are disregarded when 
computing FOGEI for purposes of chapter 1 of the Code. See 
Sec. 1.907(d)-1.
    (g) Transitional rules. Section 907(e) provides rules for the 
carryover of unused FOGEI taxes from taxable years beginning before 
January 1, 1983, and carryback of FOGEI taxes arising in taxable years 
beginning after December 31, 1982. See Sec. 1.907(e)-1.
    (h) Section 907(f) carrybacks and carryovers. FOGEI taxes disallowed 
under section 907(a) may be carried back or forward to other taxable 
years. These FOGEI taxes may be absorbed in another taxable year to the 
extent of

[[Page 748]]

the lesser of the separate excess extraction limitation or the excess 
limitation in the general limitation category (section 904(d)(1)(I)) for 
the carryback or carryover year. See Sec. 1.907(f)-1.
    (i) Statutes covered. The regulations under section 907 are issued 
as a result of the enactment of section 601 of the Tax Reduction Act of 
1975, of section 1035 of the Tax Reform Act of 1976, of section 
301(b)(14) of the Revenue Act of 1978, of section 211 of the Tax Equity 
and Fiscal Responsibility Act of 1982 and of section 1012(g)(6) (A)-(B) 
of the Technical and Miscellaneous Revenue Act of 1988.

[T.D. 8338, 56 FR 11065, Mar. 15, 1991]