The Working Families Tax Relief Act of 2004 [18] was signed into law on October 13, 2004. Primarily, the Act reduces taxes for individuals and businesses. At least two provisions relate to energy. 

Depletion of Marginal Properties 

Section 314 extends to oil and gas an exemption for marginal properties from the 100 percent of net income limitation on the percentage of assets that can be depleted in a year for tax purposes. In computing taxable income, oil and gas producers generally receive a reasonable allowance for depletion and for depreciation of improvements, based on the amount of resource extracted. Under current law, the deduction cannot exceed 100 percent of taxable income from the property (computed without allowance for depletion). An exemption from the limitation, allowing the deduction to exceed 100 percent of taxable income for production from marginal properties expired on December 31, 2003. 

This provision extends the exemption to January 1, 2006. The exemption is applicable only to “marginal production,” which is defined as production coming from property that is a stripper well property or a property from which substantially all the production is heavy oil (weighted average gravity of 20 degrees API or less). A stripper well property is a property from which the average production per well is less than 15 barrels of crude oil equivalent per day. Because production from stripper well properties and production of heavy oil are not projected separately from total oil and gas production in the EIA modeling framework, the impact of this provision is not quantified in AEO2005. 

Qualified Vehicles 

Sections 318 and 319 repeal the phaseout of credits allowed for qualified electric and clean fuel vehicles for property acquired in 2004 and 2005. For vehicles acquired in 2006, the 2004 and 2005 credits of $2,000 for clean fuel vehicles and $4,000 for electric vehicles are reduced by 75 percent. This provision is not included in AEO2005.

[18] This section describes the bill known as P.L. 108-311 (H.R. 1308), “Working Families Tax Relief Act of 2004.” For the full text of the bill, see web site http://frwebgate. access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_ public_ laws&docid=f:publ311.108.pdf.

Contact: Sean Hill
Phone: 202-586-4247
E-mail: sean.hill@eia.doe.gov