Sec. 506. Separate basket treatment taxes paid on foreign oil and gas income
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Paragraph
(1)of section 904(d) of the Internal Revenue Code of 1986 is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph
(B)and inserting , and , and by adding at the end the following: combined foreign oil and gas income (as defined in section 907(b)(1)). . Section 904(d)(2) of such Code is amended by redesignating subparagraphs
(J)and
(K)as subparagraphs
(K)and
(L)and by inserting after subparagraph
(I)the following: For purposes of this section, passive category income and general category income shall not include combined foreign oil and gas income (as defined in section 907(b)(1)). . Section 907(a) of such Code is hereby repealed. Section 907(c)(4) of such Code is hereby repealed. Section 907(f) of such Code is hereby repealed. The amendments made by this section shall apply to taxable years beginning after December 31, 2012. Any unused foreign oil and gas taxes which under section 907(f) of such Code (as in effect before the amendment made by subsection (c)(3)) would have been allowable as a carryover to the taxpayer’s first taxable year beginning after December 31, 2012 (without regard to the limitation of paragraph
(2)of such section 907(f) for first taxable year) shall be allowed as carryovers under section 904(c) of such Code in the same manner as if such taxes were unused taxes under such section 904(c) with respect to foreign oil and gas extraction income. The amendment made by subsection (c)(2) shall not apply to foreign oil and gas extraction losses arising in taxable years beginning on or before the date of the enactment of this Act.