Section 11.83.220. Development account credits.

	(a)  For purposes of (b) and (c) of this section, a lessee's qualified development costs are development costs as defined in 11 AAC 83.219 less  
		(1) general overhead and administrative expense;  
		(2) ad valorem tax;  
		(3) lease rentals;  
		(4) capital access fees for use of a production facility in existence before the commencement of commercial production from the NPSL; and  
		(5) the product of  $.30 multiplied by the amount of the lessee's working interest Btu-equivalents of oil and gas produced during the month, including any overriding royalty share of oil and gas but not including the state's royalty share of oil or gas.  
	(b)  A lessee's qualified development costs incurred during a month after March 2006 and before January 2014 generate a credit against the development account in that month.  Except as otherwise provided in this subsection, the credit is equal to 20 percent of the qualified development costs.  For a month after June 2007 and before January 2014, half of the credit is discounted for one year based on the annualized monthly interest rate for the development account applicable to the month the qualified development costs are incurred.  In addition, the commissioner may approve a discount to the credit if the lessee shows by clear and convincing evidence that the lessee cannot either  
		(1) use the qualified development costs to reduce its own production tax liability for the calendar year under AS 43.55; or  
		(2) realize the full value of the credit by using or selling a tax credit under AS 43.55  based on the qualified development costs.  
	(c)  In addition to the credit provided under (b) of this section, a lessee's qualified development costs incurred during a month before commercial production commences and after March 2006 generates a credit against the development account in that month.  For a month before July 2007, the credit is equal to 20 percent of the qualified development costs.  For a month after June 2007 and before January 2014, the credit is equal to 25 percent of the qualified development costs. For a month after December 2013, the credit is equal to 35 percent of the qualified development costs. The commissioner may approve a discount to the credit if the lessee shows by clear and convincing evidence that the lessee cannot either  
		(1) use the qualified development costs to reduce its own production tax liability for the calendar year under AS 43.55; or  
		(2) realize the full value of the credit by using or selling a tax credit under AS 43.55  based on the qualified development costs.  

Authorities

38.05.020;38.05.180

Notes

Reference

11 AAC 83.212
11 AAC 83.245
11 AAC 83.290

Authority

AS 38.05.020 AS 38.05.180

History

Eff. 2/13/2010, Register 193; am 1/9/2014, Register 209