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Understanding Regulated Natural Gas [Internal Revenue]: Key Legal Definitions
Definition & Meaning
Regulated natural gas refers to domestic natural gas that meets specific criteria set by the Internal Revenue Service (IRS) under 26 CFR 1.613A-7. For natural gas to be classified as regulated, it must have been produced and sold before July 1, 1976, and must meet several conditions related to pricing and regulatory oversight. This classification is important for tax purposes, particularly concerning deductions related to the depletion of natural resources.
Table of content
Legal Use & context
This term is primarily used in tax law, particularly in the context of income tax deductions for natural resource extraction. Legal practitioners may encounter this term when advising clients in the energy sector or when dealing with tax-related issues involving natural gas sales. Users can manage some aspects of this process using legal templates provided by services like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A natural gas producer sells gas that was extracted and sold before the cutoff date. The sale was regulated by the Federal Power Commission, and the pricing was influenced by the Commission's orders. This sale qualifies as regulated natural gas.
Example 2: A producer sells gas after February 1, 1975, but can demonstrate that price increases were due to factors unrelated to tax adjustments, thus maintaining its regulated status. (hypothetical example)
Relevant laws & statutes
The primary regulation governing regulated natural gas is found in 26 CFR 1.613A-7. This section outlines the requirements for classification and the implications for tax deductions related to natural gas production.
State-by-state differences
State
Regulation Overview
Texas
Regulations may vary based on local energy policies and the Texas Railroad Commission's oversight.
California
Strict environmental regulations may impact the classification and sale of natural gas.
Alaska
State-specific laws may influence the pricing and regulation of natural gas sales.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Natural Gas
A fossil fuel used for heating and energy.
Regulated natural gas refers specifically to gas meeting IRS criteria for tax purposes.
Percentage Depletion
A tax deduction method for natural resource extraction.
Related to tax treatment but not specific to the regulatory status of the gas.
Common misunderstandings
What to do if this term applies to you
If you believe your natural gas sales may qualify as regulated, consider the following steps:
Review your sales history to determine if they meet the criteria outlined by the IRS.
Consult with a tax professional to understand your eligibility for deductions.
Explore US Legal Forms for templates that can assist in documenting your compliance with regulatory requirements.
For complex situations, seeking professional legal advice is recommended.
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