article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Winter Readiness Act of 2005''. SEC. 2. TEMPORARY EXPENSING OF OIL AND NATURAL GAS EXPLORATION AND PRODUCTION PROPERTY AND OF COSTS TO REPAIR DAMAGES TO SUCH PROPERTY FROM 2005 HURRICANES. (a) In General.--Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 179D the following new section: ``SEC. 179E. TEMPORARY EXPENSING OF OIL AND NATURAL GAS EXPLORATION AND PRODUCTION PROPERTY AND OF COSTS TO REPAIR DAMAGES TO SUCH PROPERTY FROM 2005 HURRICANES. ``(a) Treatment as Expenses.--At the election of the taxpayer, there shall be allowed as a deduction an amount equal to the cost paid or incurred by the taxpayer during the taxable year-- ``(1) for qualified oil and gas production property, and ``(2) for repairs to property described in subsection (b)(1)(B) on account of hurricane-related damage arising from any Presidentially declared disaster (as defined in section 1033(h)(3)(A)) during 2005. The deduction under paragraph (1) with respect to any property shall be allowed for the taxable year in which such property is placed in service. ``(b) Qualified Oil and Gas Production Property.--For purposes of this section-- ``(1) In general.--The term `qualified oil and gas production property' means any property-- ``(A) the original use of which begins with the taxpayer, and ``(B) which is described in any of the following assets classes under Revenue Procedure 87-56: ``(i) 13.0 (relating to assets used in offshore drilling for oil and gas). ``(ii) 13.1 (relating to drilling of oil and gas wells). ``(iii) 13.2 (relating to exploration for and production of petroleum and natural gas deposits). ``(2) Application of section.--This section shall apply to any property only if-- ``(A)(i) no written binding contract for the construction of such property was in effect on or before [date of introduction], or ``(ii) in the case of self-constructed property, the construction of such property did not commence on or before such date, and ``(B) such property is placed in service before January 1, 2009. ``(3) Special rule for sale-leasebacks.--For purposes of paragraph (1)(A), if property is-- ``(A) originally placed in service after the date of the enactment of this section by a person, and ``(B) sold and leased back by such person within 3 months after the date such property was originally placed in service, such property shall be treated as originally placed in service not earlier than the date on which such property is used under the leaseback referred to in subparagraph (B). ``(c) Basis Reduction.-- ``(1) In general.--For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a). ``(2) Ordinary income recapture.--For purposes of section 1245, the amount of the deduction allowable under subsection (a) with respect to any property which is of a character subject to the allowance for depreciation shall be treated as a deduction allowed for depreciation under section 167. ``(d) Election.-- ``(1) In general.--An election under this section for any taxable year shall be made on the taxpayer's return of the tax imposed by this chapter for the taxable year. ``(2) Election irrevocable.--Any election made under this section may not be revoked except with the consent of the Secretary. ``(e) Election to Allocate Deduction to Cooperative Owner.--A rule similar to the rule of section 179C(g) shall apply for purposes of this section.''. (b) Conforming Amendments.-- (1) Section 263(a)(1) of such Code is amended by striking ``or'' at the end of subparagraph (J), by striking the period at the end of subparagraph (K) and inserting ``, or'', and by inserting after subparagraph (K) the following new subparagraph: ``(L) expenditures for which a deduction is allowed under section 179E.''. (2) Section 263A(c)(3)(B) of such Code is amended by inserting ``179E,'' after ``179B,''. (3) Section 312(k)(3)(B) of such Code is amended by striking ``or 179D'' each place it appears in the heading and text and inserting ``179D, or 179E''. (4) Section 1016(a) of such Code is amended by striking ``and'' at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting ``, or'', and by adding at the end the following new paragraph: ``(38) to the extent provided in section 179E(c).''. (5) Section 1245(a) of such Code is amended by inserting ``179E,'' after ``179D,'' both places it appears in paragraphs (2)(C) and (3)(C). (6) The table of sections for part VI of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 179C the following new item: ``Sec. 179E. Temporary expensing of oil and natural gas exploration and production property and of costs to repair damages to such property from 2005 hurricanes.''. (c) Effective Date.--The amendments made by this section shall apply to costs paid or incurred after the date of the enactment of this Act in taxable years ending after such date. SEC. 3. 10-YEAR CARRYBACK OF NET OPERATING LOSSES FROM 2005 HURRICANE- DAMAGED OIL AND GAS FACILITIES. (a) In General.--Paragraph (1) of section 172(b) of the Internal Revenue Code of 1986 (relating to net operating loss deduction) is amended by adding at the end the following new subparagraph: ``(J) 2005 losses from hurricane-damaged oil and gas facilities.--In the case of a taxpayer which has a 2005 hurricane-damaged oil and gas facility loss (as defined in subsection (j)) for a taxable year, such loss shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of such loss.''. (b) 2005 Hurricane-Damaged Oil and Gas Facility Loss.--Section 172 of such Code is amended by redesignating subsections (j) and (k) as subsections (k) and (l), respectively, and by inserting after subsection (i) the following new subsection: ``(j) 2005 Hurricane-Damaged Oil and Gas Facility Loss.--For purposes of this section-- ``(1) In general.--The term `2005 hurricane-damaged oil and gas facility loss' means the lesser of-- ``(A) the amount of the net operating loss for such taxable year, or ``(B) the sum of-- ``(i) the amount of the loss allowed by section 165 for the taxable year for any loss sustained by reason of hurricane-related damage-- ``(I) arising from any Presidentially declared disaster (as defined in section 1033(h)(3)(A)) during 2005, and ``(II) to any property of the taxpayer which is described in section 179E(b)(1)(B), and ``(ii) the deduction allowed by section 179E(a)(2) for the taxable year. ``(2) Coordination with subsection (b)(2).--For purposes of applying subsection (b)(2), a 2005 hurricane-damaged oil and gas facility loss for any taxable year shall be treated in a manner similar to the manner in which a specified liability loss is treated. ``(3) Election.--Any taxpayer entitled to a 10-year carryback under subsection (b)(1)(J) from any loss year may elect to have the carryback period with respect to such loss year determined without regard to subsection (b)(1)(J). Such election shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer's return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.''. (c) Effective Date.--The amendments made by this section shall apply to net operating losses for taxable years ending after the date of the enactment of this Act.
summary: Winter Readiness Act of 2005 - Amends the Internal Revenue Code to allow a taxpayer election to expense (i.e., deduct in the current taxable year) all costs for qualified oil and gas production property placed in service before January 1, 2009, and for repairs to such property for hurricane-related damage. Defines "qualified oil and gas production property" to include assets used in offshore drilling for oil and gas, and for exploration and production of petroleum and natural gas deposits. Allows a 10-year carryback of net operating losses incurred in 2005 for hurricane-damaged oil and gas facilities.