gas property
(i) Transfer of oil or gas property(1) General rule(i) In general. Except as provided in paragraph (i)(2) of this section, in the case of a transfer (as defined in paragraph (n) of 1.613A-7) of an interest in any proven oil or gas property (as defined in paragraph (p) of 1.613A-7), paragraph (a)(1) of this section shall not apply to a transferee (as defined in paragraph (o) of 1.613A-7) with respect to production of crude oil or natural gas attributable to such interest, and such production shall not be taken into account for any computation by the transferee under this section. (ii) Examples. The provisions of this subparagraph may be illustrated by the following examples: (2) Transfers after October 11, 1990(i) General rule. Section 613A(c) (9) and (10), as in effect prior to the Revenue Reconciliation Act of 1990 (relating to prohibition of percentage depletion on transferred proven properties) has been repealed effective for transfers after October 11, 1990. Accordingly, a transferee of a proven oil or gas property transferred after October 11, 1990 is permitted to claim percentage depletion with respect to production from the property. For purposes of transfers of property occurring before October 12, 1990 under section 613A(c)(10), prior to its repeal, the disposition of stock after October 11, 1990 by a transferor will not result in a reduction in the depletable quantity of the transferee corporation under section 613A(c)(10)(F). (ii) Transfer. The term transfer has the same meaning as under 1.613A-7(n). (iii) Transferee. A person shall not be treated as a transferee with respect to a transferred property to the extent that such person held an interest in the property but was not entitled to a percentage depletion allowance on mineral produced with respect to the property immediately before the transfer. Thus, for example, if a taxpayer who is not entitled to claim percentage depletion on a proven property transfers the property to a partnership for an interest in the partnership, the taxpayer is not a transferee with respect to the property in the hands of the partnership. (iv) Effective date. The provisions of paragraph (i)(2) of 1.613A-3 are effective for transfers occurring after May 13, 1991. However, a taxpayer may elect to apply these provisions to transfers occurring after October 11, 1990 and on or before May 13, 1991. (v) Examples. The examples below illustrate the provisions of this subparagraph. The examples ignore the application of any restriction on percentage depletion other than the proven property transfer rule.