SB 85 Summary

• Creates a new development cost credit (AS 43.55.026) allowing producers and explorers to claim a 100 percent tax credit against oil and gas production taxes for qualified development expenditures incurred after discovery of a commercially viable pool and before production begins.

• Development cost credits may be applied against production taxes during a five-year period following the commencement of production in paying quantities, with credits expiring if not claimed within five years.

• Limits the credit to leases or properties that had not been within a unit or previously produced oil or gas in paying quantities as of December 31, 2010.

• Prevents double-dipping by prohibiting the same qualified expenditure from being claimed under multiple tax credit provisions (AS 43.20.043, AS 43.55.023, AS 43.55.025, and AS 43.55.026), though taxpayers may elect which credit to use.

• Credits are non-transferable, cannot reduce tax liability below zero in any calendar year, and if a property subsequently becomes part of a unit, the credit applies only to production attributable to that specific property.