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COPAS - APA EXAM > Tax Module Upload2 > Flashcards

Tax Module Upload2 Flashcards

1
Q

Tracs that geographically touch only at a corner

A

Adjacent land tracts

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2
Q

A method whereby each interest owner accounts for gas sales based on his relative ownership rights under the Joint Operating Agreement and his current share of gas produced from the reservoir each year.

A

Annual Gas Balancing Method

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3
Q

Gas balancing agreements that may require annual cash settlements for any imbalance.

A

Annual Gas Balancing Method

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4
Q

A separate noncontiguous area within a project area that, for tax purposes, has been identified in a G&G survey as having pecific geological features that warrant further analysis

A

Area of Interest

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5
Q

Created when one or more parties agree to pay a disproportionate share of the development expenses

A

Carried Interest

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6
Q

Tracts that geographically share a common border

A

Contigous Land Tracts

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7
Q

A method whereby each producer recognizes gross income based on his total sales of gas from the property including any sales of gas taken from another producers share of the reserves and over/under produce positions are settled at the end of the properties commercial life.

A

Cumulative Gas Balancing Method

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8
Q

A payment, made during the primary term of a lease, for additional time in which to utilized the land. It does not depend on oil or gas produced, does not exhaust substance of land, and resembles a bonus payment, which is an advance royalty

A

Delay Rental

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9
Q

Represents an interest in the mienral sin place. The interest owner may only look to its share of production proceeds for a return of capital

A

Economic interest

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10
Q

An interest that must exist in some form of legal relationship

A

Economic interest

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11
Q

Royalty interest, working interest, overridding royalty interest and net profits interest

A

Economic interest

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12
Q

Conversts all hydrocarbons to a single unit of measurement base on their equivalent energy content

A

Equivalent Barrelts

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13
Q

Under the standard energy conversion 6MCF of gas is equivalent to 1 barrel of oil

A

Equivalent Barrelts

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14
Q

A form of sharing arrangement under which the working interest owner assings all or part of his working interest to a secondary party in exchange for that party’s agreement ti drill a well

A

Farmout

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15
Q

The working interest owner in a farmout

A

Farmor

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16
Q

The secondary party agreeing to drill a well on the lease in a farmout

A

Farmee

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17
Q

An estate limited absolutely to a person and his/her heirs and assigns forever without limitation or condition

A

Fee simple interest

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18
Q

The owner is entitled to the entire property, with uncondition power of dipositon during his/her life, and descending to his/her heirs and legal representitives upon his death

A

Fee simple interest

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19
Q

Costs for processes which look for surface or subterranean indication of formations, faults or other geoplogical structs which are of a type in which experience has shown the possible of mineral deposits

A

Geological and Geophysical costs

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20
Q

A payment made by the lessee or sublessee to the lessor or sublessor as consideration for granting a lease

A

Lease bonus

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21
Q

The term commonly used to descrive all hydrocarbons and other natural resources.

A

Minerals

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22
Q

Entitles the owner to a portion of the net profits from oerpation of the property

A

Net profits interest

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23
Q

An interest that has no obligation to pay for development or production costs if the share of production attributable to this interest is not sufficient to pay those costs

A

Net profits interest

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24
Q

In a NPI, if not net profit exists the holder of the

A

Receives no payment

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25
Q

A royalty interest carved out of a working interest and is interest in oil and gas produced at te wellhead free of expenses

A

Overridding Royalty Interest

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26
Q

The durration of an ORRI is limited to the duration

A

of the working interest in which it was created

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27
Q

The conduct of any trade of business in which the taxpayer does not materially participate throughout the year

A

Passive

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28
Q

Entitles the holder to a specified percentage of production for a limited period of time, or unil a defined amount ofmoney has been received, or until a certain number of production units has been received

A

Production payment

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29
Q

At the time a production payment is created, it must have a projected life ______________________ than that of the operting interest from which it was created

A

Shorter

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30
Q

The initial term of the lease

A

Primary term

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31
Q

A general geographical area of exploration selected to yield data that will afford a basis for identifying specific geological features

A

Project area

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32
Q

Created under a mineral lease and is the right to share in a stated protion of the mineral production from the property, free of developing and producing cost

A

Royalty interest

33
Q

The process of injecting water, gas, ect, into a producing formation as a means of increasing the drive and mechanism in order to product oil that would be otherwise unobtainable

A

Secondary recovery

34
Q

Another name for secondary recovery

A

Tertiary recovery

35
Q

The use of sophisticated techniques such as flooding the reservoir with steam to increase the production of oil or gas

A

Tertiary recovery

36
Q

A single comprehensive set of rules in the tax code governing the capitalization of costs for acquiring, developing, producing, and holding properties

A

Uniform Capitalization Rules UCR

37
Q

Held by the assignee of the lease and represents an interest in the minerals burded by the cost of exploration, development, and production

A

Working or operating interest

38
Q

Ruling that state “pool-of-capital” doctrine does not apply when myltiple properties are involved. A taxable gain or loss occurs for the FMV of the earned acreage protion

A

Rev. Ruling 77-176

39
Q

No consideration passes between the parties other than a contribuation, or assumption, of the obligation to develop

A

Pooling-of-capital

40
Q

What ruling stated that after may 17, 2006 (major intergrated oil companies) costs paid or incurred for G&G costs are amortized over 5 years

A

IRC Sec. 167 (h)

41
Q

What regulation describes items that are not considered IDC

A

Treas. Reg. Sec. 1.612-4c

42
Q

According to Treas. Reg. Sec. 1.612-4c installing ___________ ___________ is not considered IDC

A

Production facilities

43
Q

According to Treas. Reg. Sec. 1.612-4c ______________ cemented into place is not considered IDC

A

Casing

44
Q

According to Treas. Reg. Sec. 1.612-4c ___________________ is not considered IDC

A

Pipeline from the mouth of a gas well to the first point of control

45
Q

What ruling exludes items from IDC

A

Rev. Ruling 70-414

46
Q

Accoridng to Rev. Ruling 70-414 expenditures for installing production facilities are

A

Excluded from IDC

47
Q

A well is considered complete when the

A

Christmas tree has been installed

48
Q

What revenue prodecure allowed for the Safeharbor election

A

Revenue Procedure 2004-19

49
Q

The Safeharbor election allows for the taxpayer to estimate ________________ and ____________________ reserves

A

Probable and prospective

50
Q

The companies estimate of total recoverable reserves is equal to what percentage of proved reserves

A

105%

51
Q

What provision address abrupt year end increase in the at risk amount

A

Anti-abuse provision

52
Q

What act gave releif to the AMT beginning in 1993

A

Energy policy act of 1992

53
Q

What was replaced with the Energy Policy act of 1992

A

Excess percentage depletion preference

54
Q

IDC deducted must be capitalized and amortized over 60months starting with the date paid

A

Adjusted current earnings (ACE)

55
Q

What ruling offers credit for enhanced oil recovery

A

IRC Sec. 43

56
Q

How much of credit is given as a result of the IRC Sec. 4.

A

15%

57
Q

What section of the Tax Reform act of 1986 promulgated the Uniform Capitalization Rules

A

Section 263A

58
Q

All of the depreciation deduction for what type of property are subject to recapture

A

Personal property

59
Q

Real property subject to recapture is limited to te difference between straight line and accelerated depreciation for who

A

Corporations

60
Q

Real property depreciation subject to recpature is taxed at 25% and computed similarly to personal property recapture

A

Individuals

61
Q

To be entitled depletion deduction, the interest owner must possess which type of interest

A

Economic interest

62
Q

Which interest type has a life longer than the working interest

A

Fee simple interest

63
Q

Under US property law ______________ rights and ________________ rights are divisible

A

Surface and mineral

64
Q

If a company owns a working interest and an ORRI interesest in a lease and acquires as additional WI and ORRI, in absense of an election with the IRS the company’s depletion schedule will show

A

One WI and two ORRI

65
Q

Income from a sale or a taxable exchange could constitute a

A

Capital gain

66
Q

A lease bonus is considered what type of income

A

Ordinary

67
Q

A company transfers one-third of its working interest in a lease to another company for cash and uses the cash to pay employee Christmas bonuses

A

Sale

68
Q

A company transfers one-third of its working interest in a lease to another company for cash and uses the cash to drill a well on the Cactus lease

A

Sharing arrangement

69
Q

What rev. ruling states that “Each separable noncontigous portion of the original project area in which such a specific geological feature is identified is a separate ‘area of interest’

A

Rev. Ruling 77-188

70
Q

What are the three phases of G&G costs

A

Project area, areas of interest, and selection of properties

71
Q

Integrated oil companies are required to capitalized what percentage of their IDC even after making the election to expense IDC

A

30%

72
Q

The 30% of costs that integrated oil companies are required to capitalized is deducted ratably over

A

60 months

73
Q

All taxpayers must ___________________ foreign IDC and recover its costs either through depletion deductions or through straight-line amortization over __________ years

A

Capitalize, 10 years

74
Q

Taxpayers who elect to deduc IDC in the current year may choose to

A

Capitalize all or a portion of the IDC incurred in that tax year

75
Q

If the taxpayer has decided to capitalize his IDC, the regulations grant an option to either capitalize or expense the cost of

A

Dry holes

76
Q

What petroleum industry costs has been specifially excluded from the UCR

A

Intangible drilling costs

77
Q

Labor to plumb a tank battery is or is not IDC

A

Is not

78
Q

The costs from drilling an injection well are

A

Accounted for in te same manner as producing wells

79
Q

Abandonment results in a capital or orindary loss

A

Ordinary

COPAS - APA EXAM (2 decks)

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