n-13-25.pdf

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Nonconventional Source Fuel Credit, 2012 Section 45K Inflation Adjustment
Factor and Section 45K Reference Price

Notice 2013-25

SECTION 1. PURPOSE

This notice publishes the nonconventional source fuel credit, inflation adjustment
factor, and reference price under § 45K of the Internal Revenue Code for coke or coke
gas (other than from petroleum based products) for calendar year 2012. The inflation
adjustment factor is used to determine the credit allowable under § 45K for coke or coke
gas. The calendar year 2012 inflation-adjusted credit applies to the sales of barrel-of-oil
equivalent of coke or coke gas sold by a taxpayer to an unrelated person during the
2012 calendar year, the domestic production of which is attributable to the taxpayer.
SECTION 2. BACKGROUND
Section 45K(a) provides for a credit for producing fuel from a nonconventional
source, measured in barrel-of-oil equivalent of qualified fuel, the production of which is
attributable to the taxpayer and is sold by the taxpayer to an unrelated person during
the taxable year. For calendar year 2012, the credit is available only for coke or coke
gas. The credit amount for coke or coke gas is equal to the product of $3.00 and the
appropriate inflation adjustment factor.
Section 45K(d)(1) provides that the credit applies only to sales of qualified fuels
the production of which is within the United States (within the meaning of § 638(1)) or a
possession of the United States (within the meaning of § 638(2)).

Section 45K(d)(2)(A) requires that the Secretary, not later than April 1 of each
calendar year, determine and publish in the Federal Register the inflation adjustment
factor and the reference price for the preceding calendar year.
Section 45K(d)(2)(B) defines "inflation adjustment factor" for a calendar year as a
fraction the numerator of which is the GNP implicit price deflator for the calendar year
and the denominator of which is the GNP implicit price deflator for calendar year 1979.
The term "GNP implicit price deflator" means the first revision of the implicit price
deflator for the gross national product as computed and published by the Department of
Commerce.
Section 45K(d)(2)(C) defines "reference price" to mean with respect to a calendar
year the Secretary's estimate of the annual average wellhead price per barrel for all
domestic crude oil the price of which is not subject to regulation by the United States.
Section 45K(d)(5) provides that the term "barrel-of-oil equivalent" with respect to
any fuel generally means that amount of the fuel that has a Btu content of 5.8 million.
Section 45K(g)(1) provides that in the case of a facility for producing coke or
coke gas (other than from petroleum based products), which was placed in service
before January 1, 1993, or after June 30, 1998, and before January 1, 2010, § 45K(g)
shall apply with respect to coke or coke gas produced in such facility and sold during
the period beginning on the later of January 1, 2006, or the date that such facility is
placed in service, and ending on the date which is 4 years after the date such period
began.
Section 45K(g)(2)(A) provides that the amount of coke or coke gas sold during

any taxable year that may be taken into account to compute the credit under § 45K with
respect to any facility shall not exceed an average barrel-of-oil equivalent of 4,000
barrels per day.
Section 45K(g)(2)(B) provides that in determining the amount of credit allowable
to coke or coke gas sold after 2005, the reference to the GNP implicit price deflator for
calendar year 1979 is replaced with the GNP implicit price deflator for calendar year
2004 for purposes of § 45K(d)(2)(B). Accordingly, for purposes of § 45K(g), the inflation
adjustment factor for a calendar year is a fraction the numerator of which is the GNP
implicit price deflator for the calendar year and the denominator of which is the GNP
implicit price deflator for calendar year 2004.
Section 45K(g)(2)(D) provides that the phaseout of the credit under § 45K(b)(1)
does not apply in the case of facilities producing coke or coke gas.
SECTION 3. REFERENCE PRICE
The reference price for calendar year 2012 is $94.53.
SECTION 4. INFLATION ADJUSTMENT AND CREDIT AMOUNT
The inflation adjustment factor for calendar year 2012 is 1.1922. The
nonconventional source fuel credit is $3.58 per barrel-of-oil equivalent ($3.00 x 1.1922).
SECTION 5. DRAFTING INFORMATION
The principal author of this notice is Martha M. Garcia of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding

this notice contact Ms. Garcia on (202) 622-3110 (not a toll-free call).