text: 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.
target: 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.
feat_title: To amend the Internal Revenue Code of 1986 to provide incentives to restore and increase oil and natural gas production.