§ 776. Special rules for partnerships holding oil and gas properties
(a)
Computation of percentage depletion
In the case of an electing large partnership, except as provided in subsection (b)—
(1)
the allowance for depletion under section
611 with respect to any partnership oil or gas property shall be computed at the partnership level without regard to any provision of section
613A requiring such allowance to be computed separately by each partner,
(b)
Treatment of certain partners
(1)
In general
In the case of a disqualified person, the treatment under this chapter of such person’s distributive share of any item of income, gain, loss, deduction, or credit attributable to any partnership oil or gas property shall be determined without regard to this part. Such person’s distributive share of any such items shall be excluded for purposes of making determinations under sections
772 and
773.
(2)
Disqualified person
For purposes of paragraph (1), the term “disqualified person” means, with respect to any partnership taxable year—
(3)
Average daily production
For purposes of paragraph (2), a person’s average daily production of domestic crude oil and natural gas for any taxable year shall be computed as provided in section
613A
(c)(2)—