Internal Revenue Bulletin:  2003-28 

July 14, 2003 

Notice 2003-43

2003 Section 43 Inflation Adjustment


Table of Contents

Section 43(b)(3)(B) of the Internal Revenue Code requires the Secretary to publish an inflation adjustment factor. The enhanced oil recovery credit under § 43 for any taxable year is reduced if the “reference price,” determined under § 29(d)(2)(C), for the calendar year preceding the calendar year in which the taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year.

The term “inflation adjustment factor” means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990.

Because the reference price for the 2002 calendar year ($22.51) does not exceed $28 multiplied by the inflation adjustment factor for the 2003 calendar year, the enhanced oil recovery credit for qualified costs paid or incurred in 2003 is determined without regard to the phase-out for crude oil price increases.

Table 1 contains the GNP implicit price deflator used for the 2003 calendar year, as well as the previously published GNP implicit price deflators used for the 1991 through 2002 calendar years.

Notice 2003-43 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
  Calendar Year   GNP Implicit Price Deflator
       
  1990   112.9 (used for 1991)
  1991   117.0 (used for 1992)
  1992   120.9 (used for 1993)
  1993   124.1 (used for 1994)
  1994   126.0 (used for 1995)
  1995   107.5 (used for 1996)*
  1996   109.7 (used for 1997)
  1997   112.35 (used for 1998)**
  1998   112.64 (used for 1999)
  1999   104.59 (used for 2000)***
  2000   106.89 (used for 2001)
  2001   109.31 (used for 2002)
  2002   110.63 (used for 2003)
* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to compute the 1996 § 43 inflation adjustment factor is 93.6.
** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the 1998 § 43 inflation adjustment factor is 93.63.
*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used to compute the 2000 § 43 inflation adjustment factor is 86.53.

Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 2003 calendar year as well as the previously published inflation adjustment factors and phase-out amounts for taxable years beginning in the 1991 through 2002 calendar years.

Notice 2003-43 TABLE 2
INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS
Calendar Year Inflation Adjustment Factor Phase-out Amount
     
1991 1.0000 0
1992 1.0363 0
1993 1.0708 0
1994 1.0992 0
1995 1.1160 0
1996 1.1485 0
1997 1.1720 0
1998 1.1999 0
1999 1.2030 0
2000 1.2087 0
2001 1.2353 0
2002 1.2633 0
2003 1.2785 0

DRAFTING INFORMATION

The principal author of this notice is Jaime Park of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Ms. Park at (202) 622-3120 (not a toll-free call).


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