Abandoned Well Plugging Credit

INCOME TAXPAYER-Effective for all taxable years beginning after Dec. 31, 1997.

Beginning in tax year 2013, this credit shall only be available to corporations that are subject to the Kansas corporate income tax, i.e. C corporations. This credit shall not be available to individuals, partnerships, S corporations, limited liability companies, and other pass-through entities.

An income tax credit is allowed for expenditures made for plugging any abandoned oil or gas well in accordance with rules and regulations of the state corporation commission.

QUALIFICATIONS
The oil or gas well must be plugged in accordance with rules and regulations of the Kansas Corporation Commission. For information about plugging an abandoned oil or gas well or certification, contact the:

Kansas Corporation Commission
Conservation Division
130 S. Market, Room 2078
Wichita, KS 67202-3802
316-337-6200

Credit Amount

The credit is 50 percent of the expenditures for plugging the oil or gas well.

Limitation of Credit

The credit is limited to the taxpayer's income tax liability. The amount of credit which exceeds the tax liability in any one taxable year may be carried forward until used. However, the total amount of credits taken by ALL taxpayers (including any credit carry over) may not exceed $250,000 in any fiscal year.

Procedures to Claim the Credit

You may download Schedule K-39 to claim the credit for plugging an abandoned well. This schedule should be completed and submitted with the income tax return. You may also call the Department of Revenue voice mail system at (785) 296-4937 to request Schedule K-39. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

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Abandoned Oil or Gas Well Definition

For purposes of this credit, an abandoned oil or gas well means an abandoned well:

  • that the Kansas Corporation Commission has the authority to plug, replug or repair because the well is polluting or is likely to pollute any usable water strata or supply;
  • on which drilling was begun before Jan. 1, 1970;
  • and is located on land owned by the taxpayer claiming the credit.

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