A bill to amend chapter 45 of the Internal Revenue Code of 1954 with respect to the exemption of the State share of Federal royalties from the Crude Oil Windfall Profit Tax and to insure the deductibility of certain severance taxes.

[AI summary unavailable — showing source text] Amends the Internal Revenue Code to exempt from the windfall profit tax certain rights of States to payments under the Mineral Lands Leasing Act. Revises the definition of "severance tax," for purposes of calculating windfall profit, to: (1) include any severance tax imposed by an Indian tribe; and (2) allow the determination of such tax on an ad valorem basis. Revises the definition of "producer," for purposes of the windfall profit tax, to assign to States and instrumentalities thereof cost recovery oil (amounts of crude oil used for reimbursement, pursuant to any agreement with another party, for oil or gas development costs) in accordance with their proportion in net profits. Excludes from gross income and treats as paid by the governmental entity, for purposes of the net income limitation on windfall profit, cost recovery oil covered by such an agreement.…