Global

Details

  • Industry: Energy & Natural Resources, Oil & Gas
  • Type: Business and industry issue
  • Date: 7/10/2012

A Primer on Domestic Oil and Gas, Part II: Intangible Drilling and Development Costs 

Second publication in a two-part series examining the tax treatment of geological and geophysical costs and intangible drilling and development costs
Intangible Drilling and Development Costs
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The owner of operating rights in an oil or gas property has the burden of developing the property, and in the course of developing the property by drilling oil or gas wells it incurs costs that are segregated between intangible drilling and development costs (IDC) and equipment costs. As noted, under certain circumstances the taxpayer has the option of expensing or capitalizing the IDC.

This article, second in a two-part series, considers the nature of this election as well as considers in some detail, the nature of IDC including the kinds of costs included in IDC; historical and current tax treatment of IDC, including capitalization versus deduction; and current U.S. administration and legislative proposals to change treatment of IDC under existing oil and gas tax laws.

Read the first article of this two-part series Primer on Domestic Oil and Gas, Part I - Intangible Drilling and Development Costs
 

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