| Industry Issues / Intangible oil and gas and geothermal well drilling and development costs |  |
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| Geological
and geophysical costs incurred in exploring for oil and gas are capital
expenditures. Taxpayers, however, may capitalize, amortize (over 60
months) or expense the
so-called intangible drilling and development costs (IDCs) of
oil, gas and geothermal wells. In
general, such intangible costs include only those costs that in
themselves don't have a salvage value, such as labor and fuel. Deducted IDCs are recaptured (on Form 4797) as ordinary income on disposition of the oil or gas wells. |
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