I:13-61 Recapture of Intangible Drilling Costs. Jeremy purchased undeveloped oil and gas property five years ago. He paid $300,000 for intangible drilling and development costs and elected to expense the $300,000. During the current year, Jeremy sells the property, which has an $800,000 adjusted basis, for $900,000. What is the amount of gain treated as ordinary income under Sec. 1254 because of the election to expense intangible drilling and development costs?