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Problems on Expenses Qualifying for IDC Deduction IDC = Intangible Drilling Costs Which of the following expenditures qualify for the election to expense intangible drilling
Problems on Expenses Qualifying for IDC Deduction IDC = Intangible Drilling Costs
- Which of the following expenditures qualify for the election to expense intangible drilling and development costs
- Drilling costs billed to the operator/lessee by a contract driller. Does it make a difference if the drilling fee is on a per foot billing rate ore a well completion rate to a stated depth?
- Legal fees paid by the lessee for the negotiating and drafting the drilling contract with an independent contractor
- Drilling costs associated with a well to determine the best location for a platform location
- Costs of constructing a dirt road to the drill site to access the property these include labor and gravel costs
- Costs of renting trucks and cars to transport materials and individuals to the drill site. Would it make a difference if the cars and trucks are purchased by the operator
- Costs of constructing pipelines from the wellhead to oil storage tanks that are needed in drilling operations as liquids come up the wellbore during drilling operations.
- Labor and material costs of offshore drilling platforms
- Costs of transporting the platforms described in prob 7 above to their offshore location, and costs of installing the platforms at that location
- Costs of a flare boom installed on an offshore platform that is sized for peak production but needed during drilling operations
- Costs of separation equipment located onshore due to regulatory requirements but needed for drilling offshore wells from an offshore platform
- Costs of modules installed on a modular platform that are stacked in place to secure all of the modules but are not sued for drilling other than to support other modules that are used in drilling
- Costs of drilling delineation wells to determine the reservoirs locations when the driller/operator is highly unlikely to ever produce from the well until a platform is installed although the well is capable of producing.
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