incurred in connection with equipment, facilities, or structures that are not incident to or necessary for the drilling of wells (including expenditures for storing and drilling) are not intangible drilling costs
Earnings and profits are adjusted further for certain purposes such as the treatment of intangible drilling costs
, amortization of certain expenses, installment sales, and depletion.
Therefore, the costs incurred to obtain the following items would not be considered intangible drilling costs
(although depreciation deductions may be available):
It's not easy to get the capital needed to go out and drill the wells so there are things like percentage depletion and intangible drilling costs
, which the Obama Administration has sought to end during the last two years," said Martin Frost, a former Democratic congressman from Texas who works as a lobbyist for Polsinelli Shughart.
The next chapter reveals the story behind changes in oil and gas depletion and intangible drilling costs
and how the alternative minimum tax came into being as the way to prevent taxpayers from escaping income tax liability by using "preferences.
Noncorporate independent producers also benefit from the EPA's changes to the intangible drilling costs
It should be noted that the company was able to expense its share of the vast majority of intangible drilling costs
related to drilling three wells during the first half of 2007 which is reflected in the attached Statement of Revenues and Expenses and Retained Earnings as a deduction against other income.
Incentives include: tax exemptions; a duty-free import allowance for materials not available in Turkey; depreciation on fixed assets; exemption from VAT, limited to purchase of goods and services for exploration; a depletion allowance, though restricted to capitalised exploration costs, intangible drilling costs
, and costs of dry-holes; the possibility of creating and/or transferring rights in licences and leases, similar to those exercisable in real property; the right to export 35% of onshore, and 45% of offshore oil production from fields discovered after January 1980; and deduction of some exploration costs from annual licence rentals.
For example, calculations for depreciation, depletion, intangible drilling costs
(IDCs), and mineral exploration and development costs would have required (i) computing deductions over a series of years, (ii) present valuing these deduction streams, and (iii) comparing them to present valued book deduction streams prior to including the item into the ACE calculation.
This higher cash tax provision is due to higher oil and gas prices and certain expenses such as intangible drilling costs
and net operating losses from prior periods that are not large enough to offset the cash tax liability.