Deductibility of geological and geophysical costs for purposes of the 90% net-income limitation for the Windfall Profit Tax

Journal Article · Sun Dec 01 04:00:00 EST 1985 · Oil Gas Tax Q.; (United States)

OSTI ID:6065341

Russell, C W; Henderson, W I

The capitalization of geological and geophysical (G and G) costs not specifically attributable to properties is hard to justify based on prior judicial decisions. It appears that the Internal Revenue Service has interpreted those decisions too broadly. Certain types of G and G costs should be deductible as ordinary and necessary business expenses, and be deductible from gross income in determining the net income limitation (NIL). To suspend such costs until a determination can be made whether or not the costs have future benefit or are deemed worthless and deductible as a loss should not affect their eventual deductibility. When suspension of the costs defers their deductibility to a subsequent year, it becomes doubly expensive because it postpones their tax benefit for both federal income tax and windfall profit tax NIL purposes.

• Research Organization: Peat, Marwick, Mitchell and Co., Houston, TX
• OSTI ID: 6065341
• Journal Information: Oil Gas Tax Q.; (United States), Journal Name: Oil Gas Tax Q.; (United States) Vol. 34:2; ISSN OGTQD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000* -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002 -- Energy Planning & Policy-- Petroleum
CASE LAW
DEPLETION ALLOWANCES
DOCUMENT TYPES
INDUSTRY
LAWS
LEGAL ASPECTS
NATIONAL ORGANIZATIONS
PETROLEUM INDUSTRY
REGULATIONS
REGULATORY GUIDES
TAXES
US DEPARTMENT OF TREASURY
US IRS
US ORGANIZATIONS
WINDFALL PROFITS TAX