Deducting Intangible Drilling Costs (IDC)

Under current tax code, Intangible Drilling Costs (IDC) are 100% tax deductible for federal income tax purposes. 

 

Eagle Drilling Venture 2019 Limited Partners will invest in the Intangible Drilling Costs (IDC). Under current tax code, this is 100% tax deductible for federal income tax purposes. (IDC cost will account for 80% of Total well expenditure). To maximize the tax incentives for the investor, Eagle Resources will functionally allocate the tangible drilling costs to ERC (20% of Total well cost). Only Royalties will be 3rd party royalties, ERC will not take a Royalty Interest.

 

REFERENCES

https://www.investopedia.com/articles/07/oil-tax-break.asp

https://taxmap.irs.gov/taxmap/pubs/p535-029.htm

https://www.energytaxfacts.com/issues/intangible-drilling-costs

eagle-on-ice