intangible drilling costs(redirected from Intangible Drilling and Development Cost)
Intangible Drilling Costs
Expenses a company has when it drills for oil or natural gas. Intangible drilling costs are sometimes convenient for a company's tax purposes because it can deduct intangible drilling costs in one year when the company perhaps found little or no oil from profits made in a different year when the company does find oil.
intangible drilling costs
Expenses incurred while exploring for gas, geothermal, or oil reserves. These items may be expensed in the year incurred, or they may be capitalized and deducted throughout a period of years. Intangible drilling costs are an effective means of reducing taxes because they can be used to offset income in a single year even though the costs were incurred in order to produce or develop a capital asset (energy reserves) that will in turn generate income for many years. Costs for fuel, preparation of a site, and wages are examples of intangible drilling costs.