intangible drilling costs

Definition

The expenses incurred during the exploration for gas, oil, or geothermal reserves that can be expensed in the year they have been incurred. They may also be capitalized and deducted over a period of several years. It can be an effective tax reduction strategy when used to offset a company's income in one year although they were spent to develop or product energy reserves and capital assets that will bring in income for many years to come. Some examples of intangible drilling costs include site preparation, fuel costs, and employee wages.

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