Intangible Drilling and Development Costs Taken into Account for Purposes of Computing Adjusted Financial Statement Income
Section 70523 · Sec. 70523 ·
What this chapter is about
This part changes how drilling costs are handled in a book income tax. Those costs may now be taken off in the same way as wear and tear. Matching book expenses are set aside. It starts with tax years after December 31, 2025.
“any deduction allowed for expenses under section 263(c) (including any deduction for such expenses under section 59(e) or 291(b)(2)) with respect to property described therein to the extent of the amount allowed as deductions in computing taxable income for the year, and”
The section rewrites subparagraph (A) of section 56A(c)(13) of the Internal Revenue Code of 1986 so that the figure is reduced both by depreciation deductions under section 167 for property to which section 168 applies and by deductions for intangible drilling and development costs under section 263(c), in each case to the extent allowed in computing taxable income. It also rewrites clause (i) of subparagraph (B) so that both depreciation expense and depletion expense tied to those drilling costs are disregarded on the applicable financial statement.
What the document actually says
“any deduction allowed for expenses under section 263(c) (including any deduction for such expenses under section 59(e) or 291(b)(2)) with respect to property described therein to the extent of the amount allowed as deductions in computing taxable income for the year, and”
That sentence, in plain words
Drilling costs may be taken off the figure. Only the part allowed for normal tax counts.
What this is about
Wear and tear is treated the same way. The matching book expenses are set aside. That stops the same cost counting twice.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70523 in the PDF
What the document says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
The section applies its amendments to taxable years beginning after December 31, 2025.
What the document actually says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
That sentence, in plain words
The changes start with tax years that begin after December 31, 2025.
What this is about
Earlier tax years are not touched. The old rules still hold for them. The date is fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Both things the section does: rewrite how depreciation and drilling cost deductions reduce the figure and which book expenses are disregarded, and fix the effective date.
Nothing in the section is left out. It has two subsections and each is recorded.
The section works by amending section 56A(c)(13) of the Internal Revenue Code of 1986 and points to sections 59, 167, 168, 263 and 291 of that Code, none of which is indexed here.
