Intangible Drilling and Development Costs (IDCs) Expensing

§ 263. Capital expenditures(a) General ruleNo deduction shall be allowed for—(1) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate. This paragraph shall not apply to—(A) expenditures for the development of mines or deposits deductible under section 616, (B) research and experimental expenditures deductible under section 174 or 174A, (C) soil and water conservation expenditures deductible under section 175, (D) expenditures by farmers for fertilizer, etc., deductible under section 180, (E) expenditures for removal of architectural and transportation barriers to the handicapped and elderly which the taxpayer elects to deduct under section 190, (F) expenditures for tertiary injectants with respect to which a deduction is allowed under section 193, (G) expenditures for which a deduction is allowed under section 179, (H) expenditures for which a deduction is allowed under section 179B, (I) expenditures for which a deduction is allowed under section 179C, (J) expenditures for which a deduction is allowed under section 179D, or (K) expenditures for which a deduction is allowed under section 179E. (2) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made. [(b) Repealed. Pub. L. 101–508, title XI, § 11801(a)(16), Nov. 5, 1990, 104 Stat. 1388–520] (c) Intangible drilling and development costs in the case of oil and gas wells and geothermal wellsNotwithstanding subsection (a), and except as provided in subsection (i), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Concurrent Resolution 50, Seventy-ninth Congress. Such regulations shall also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(2)) to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells. This subsection shall not apply with respect to any costs to which any deduction is allowed under section 59(e) or 291.