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Problems on the mechanics of making an IDC Election P291

1. WB inc. an accrual taxpayer, incurred drilling costs of 25,000 during year 1, the 1^st year. it had incurred IDC. Wildcat inc. capitalized the drilling costs on the financial books but deducted the drilling costs on the tax return. Is Wildcat Bills reporting of the IDC as expense on the tax return. a valid election to exp IDC?
2. The well in Prob 1 turned out to be dry. WB Inc deducted the IDC on its year 1 return., under the heading Dry holes and worthless Leases but made no other mention of the IDC election on the return. Is Wildcat Bill, Incs expense of the dry hole cost in YR 1 an election to IDC See Hawkeye Petrol Corp. v Commissioner, 18 T.C. 1223 (1952), non acq., 1953-1 C.B. 7.
3. WB & Driller Dan form a joint venture to explore and develop an oil and gas property. (Bill & Dan do not file a Sec 761 (a) election to be excluded from Subchapter K provisions) Bill & Dan each own one- half of the working interest in the oil and gas property in year 1, Bill & Dan, both cash method taxpayers, each pay $15,000 of IDC with respect to the property & elect to expense & deduct them on their individual tax returns. In Yr. 3, the IRS establishes that Bill & Dans Joint venture constitutes a partnership for Fed tax purposes. Are Bill & Dans elections to expense IDC in Year 1 effective? See Boone vs. United states, 374 F Supp. 115(D.N.D. 1973); Marburger v United States, 303 F. Supp. 42 (W.D. Ky 1969)
4. WB inc. , has previously elected to capitalize IDC as the IDC on the financial books of account that had been capitalized flow through the tax return as capital items. WB is primarily an unconventional oil & gas producer with significant tax losses so Had not been diligent about considering tax elections. WB Inc, now proposes to acquire new oil & gas property and wants to make an election to expense IDC. Is there any way that WB Inc, can expense with respect to the new property. What would you recommend that WBI do to change the result & secure expense treatment for the IDCs associated w this new property.

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