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Politics : Politics of Energy

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To: Road Walker who wrote (24832)	1/14/2011 3:23:31 PM
From: Alastair McIntosh	2 Recommendations Read Replies (1) of 86354

The deduction of "intangible drilling costs” as a current business expense isn't much of a subsidy (if any). In any for-profit business allowable costs incurred to produce revenue are deducted from that revenue, the balance being taxable income. Some expenses benefit more than one business period and a portion of the expense is usually deducted each year until all of the expense is accounted for. To encourage certain activities governments sometimes allow accelerated write-offs. However, in all cases all of the expense is eventually written off. The only subsidy would be the interest saved because of a quicker write-off. To state that the write-off of "intangible drilling costs” is a notoriously abused provision of the tax code is pure fiction. If the accelerated write-off were not allowed and higher borrowing was required the additional interest would be an allowable expense for tax purposes. If most of the so-called subsidies are in the form of tax benefits for accelerated write-offs the amount of the subsidies are quite small. irs.gov

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