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Lacerte automatically amortizes intangible drilling costs

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Level 3

 I enter Section 59 e 2 intangible drilling costs in Screen 20 Line 13 J. I do not elect to amortize these costs but deduct them in full inone year. Why does lacerte automatically transfer these costs to the depreciation schedule, amortize them over 10 years and carry the deduction to Form 6251 line 2r ( even though enetered in Screen 20 as IDC, they carry to Form 6251 as research and experimental costs !

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7 Replies 7
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The short answer has to do with expensed IDCs going through the excess IDC calculation to determine whether there's an AMT adjustment. Prior-year expensed IDCs get amortized for AMT purposes as part of the well-by-well calculation of what I'd call for clarity purposes tentative excess IDCs (as opposed to the AMT adjustment for excess IDCs).

Consider this a "you cannot rely on plugging tax form numbers in and assuming that a completely correct tax return will magically pop out" flag. Your guy has plenty of O&G income and plenty of taxable income and no actual AMT adjustment for excess IDCs? Judiciously override / delete / otherwise force the right answer. All that stuff sounded like gibberish? Time to do some research to determine what the right answer is.

Personally, I consider the auto-generated entry for K-1 O&G income (as opposed to O&G screen amounts) to be unhelpful and delete them first thing after proforma, but my affected clients could have enormously more IDCs and excess IDCs before they'd actually have an AMT adjustment, and with the SALT cap, could have enormously more AMT adjustment before they'd pay AMT. So "this has zero chance of materially affecting the correctness of my tax return" is the primary driver of that decision; your clients may vary!

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Level 3

This is the best reponse I have ever seen on Lacerte. A real Yale effort. Intelligent, professional and a little arrogant. Just like me. Thank you. I understand. Yes, my client has no AMT in any event. Back to work.

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Level 12

"and a little arrogant"

I think you meant "Precise." You got helped by the volunteer peer user that is the O&G Guru.

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"Level Up" is a gaming function, not a real life function.
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Level 15

and a graduate of Yale.


ex-AllStar
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Level 3

Yes. A real Yale effort.

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Level 3

Nah I meant what I said. And not in a negative way. I am well aware of who helped me. Thanks.

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As to why it shows up on the wrong line? There's a lot of slop in the more obscure lines of the 6251. For a complex return, if I can get within some reasonable approximation of the net adjustment, I consider myself somewhat fortunate.