This article will help you resolve the following diagnostic, electing to expense intangible drilling and development (IDC) for nonproductive wells:
"Oil and Gas property #X: Dry hole expenses of $XX have been entered. For this amount to be allowed as a deduction, the nonproductive well must have been completed in the current tax year and an election must be attached to the return." (Ref #2000184)
To add an election in the Individual module
- Go to Input Return ⮕ Other ⮕ Elections.
- Select the Other tab.
- Scroll down to Election to Expense IDC for Nonproductive Wells Section.
- Place a checkmark in the box Expense intangible drilling & development costs [263(c)].
- Enter a Description of well and Total costs incurred to complete the statement.
To add an election in the S-Corp module
- Go to Input Return ⮕ Other ⮕ Elections.
- Select Elections in the upper right corner.
- Select the Other tab.
- Scroll down to Election to Expense IDC for Nonproductive Wells Section.
- Place a checkmark in the box Expense intangible drilling & development costs [263(c)].
- Enter a Description of well and Total costs incurred to complete the statement.
To add an election in the Corporate module
- Go to Input Return ⮕ Other ⮕ Elections.
- Select Elections in the upper right corner.
- Select the Other tab.
- Scroll down to Election to Expense IDC for Nonproductive Wells Section.
- Place a checkmark in the box Expense intangible drilling & development costs [263(c)].
- Enter a Description of well and Total costs incurred to complete the statement.
To add an election in the Partnership module
- Go to Input Return ⮕ Other ⮕ Elections.
- Select Elections in the upper right corner.
- Select the Other tab.
- Scroll down to Election to Expense IDC for Nonproductive Wells Section.
- Place a checkmark in the box Expense intangible drilling & development costs [263(c)].
- Enter a Description of well and Total costs incurred to complete the statement.
To add an election in the Fiduciary module
- Go to Input Return ⮕ Other ⮕ Elections.
- Select Bene. Elections in the upper right corner.
- Select the Other tab.
- Scroll down to Election to Expense IDC for Nonproductive Wells Section.
- Place a checkmark in the box Expense intangible drilling & development costs [263(c)].
- Enter a Description of well and Total costs incurred to complete the statement.
