Standard Oil Co. v. Commissioner
United States Tax Court
On its income tax returns, petitioner capitalized the following costs of constructing offshore jacket-type drilling platforms: labor, fuel, repairs, hauling, supplies, and overhead. In its petition, it claims these costs are deductible as intangible drilling costs (IDC). Held, claiming such costs as deductions does not constitute a change in the method of accounting under sec. 446(e), I.R.C. 1954, requiring the consent of the Commissioner.
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On its income tax returns, petitioner capitalized the following costs of constructing offshore jacket-type drilling platforms: labor, fuel, repairs, hauling, supplies, and overhead. In its petition, it claims these costs are deductible as intangible drilling costs (IDC). Held, claiming such costs as deductions does not constitute a change in the method of accounting under sec. 446(e), I.R.C. 1954, requiring the consent of the Commissioner. Held, further: The jacket-type drilling platforms involved here are not ordinarily considered as having salvage value. Accordingly, all of the other costs…
1Opinion of the Court
Goffe, Judge:
The Commissioner determined deficiencies in petitioner’s Federal income tax for its taxable years ending December 31 of 1970 and 1971 in the respective amounts of $7,402,139.81 and $6,372,883.57. Petitioner moved, on the basis of our decision in Standard Oil Co. (Indiana) v. Commissioner, 68 T.C. 325 (1977), for summary judgment as to those deductions for intangible drilling and development costs (herein IDC) expended in the drilling of offshore wells from mobile drilling rigs which the Commissioner had disallowed. Respondent failed to allege any material facts which would…
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