For US federal income tax purposes, Big Oil and Big Oil-related Corps are presently permitted to deduct in the first year, 70% of their Intangible Drilling Costs (IDCs). These IDC expenditures include labor, fuel, materials, supplies truck rent, repairs to drilling equipment, and depreciation for drilling equipment. The portion not deducted in the first year is amortized over 5 years.
My proposal here is to require 100% of these IDC expenditures of Big Oil Corps and Big Oil-related Corps to instead be initially capitalized and amortized over 10 years.
I would not apply my above proposal to smaller Oil and Oil-related companies.
The economic damage to Big Oil Corps and Big Oil-related Corps from this proposal is substantially softened here due to this corporate tax loophole closer being treated as a Temporary Tax Difference under US generally accepted accounting principles. The total federal income tax deductions for these IDC expenditures will be the same over the long run. Thus, there will be no income tax charge to the income statements of these Big Oil Corps and Big Oil-related Corps from my proposal here.
There will be significantly positive CBO scoring to the US Government from this proposal, for the next 10 years and for many years thereafter.
