Can a limited partnership elect to amortize intangible drilling costs over 60 months instead of expensing these costs?
No. The election to amortize intangible drilling costs (IDC) over 60 months is not available to a partnership. IDC are a part of the cost of goods sold (COGS) deduction. A taxable entity that elects to capitalize its allowable COGS under TTC Section 171.1012(g) must capitalize those costs in the same manner and to the same extent they are capitalized on the taxable entity’s federal income tax return. For federal tax purposes the 60-month IDC amortization election is made at the partner level rather than by the partnership. Therefore, a partnership must expense its IDC in the year incurred for the COGS deduction.
