Title 15 . Revenue

Chapter 21 . (Repealed)

Section 270. Deduction for exploration costs

15 AAC 21.270. Deduction for exploration costs

(a) A taxpayer's costs (excluding all general overhead and administrative expense allocated to the exploration) for oil and gas exploration on land in the state before the taxpayer has any production interest in that land constitute a deduction in determining the taxpayer's taxable production income for the earlier of (1) the year in which the permit or other authorization to enter that land to conduct that exploration expires without the taxpayer's having by then acquired a production interest in that land or (2) the year the taxpayer acquires a production interest in that land; except that the drilling costs for a well drilled in the course of that exploration may be deducted in determining the taxpayer's taxable production income for only that year in which the well is completed or abandoned.

(b) A taxpayer's exploration costs incurred in a project involving land both within and outside the state and in which the taxpayer then has no production interest should be allocated on the basis of relative acreage involved in the project. The department may authorize or require such an allocation to be on another basis if that is more appropriate than using acreage.

History: Eff. 2/22/79, Register 69

Authority: AS 43.05.080

AS 43.19.010 ,

Art. IV, § 18

AS 43.21.020

AS 43.21.090