Sec. 217. Amortization of intangible drilling and development costs in the case of oil and gas wells
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Subsection
(c)of section 263 of the Internal Revenue Code of 1986 is amended to read as follows: Notwithstanding subsection (a), and except as provided in subsection (i), a taxpayer may elect to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(2)) in such manner as the Secretary provides. This subsection shall not apply with respect to any costs to which any deduction is allowed under section 59(e). Notwithstanding subsection (a), and except as provided in subsection (i), in the case of any expenses paid or incurred in taxable years beginning after the date of the enactment of End Polluter Welfare Act of 2025 in connection with intangible drilling and development costs related to oil and gas wells— such expenses shall be allowed as a deduction ratably over the 84-month period beginning on the date that such expense was paid or incurred, any such expenses paid or incurred during any month shall be treated as paid or incurred on the mid-point of such month, except as provided in this paragraph, no depreciation or amortization deduction shall be allowed with respect to such expenses, and if any property with respect to which such intangible drilling and development costs are paid or incurred is retired or abandoned during such 84-month period, no deduction shall be allowed on account of such retirement or abandonment and the amortization deduction under this paragraph shall continue with respect to such payment. . Paragraph
(2)of section 57(a) of the Internal Revenue Code of 1986 is amended to read as follows: With respect to all geothermal properties of the taxpayer, the amount (if any) by which the amount of the excess intangible drilling costs arising in the taxable year is greater than 65 percent of the net income of the taxpayer from geothermal properties for the taxable year. For purposes of subparagraph (A), the amount of the excess intangible drilling costs arising in the taxable year is the excess of— the intangible drilling and development costs paid or incurred in connection with geothermal wells (other than costs incurred in drilling a nonproductive well) allowable under section 263(c)(1) for the taxable year, over the amount which would have been allowable for the taxable year if such costs had been capitalized and straight line recovery of intangibles (as defined in subsection (b)) had been used with respect to such costs. For purposes of subparagraph (A), the amount of the net income of the taxpayer from geothermal properties for the taxable year is the excess of— the aggregate amount of gross income (within the meaning of section 613(a)) from all geothermal properties of the taxpayer received or accrued by the taxpayer during the taxable year, over the amount of any deductions allocable to such properties reduced by the excess described in subparagraph
(B)for such taxable year. . Section 59(e) of such Code, as amended by sections 215 and 216, is amended— in paragraph (2)(C), by striking section 263(c) and inserting section 263(c)(1) , and in paragraph (5), by striking section 263(c) and inserting section 263(c)(1) . Section 263A(c)(3) of such Code, as amended by sections 215 and 216, is amended— in the heading, by striking and inserting oil and gas , and geothermal by striking 263(c), and inserting 263(c)(1) . Section 291 of such Code, as amended by sections 215 and 216, is amended by striking subsection (b). Section 312(n) of such Code, as amended by sections 215 and 216, is amended by striking section 263(c), and inserting section 263(c)(1) . The amendments made by this section shall apply to expenditures paid or incurred in taxable years beginning after the date of the enactment of this Act.