- 10 - Exxon’s income tax return preparers as not resulting in the discovery of commercially exploitable energy resources and therefore as currently deductible business expenses. During the audits for the years in issue, Exxon’s and respondent’s representatives generally agreed as to the applicable law relating to the treatment of G&G costs. They generally understood that to the extent they could agree that information provided during the audits to respondent's representatives established which particular G&G activity led to the discovery of commercially exploitable energy resources, the related G&G costs would be disallowed as current expenses and would be treated as nondeductible capital expenditures. Upon receipt during the audits from Exxon's representatives of information regarding particular G&G activity that had occurred in a year, respondent's representatives would review and analyze the information, discuss the information with Exxon's representatives, make inquiries with regard thereto, and negotiate with Exxon's representatives over whether such information established that particular G&G activity had or had not led to the discovery of commercially exploitable energy resources and whether the related costs should be treated as ordinary expenses or as capital expenditures. The following schedule for 1972 through 1978 reflects the amount of claimed G&G costs that, on audit by respondent, werePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011