A continuing column which provides short summaries and updates of recent events that affect oil and gas taxation. This issue's topics include: 1987 Omnibus Reconciliation Act; Publicly-traded Partnerships; Intangible Drilling costs.

Current Developments in Oil and Gas Taxation. Mark, Richard S., Spring 1988, pp. 3‑10.

A continuing column which provides summaries of updates in the area of financial accounting. This issue's column includes a discussion of FASB statements, SFAS No. 96, and COPAS activities and bulletins.

Developments in Financial Accounting. Brock, Horace R., Spring 1988, pp. 11‑14.

Since the treatment of the IDC deduction has changed under recent revisions to the tax code, it is important for taxpayers claiming this deduction to be up to date on the latest regulations. This paper reviews the general rules concerning the deductibility of IDC's and the current status of the deduction for prepaid IDC.

The Current Status of the Deduction for Prepaid Intangible Drilling and Development Cost. Price, John, Spring 1988, pp. 15‑28.

The 1986 Tax Act made extensive changes to the rules for deducting "passive" losses. Many of these changes have adversely affected the oil and gas industry. Professors Mayne and Putnam present information on the exception provided in the 1986 Tax Act for working interests in oil and gas properties.

Oil and Gas Working Interest Rules in the Tax Reform Act of 1986. Mayne, Frank A. and Putnam, Karl B., Spring 1988, pp. 29‑32.

Among the many provisions of the 1986 Tax Act is a requirement that companies allocate and capitalize a portion of their administrative and overhead costs. This paper considers the cost accounting concepts under which such allocations might be considered reasonable for tax purposes. Further, it shows how the choice of allocation method may affect tax liability.

Cost Allocation Concepts for 1986 Tax Act Uniform Capitalization Rules. Deakin, Edward B., Spring 1988, pp. 33‑50.

The distress facing the oil industry as a result of the substantial decline in oil prices has forced a number of companies to file for bankruptcy. Mr. Johnson reviews the provisions of the bankruptcy law with an eye to providing guidance to companies who must consider this action as well as to investors and creditors in bankrupt companies.

Bankruptcy: An Overview. Johnson, Robert E., Spring 1988, pp. 51‑62.

The Hoteling Valuation principle was first published in 1931. It holds that exhaustible resource prices should rise over time according to certain predetermined principles. Professor Crain provides an empirical test of the Hoteling Valuation Principle and finds that it is a good descriptor of oil and gas price behavior. He also suggests that the significance of the principle supports the need for supplemental disclosure of oil and gas value data.

A Test of the Hoteling Valuation Principle Using Royalty Trusts and Master Limited Partnerships: Implications for Oil and Gas Disclosures. Crain, John L., Spring 1988, pp. 63‑74.

The domestic petroleum industry has been through perhaps the most difficult period in its history. This article reviews some of the more recent trends in the industry which suggest that the basis is being laid for an improved future. A review of governmental policies and the way that those policies could stall the recovery is also included.

The Domestic Petroleum Industry: A Challenge to Survive. Ekstrom, Jack R., Spring 1988, pp. 75‑88.

Financial accounting rules provide that events which may have a material effect on the financial statements of a company should be disclosed if they become evident between the date of the financial statements and their release. The severe decline in oil prices at the start of 1986 took place between the date of most 12/31 financial statements and the issuance of those statements. This paper reviews the treatment which companies applied to this event. They found a high degree of consistency by affected full-cost companies.

Reporting of Post-Balance Sheet Price Changes by Full-Cost Oil and Gas Companies. Gallun, Rebecca A. and Adams, Barbara L., Spring 1988, pp. 89‑100.

There is continuing concern that the quantities of proved reserves reported by oil and gas companies are highly unstable. This instability usually shows up through subsequent revisions to reported reserve quantities. Professor Campbell reviews reported revisions relative to reserve quantities and finds that, for the most part, reported amounts are relatively stable and free from bias.

An Analysis of Bias and Reliability in Revisions of Previous Estimates of Proved Oil and Gas Reserve Quantity Information: An Update. Campbell, Alan D., Spring 1988, pp. 101‑146.

Controversy continues to surround the FASB's required standardized measure disclosures under Standard No. 69. This article tests the usefulness of the FAS 69 disclosure data for predicting financial distress. They found that traditional distress measures were better at predicting firm failure than the FAS 69 data.

An Assessment of the Relevance of Standardized Measures for Oil and Gas Reserves. Grove, Hugh D.; Selto, Frank H.; and Lee, Patsy L., Spring 1988, pp. 147‑170.