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CAUTION

Cost depletion can be substituted for the amount allowed using amortization over 120 months.

Net income. Determine net income by reducing the gross income that the estate or trust received or accrued during the tax year from all oil, gas, and geothermal wells by the deductions allocable to those wells (reduced by the excess IDCs). When refiguring net income, use only income and deductions allowed for the AMT.

Exception. The preference for IDCs from oil and gas wells doesn't apply to taxpayers who are independent producers (that is, not integrated oil companies as defined in section 291(b)(4)). However, this benefit may be limited. First, figure the IDC preference as if this exception didn't apply. For purposes of this exception, complete and combine lines 1 through 21, including the IDC preference. If the amount of the IDC preference exceeds 40% of the total of lines 1 through 21, enter the excess on line 20 (the benefit of this exception is limited). Otherwise, don’t enter an amount on line 20 (the estate's or trust's benefit from this exception isn't limited).

Line 21—Other Adjustments Enter on line 21 the total of any other adjustments that apply, including the following.

• Section 199A deduction. Include as a negative amount on line 21 the section 199A deduction shown on Form 1041, line 20.

ESBTs. Don't include any section 199A