Section 7.57(d)-1 - Election with respect to straight line recovery of intangibles(a)Purpose. This section prescribes rules for making the election permitted under section 57(d)(2), as added by the Tax Reform Act of 1976. Under this election taxpayers may use cost depletion to compute straight line recovery of intangibles.(b)Election. The election under section 57(d) is subject to the following rules: (1) The election is made within the time prescribed by law (including extensions thereof) for filing the return for the taxable year in which the intangible drilling costs are paid or incurred or, if later, by July 25, 1978.(2) The election is made separately for each well. Thus, a taxpayer may make the election for only some of his or her wells.(3) The election is made by using, for the well or wells to which the election applies, cost depletion to compute straight line recovery of intangibles for purposes of determining the amount of the preference under section 57(a)(11).(4) The election may be made whether or not the taxpayer uses cost depletion in computing taxable income.(5) The election is made by a partnership rather than by each partner.(c)Computation of cost depletion. For purposes of computing straight line recovery of intangibles through cost depletion, both depletable and depreciable intangible drilling and development costs for the taxable year are taken into account. They are treated as if capitalized, added to basis, and recovered under § 1.611-2(a) . Costs paid or incurred in other taxable years are not taken into account.T.D. 7541, 43 FR 17816, Apr. 26, 1978; 43 FR 18993, May 3, 1978 Secs. 57(d) and 7805 of the Internal Revenue Code of 1954 (90 Stat. 1551; 68A Stat. 917; 26 U.S.C. 57(d) , 7805 )