Currently, the United States of America is the largest consumer of oil in the world, and the demand for energy is growing by the day. That is one of the reasons why the U.S. Government provides a series of tax benefits to energy investors, to increase domestic oil and gas production. As a leading investment services company, FIG Tree Capital Ventures has been actively involved in bringing the most promising oil and gas investment opportunities to qualified investors. Our energy investing programs are designed to generate steady cash flow and significant tax savings for investors. If you too have been planning to put your money into oil and gas investment opportunities, this blog post is for you. Read on as we cover some of the many energy investing tax advantages. Take a look.
Intangible Drilling Costs
Intangible drilling costs cover everything except the actual drilling equipment. Labor, chemicals, grease, mud, and other miscellaneous items essential for drilling come under intangible costs. Generally, these expenses constitute 65 to 80 percent of the total drilling costs of a well, and they are 100 percent deductible in the year they were incurred.
Tangible Drilling Costs
Tangible costs are the direct opposite of intangible costs. They pertain to the actual cost of drilling equipment. But like the energy investing tax advantages arising from intangible drilling costs, these expenses are 100 percent deductible. The only difference is that the tangible costs are depreciated over a period of 7 years.
Active vs. Passive Income
The tax code clearly spells out that, unlike a royalty interest, a working interest in an oil and gas well is not considered a passive activity. This means that all net losses are active income incurred in the course of wellhead production, which can be offset against other forms of income such as wages, interest, and capital gains.
Lease Operating Costs
Under these costs, investors will get tax benefits on expenses related to the purchase of a lease, operation of a lease, mineral rights, and all administrative, accounting, and legal costs. These expenses are typically capitalized and deducted over the lifespan of a lease through a depletion allowance.
Small Producer Exemptions
Small producers and investors find this tax break the most alluring. Known as the depletion allowance, this incentive exempts 15 percent of all gross income from oil and gas wells from taxation. This tax benefit is available only to small companies and individual investors with a production capacity of less than 50,000 barrels of oil per day.
Looking for Energy Investing Programs? Speak with Us!
Energy investing programs entail significant tax advantages that are attracting an increasing number of investors. If you too are looking for oil and gas investment opportunities, speak with the experts at Fig Tree Capital Ventures. We provide direct investment opportunities in the increasingly profitable oil and gas industry, and help investors realize consistent cash flow while qualifying for substantial tax benefits. To learn more, simply call (866) 300-2170, or fill out our contact form and one of our advisors will take it from there.