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Oil & Gas Drilling Programs
"The Survivor among Tax Shelters"
Oil and gas investments are popular tax shelters today-- especially with oil prices north of $80 a barrel. As an investor in oil and natural gas, a tax payer is allowed to deduct as a current expense, the investments in capital expenditures known as intangible drilling and developing costs. Nearly all the costs of drilling and completing a well are deductible in the year incurred. Normally, you would not be allowed to deduct these expenditures until the year that either the product was actually extracted from the wells or the drilling was abandoned. Depending on the structure of the program, tax write-offs can range from 50-90% of money invested. For example, and investment of $100,000 in a program with an 80% write-off would generate a deduction of $80,000 against your ordinary income.
Why does such a lucrative shelter still exist? The answer is very simple. Congress wishes to remove our dependency on foreign oil. Currently we import nearly all oil used in this country. We need to either produce more oil domestically or find an economic alternative.
When investigating a suitable drilling program one's primary concern should be the history of the company. What is their drilling record? With today's technology, it is more common to see success in wells drilled. One should invest only in diversified programs where you are a part owner in many wells. One should not invest in single well programs. Keep in mind that there are risks involved in these programs (such as economic and environmental risks, among others) and the potential for dry holes. Always read the program's offering documents before investing.
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Securities offered through Pacific West Securities, Inc. Member FINRA/SIPC. Advisory services offered Pacific West Financial Consultants, Inc. A Registered Investment Advisor. AMBAR Financial Group is independent of Pacific West Securities, Inc.
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Oil Drilling Platform |
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