In today’s unsteady economic times, reducing your income tax burden is an important way to ensure that you are making the most of your money. By putting a portion of your income into oil investments, you can reduce the amount of money that is subject to taxation by the government. Sheltering your income from taxation is a great way to keep more of your money in your pocket. Read below to find out how to use oil and gas investments to lower your taxes.
The cost for developing and preparing oil wells is tax deductible as intangible drilling costs. This means that even if oil hasn’t yet been found, you can benefit from lowering your taxable income immediately. Intangible drilling costs usually make up a majority of the total investment. Tangible drilling costs relate directly to the equipment used for drilling and are also 100% tax deductible. These costs can be deducted over an extended period of time.
Once the oil well is in production, you can use the depletion allowance to account for the depletion of the resource as it is extracted. With the depletion allowance, a portion of your income will be tax free. Small companies and individual investors are given an edge with the depletion allowance, since large companies are ineligible.
Using modern technology such as 3D seismic imaging, oil producers are able to pinpoint the location of oil reserves and place their wells only in areas that are likely to be successful. This means fewer wells need to be drilled and the success rate of the wells is high, allowing for higher returns with low risk to the investors.
Aegis Oil offers investment opportunities in the Permian Basin and other quality oil-producing regions. We lower risk by focusing on proven fields and provide a safe return on your investment. Call (888) 927-3563 to find out more about oil investments through Aegis Oil.