Tax Advantages

Federal Income Tax Deductions Available

  • Intangible Drilling Costs (IDC)
    Immediate tax deduction in the year costs are incurred (100% for new drilling ventures). See IRS publication 535

  • Tangible Drilling Costs (TDC)
    100% Tax deductible in year costs are incurred and assets placed in service due to Bonus Depreciation.

  • Percentage Depletion
    Tax deductible for percentage depletion (15% of gross income is tax deductible, even when in excess of cost depletion, subject to certain limitations).

  • Lease Operating Costs
    100% Tax deductible

  • Exemption from passive loss rules
    The working interest owned by the Limited Partnership qualifies for the exemption from the passive activity rules if the partner’s ownership in the Partnership meets the exception guidelines.

Tax benefits depend on your personal circumstances. Please consult a tax advisor to understand how this investment may affect your tax situation. Current tax laws are subject to change, and certain rules may limit your ability to claim tax deductions. This information is intended for informational purposes only and should not be considered tax advice. For personalized guidance, seek help from an independent tax advisor.