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Tax Benefits

Tax Benefits

When considering the type of investments you should be making to protect and grow your wealth, one of the key considerations for sophisticated investors should be the tax benefits the investment offers. In most cases, a successful investment equates to an increase in taxes. It is rare for a successful investment to offer additional tax benefits. The one investment option in which tax benefits offer a major advantage, whether or not the investment itself is successful, is oil and gas investments. The best tax benefits come from investors who choose to participate in oil and gas investments through Direct Participation Programs (DPP).

The sophisticated investor seeking investments that offer the best tax benefits often look to Direct Participation Programs because they allow the investor the best of both worlds: partnership in a business that gives the investor the ability to write off costs and deduct losses, all without incurring exorbitant start up costs.

Investments in oil and gas offer an enticing combination of tax benefits and potential returns. For many investors, whether or not the oil or gas investment pays off, the tax benefits of participating in a Direct Participation Program makes it an attractive consideration.

In addition to tax benefits for deducting expenses related to drilling and establishing wells, additional tax benefits for oil and gas investors include the ability to earn tax-free income from the proceeds of a successful well. The IRS offers tax benefits to small oil and gas operations, allowing up to 15% of the gross income to be tax-free.Tax Benefits

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Because Congress is motivated to increase domestic oil and gas production and end the country’s dependence on middle east oil producers, they have also provided additional tax benefits to qualified investors to encourage increasing domestic production of oil and gas to help meet the energy demand in the United States, including specifically stating that investments in oil and gas wells are not considered “passive” income streams, which allows investors to deduct expenses associated with the oil and gas well against income from stocks, other investments, and salaries.

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