This Tax Information is for General Educational Purposes only. Consult your CPA professional for direct impact on your financial picture.



The Intangible Drilling Cost (IDC) deductions and the depreciation of tangible equipment on a typical oil or natural gas well allow a large income tax deduction of the investment in the first year (usually 65% to 80%). The first-year tax deductions for a $100,000 capital expenditure for drilling oil and natural gas wells can be approximated as follows:

Intangible Costs  
 Capital Contribution  $100,000
  Intangible Drilling Costs  x 65%
 Intangible Expenses Deduction  $65,000
 Tangible Costs  
 Capital Contribution  $100,000
 Tangible Equipment Costs     x 35%
 Intangible Expenses Deduction    $35,000
 Depreciated over 7 years        ÷ 7
 First year Tangible Depreciation Deduction  $5,000
 First year reduction in Taxable Income    $70,000

Leave a Reply

Stay in Touch

Would you like more information regarding CEFM?

Important Notice:
Information is limited to the capabilities CEFM offers as originator and administrator of Private Placement Offerings and is not a solicitation to buy or an offer to sell any securities. Such solicitation or offer will only be made to qualified Sophisticated or Accredited Investors via confidential Private Placement Memorandum in accordance with SEC Regulation D, Rule 506.

Copyright Clarke Energy Fund Management, LLC2020 © All rights Reserved.
Close Menu