The tax code has let you deduct drilling costs against ordinary income since 1913. It still does, for the same reason it always has.
$100,000 in. A target of roughly $70,000 off your ordinary income (like your W-2), in the same tax year.
Real footage, South Texas site.
Step 1 of 3
Which of these describes you?
The deduction math fits on one line
Put $100,000 in and a target of roughly $70,000 comes off your ordinary income, in the tax year you invest. Not a rate of return. A deduction, and it lands the same year.
It is a rule, not a strategy
Drilling a well is mostly intangible drilling cost. The tax code has allowed those costs to be deducted against ordinary income since 1913, a provision written long before anyone was selling it. The number arrives on a K-1 by March, already printed.
What sits underneath the deduction
400 producing wells across roughly 58,000 leased acres in South Texas. A natural gas development, mostly dry gas and natural gas liquids, producing today. The deduction is attached to the wells, and the wells are already there. Deduction figures are targeted, not guaranteed; they depend on the specific wells and on your own income and tax situation.
Who this is written for
Income that arrives as salary, bonus or 1099 fees is taxed as ordinary income, and the list of deductions that reach it is short. If that is your income, and you can commit $100,000, the two questions above will tell you whether it applies. Accredited investors only.
Two questions is all it takes to know whether this applies to you.