Tax Benefits That Can Help You Save
Tax Benefits of Energy Development Investments
Who is Eligible to
Invest in Energy Development?
Investing in oil and gas property developments is available to accredited investors in the top federal and state income tax brackets with annual tax burdens exceeding $1,000,000.
Is my energy investment tax deductible?
Yes! The Tax Code allows investors to deduct the entire amount of energy development investment against their ordinary income in the year the investment is made.
Consider Investing in Energy Development
Sophisticated investors participate in developing energy-producing properties because they can subsidize a portion of their venture with tax dollars while targeting the attractive returns associated with high-risk investments.
The tax benefits associated with energy development investment reduce an eligible investor’s tax burden by lowering their ordinary taxable income. Accordingly, the financial risk of investors in the top tax brackets decreases as their tax bracket increases.
Why Do These Tax Benefits Exist?
The 1986 Federal Tax Reform Act was passed to spur investment in developing domestic natural energy resources to lessen U.S. dependency on foreign energy. It provides a considerable up-front tax deduction for investors participating in domestic oil and gas exploration and production.
The Cost of Doing Nothing
Accredited investors pay a hefty price with unforgiving tax brackets by not considering oil and gas investments as a hedge. The tax incentives of energy development allow investors to convert a portion of their tax liability into risk capital–with tremendous upside potential.
Federal and state combine personal income tax 45% per $1 million of Ordinary Active Income are used below.