A direct working interest in U.S. oil & gas — combining IDCs, 100% bonus depreciation, and the depletion allowance — where we target Year-One federal deductions of 80–90% of the amount invested, usable against active or passive income.
For important disclosures regarding this educational video, please see the disclaimer below.
Direct working-interest investments in U.S. oil & gas are among the most tax-advantaged opportunities available to accredited investors — with first-year deductions that have historically reached 80–90% of the amount invested, usable against active or passive income.
Non-salvageable drilling expenses — labor, drilling fluids, site preparation, fuel, and similar costs incurred to bring a well into production.
Typically 70–85% of a well’s total cost, and the entire amount can be deducted in the year incurred.
Up to 100% deductible in Year 1Equipment with salvage value — tubulars, wellheads, tanks, surface equipment, and other recoverable hardware.
Typically 15–30% of a well’s total cost. Under the current bonus depreciation rules, eligible tangible equipment qualifies for 100% first-year expensing — no longer spread over 7 years.
100% deductible in Year 1As reserves are produced, investors may deduct a portion of gross income from the property each year to account for the decline in reserves.
Percentage depletion is generally 15% of gross income from the property — sheltering a meaningful share of ongoing distributions from federal tax.
15% of gross income — ongoingThe majority of a well’s cost flows through as IDC and bonus-depreciable TDC in Year 1. A modest remainder (lease acquisition, G&G, and other capitalized costs) is recovered over longer schedules.
Illustrative only. Assumes a 37% federal marginal bracket, full deductibility of IDCs and TDCs, and eligibility for 100% first-year bonus depreciation under current law (IRC § 168(k)). Excludes state and local taxes. Actual results depend on individual circumstances, allocations, and applicable phase-outs; bonus depreciation, IDC, and depletion rules are subject to change. This material is not tax, legal, or accounting advice — investors should consult their own independent tax and legal advisors before making any investment decision.
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