100% Tax Write Off with Intangible Drilling Costs (IDC)
A great oil investment tax write off is in the form of intangible drilling costs, which can be deducted 100% against taxable income in the first year. Intangible Drilling Costs (IDCs) are drilling expenses related to labor, fuel, chemicals, hauling, etc. IDCs usually represent 70% to 85% of the cost of a well. For example, if you invested $50,000 today in a project that had 85% of its costs in IDCs, you could elect to deduct $42,500 from your taxable income for 2014. If you are in the top 39.6% federal tax bracket this deduction could save you approximately $14,875 in federal income taxes – please speak with your tax advisor for information specific to your situation.
For more write-offs, see Oil Investing Tax Shelters