Who says there are no great “tax shelters” left for investors?
Strategy: If you can bear the risk, you can invest in oil and gas drilling funds. Investors can qualify for a special up-front tax break: the deduction for intangible drilling costs. A dollar invested now might provide a deduction of 50 cents, 70 cents or even 90 cents this year.
In drilling funds, investors pool their money, which is used by a driller to hunt for oil, natural gas or both.
As with other types of partnerships, public drilling funds are composed of many investors who may contribute tens of millions of dollars to drill in several places. In private drilling funds, a few wealthy investors make larger commitments, but the total amount raised winds up being smaller.
In either case, you may benefit from two prime tax shelters:
- In the first year or two, from a deduction for intangible drilling costs (IDC)
- Over the life of the venture, from an allowance ...(register to read more)