landowner

Tax Consequences & Depreciation

I was wondering about the tax consequences and depreciation if your section is unitized and a drill is completed and production begins.

a. Non Consent
b. Investing partner in the well

Can you depreciate the equipment if you go non consent? If you are paying for your share of the well it would seem so.

Also, I have asked this before but got no response. Has anyone gone nonconsent? If so, how has the experience gone?

Thanks,

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landownerPermalink Reply by RAY on October 28, 2008 at 12:54
you need to join & ask the "Oil & Gas Professional" group.

landownerPermalink Reply by Grice on October 28, 2008 at 13:27
You would need to verify this with your CPA, but I believe (from a non consent position) the cost of the well, or any associated fees would be determined to be passive income, and not considered an asset. Being as such, you would not be able to depreciate the value, nor claim a tax relief of the equipment used to drill the well. As a consenting partner, you would be able to claim the same reliefs as you would with any other type of investment. Again, you would need to verify this with your CPA, as free advice on a public forum would not be a defense in the event you failed to follow proper procedures when filing your tax records.

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