Replies to This Discussion

Permalink Reply by danny meyers on May 7, 2009 at 18:11

KB With the 80+% decline curve of these wells the second year's income is going to be about15-20% of the first year's income. In other words if you have a relatively steady income and the well comes on line in your unit even with one acre you will have enough income increase to be in a higher tax bracket. The next year the income from the well will decrease by 80+%. The second year decline will be about 25+%.The third year decline will be 20+%. In a situation where your income is declining (depleting) does it not seem logical that one should be able to deduct 15% of ones royalty income to avoid being placed into such a high tax bracket for such a short time.

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Permalink Reply by Bobi Carr ("parker") on May 8, 2009 at 12:34

And what happened to real estate and the S & L's in the 80's, when taxes were restructured? Anyone remember the RTC?

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Permalink Reply by Spring Branch,mineral owner on May 9, 2009 at 5:25

You have to have an office somewhere in order to generate income as an attorney, I would think, KB. You either have that office in your home, own your own building which houses your office, or rent space from another building owner who provides you space for a fee. Which ever it is, someone is depreciating the building which houses your office and without that landlord having the ability to depreciate the building which provides that space, guess what.......your rent would be higher. Guess what else....your income would be lower, because you are having to pay more rent. So you do generate income with property, plant and equipment. It just happens to belong to someone else, or to you if you own your own building. It all falls back to that old law of unintended consequences!

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Permalink Reply by Snake Stewart on May 8, 2009 at 12:19

Similar to how great the auto industry had been doing for years ? Now its payback time (bailout) for the auto workers unions for their support of President Obama ? Going backwards (rolling back) makes almost as much sense as someone screaming "tax the rich, tax the rich" while drawing EIC.
Eventually we will have to get above the rhetorical political election time themes to survive as a nation. Trying to cripple the industry thats the best shot you have at a speedier economic recovery is almost as backwards as expecting our veterans to foot their own medical bills because "its an all volunteer military".
We were eating supper, night before last, at a steak house in Bossier. They announced that the kid in the booth in front of us was being called up & was leaving for Saudi Arabia the next morning. Everyone in the joint raised their collective voices to bid him farewell. I even tried to pick his tab up but somebody beat me to it. Two other cats asked after I did! Not because I believe in the war on terror, or because I dislike someone on the other side of the planet that views stuff differently . Because there are crazies out there that dont want me to live the free way that I do,( or even live at all ) fighting has to happen. It was simply, the right thing to do.I just reached out and grabbed that kids hand on the way out and told him good luck. I was thankful for his willingness to be placed in harms way so that I could live free and do as I choose in this once great nation. Freedom comes at a huge price. But not on the backs of the wealthy.

I generally try to shy away from politics but this is getting ridiculous. Having a different view politically is fine. It is your God given right. I differ with most on at least an issue or two....... hundred.But politics should be left outside when it distorts, good ole do the right thing type of common sense decision making and blurrs everything into a far left/ extreme right black hole at the quantum level! We all, left & right, need to put our gray paint brushes down for a while and do what we must do to survive. Tried and true methods for survival. This isnt the time to experiment with new , unproven theories. Or old ones that never worked with a new twist. You cant tax your way out of a recession , only stunt prospective growth. You cant print your way into better days, only step up the risks of inflation.

From a business standpoint , Its not about simply surviving. It is about profitability. If it cant be more profitable, why bother with the added expense and risks associated with growing any business ? Bigger government cant dig us out of this hole. They havent ever been known for that. They can bury us deeper tho.

Energy independence is the safest, fastest way to securing our future and the future of those beloved grandchildren you speak of. N/G is the NOW engine that can get us there. I hope that our agendas dont get in the way and keep this from becoming a reality.
Have a good one.

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Permalink Reply by Bobi Carr ("parker") on May 8, 2009 at 12:42

Snake,
I wouldn't even have a thought about this issue unless it were for my own self interest. I know that I enter the discussion with that perspective, just as someone in Appalachia sees it from their view in coal country. I just hope that our politicians can make informed decisions that are the best decisions for our country and future generations.

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Permalink Reply by Bobi Carr ("parker") on May 8, 2009 at 12:44

Snake,
BTW, what are you doing on here? Did you tell KK to meet you at Trejos?

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Permalink Reply by Snake Stewart on May 8, 2009 at 14:57

YIKES !!!!!!!!
Some memory you got there Parker. If me-maw wasnt already down for the count due to her meds, she would be all over this too! (LOL)

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Permalink Reply by Cathaus on May 8, 2009 at 22:41

MeMaw was going to give you a pass. I changed my mind when I changed my depends!
Parker and I will never forget about being "stood up". See you at Trejos on Airline, yea right!!!

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Permalink Reply by Spring Branch,mineral owner on May 8, 2009 at 13:13

I'm no expert, but I don't think Percentage Depletion is available to the "big O&G" or any independents that produce over a certain amount a day (I think 1000 barrel oil equivalent). Someone check me on this, but that is my understanding. If that is the case, it was designed for the small independents and royalty owners like me and you, Not Large O & G and I think that Percentage Depletion existed before George Bush's Presidency. Someone check me on that , too. How is it " at the expense of our grandkids" to encourage domestic production rather than imported oil? Are tax credits for ethanol, wind power, solar power, home insulation, and everything else that the "enlightened ones" are in favor of ......"at the expense of our grandkids" also?

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Permalink Reply by Pipeliner on May 13, 2009 at 7:42

Spring Branch,

You are correct that this tax break is not for Big Oil. Please see page 61 of the Treasury Green Book. Under "Repeal Credit for Production from Marginal Wells"--states "credit per well is limited to 1,095 barrels of oil or oil equivalents". That leaves the Big Boys out.

http://www.treas.gov/offices/tax-policy/library/grnbk09.pdf

These "tax breaks" were made laws by both parties, starting in 1916. If these are all George W. Bush "Tax Breaks for the Wealthy", he sure started early-1916, 1926. 1950, etc., didn't he?



http://www.taxpayer.net/search_by_category.php?action=view&proj...

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Permalink Reply by Keith Mauck (Site Publisher) on May 11, 2009 at 8:22

Update...

Obama keeps new oil, gas taxes in final 2010 budget

Natural Gas Supply Association Pres. R. Skip Horvath said Obama's budget was bad news for American consumers and worse news for American jobs. "People don't appreciate how big the gas industry is in this country. Four million Americans depend on domestic gas for their livelihoods, both those who work directly in the industry as well as those in second jobs, such as steel and concrete, and retailing," he said.

He said that it was too soon to say definitively how many jobs would be lost, "but just a 10% decrease in direct natural gas jobs could wipe out the beneficial effects of a doubling of wind and solar jobs.

"Tax policies directly impact the decisions that are made regarding drilling, especially for smaller companies," Horvath said. "More importantly, over 80% of the gas in the US is actually produced in this country. We are troubled that this administration has such a basic misunderstanding of how domestic gas markets will be impacted," he said.

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Permalink Reply by Spring Branch,mineral owner on May 12, 2009 at 12:05

Most of us are not overly concerned with the increased taxes on the Exxon's of the world, though I would suspect that there will be many mom & pop shareholders who will be affected negatively. Your clueless president appears to be lumping the 40 acre royalty owner with the Exxon's and Chevrons by taking away their percentage depletion. Most of these folks have never received a royalty $ in their lifetime. Where is the increased taxes going??? To folk who have never paid taxes in their lifetime. How do you think the commercial real estate business would do if you took away their ability to depreciate buildings? Depletion is just another name for depreciation... Are you suggesting that his plan takes into consideration "tax fairness" for the small/medium independents?
I think not. Heck, if they are borrowing billions of dollars to discover "domestic" natural gas, why not leave the large independents alone also?

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