What is Energy Tax Facts?

Quite simply, Intangible Drilling Costs (IDCs) represent all expenses an operator may incur at the wellsite that don’t – by themselves – produce a physical asset for the producer.

The passive loss exception enables working interest owners in oil and natural gas production to achieve some parity between their investments and those of corporate shareholders.  By counting any working interest investment losses as active instead of passive, investors are able to treat the normal business deductions from their investment in the same way that a corporation would. Repealing passive loss exception would put our nation’s energy producers at a disadvantage against other American businesses.

Depletion is a form of depreciation for mineral resources that allows for a deduction from taxable income to reflect the declining production of reserves over time.