Jerry Capehart states that while many are writing checks to pay their taxes as the tax deadline comes to an end, many investors are enjoying 100% Tax Write Offs because they invested in Oil & Gas - Direct Participation Programs (DPPs).
Grand Prairie, TX (PRWEB) April 15, 2004 -- (12:01AM) Jerry Capehart states that while many are writing checks to pay their taxes as the tax deadline comes to an end, many investors are enjoying 100% Tax Write Offs because they invested in Oil & Gas - Direct Participation Programs (DPPs).
The investors who invested last year in oil and gas programs, such as the DDPs, are allowed by the IRS code 469(c) to deduct usually 75% (often more of the intangible drilling costs) of their capital investment in the year in which the well began drilling. In addition, investors get to write off the remainder in subsequent years. The tangible drilling costs" are amortized and deducted too, allowing for a fabulous opportunity to make money while lessening ones tax burden. If more investors were aware of the IRS code, he believes more investors would be willing to take on some speculation and risk involved in drilling wells or invest in the reworking or re-completing of old domestic wells. The tax savings is a valuable consideration for investors.
Many wells, according to the Texas Railroad Commission (RRC), are orphaned and eventually must be plugged and abandoned forever. However, some of these wells can still make oil and natural gas. The problem exists that the most operators dont want the risk associated with the cost of plugging the wells because if the wells are not commercially productive the plugging cost may exceed the profits. Currently, little incentive exists for operators to attempt to rework the wells. Texas alone has thousands of these shut-in wells that have no one to operate them. Overall less oil is being produced domestically in Texas since the RRC passed the current bonding laws (effective Nov. 2001) that have inadvertently harmed our economy by making the cost of doing business higher and driving the small operators out of business. The RRC is not entirely to blame. According to Capehart, our dependence on foreign oil is one of our most difficult problems we face today. One may just look at our present condition, and it is easy to understand why our gasoline prices are so high. OPEC and Venezuela control the spigot, and we are at their mercy. Every year we become more indebted and dependent on these foreign suppliers. Unless we do something soon, we are really going to be in trouble.
If we were smart, Capehart said, we would create a national investment like a REIT (Real Estate Investment Trust) is to real estate investing, except it would allow the investors to participate in what he calls an OGIT (Oil & Gas Investment Trust). Such an investment presently does not exist. However, if Capehart has his way, one day he will create the OGIT. The OGIT will level the playing field and allow small investors the proportional tax advantages presently only enjoyed by the already wealthy.
Since 1998, Capehart has discussed and written about the idea of developing an OGIT. He says now is the time to take action. Mr. Capehart is the founder and president of www.Oil-N-Gas.com, an educational oil and gas web site.
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