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I am no expert, but the only one the sticks out to me is the depletion allowance. If you sell a million barrels of oil you then get to say you land is worth a m
by megaman821 4y ago
I am no expert, but the only one the sticks out to me is the depletion allowance. If you sell a million barrels of oil you then get to say you land is worth a million barrels of oil less. What exactly is that supposed to be incentivizing? You have already taken the oil out of the ground and sold it. It is a pure gift to be able to write-off some of your land value after that.
- snapplebobapple 4y agowhile writing it without having to sell it is a bit of a gift, it is still just an amortization thing because your land is materially worth less now that the oil isn't available to be extracted. If you sold the land you would have a loss equivalent to that change in value to write off against your other profits. It's once again just a timing thing not an actual net change as the loss will be recorded and deducted from taxes payable at some point with or without this legislation and it really should be.