Recent tax court cases provide guide to accelerated cash flow from oil and gas transactions
Three recent Tax Court decisions in the partnership taxation area point the way for owners of exploration and development properties to obtain cash without recognizing taxable gain and with no obligation to return any of the cash received or dedicate it to development. The review of these cases suggest the following general implications in the oil and gas taxation area: (1) the most important element in favor of contribution-distribution treatment is the nature of the property contributed and the plans and business risk assumed by the partners, since these elements appear to govern the substance of the transaction; (2) the trend of the cases in Tax Court seems to be in the direction of allowing the cash to come from the partners not contributing land, while still allowing nonrecognition treatment; and (3) where the landowning partner obtains his cash from a partnership production payment, the cash should not be taxed assuming production payment is adequately secured so that it is not in substance something else. (JMT)
- Research Organization:
- Union Texas Petroleum, Houston, TX
- OSTI ID:
- 6221020
- Journal Information:
- Oil Gas Tax Q.; (United States), Vol. 31:2
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
03 NATURAL GAS
29 ENERGY PLANNING
POLICY AND ECONOMY
NATURAL GAS INDUSTRY
LEGAL ASPECTS
TAX LAWS
PETROLEUM INDUSTRY
ACCOUNTING
EXPLORATION
NATURAL GAS DEPOSITS
PETROLEUM DEPOSITS
TAXES
US IRS
GEOLOGIC DEPOSITS
INDUSTRY
LAWS
MINERAL RESOURCES
NATIONAL ORGANIZATIONS
RESOURCES
US DEPARTMENT OF TREASURY
US ORGANIZATIONS
021000* - Petroleum- Legislation & Regulations
031000 - Natural Gas- Legislation & Regulations
294002 - Energy Planning & Policy- Petroleum
294003 - Energy Planning & Policy- Natural Gas
293000 - Energy Planning & Policy- Policy
Legislation
& Regulation