'76 Tax Act: ample drilling incentives still exist

Journal Article · Wed Dec 01 04:00:00 EST 1976 · World Oil; (United States)

OSTI ID:7125328

Examination of the Tax Reform Act of 1976 indicates that the impact on incentives for investment in oil and gas drilling programs will be minimal except for a few of the larger sources of capital. Major features are to reduce tax shelter for investors in many industries while increasing the record keeping requirements. A review and comparison is made of the tax statutes before 1969, the Tax Reform Act of 1969, Tax Reduction Act of 1975, and the Tax Reform Act of 1976. Prior to 1969, the oil and gas industries enjoyed favored-activity status to encourage investments through such tax incentives as intangible drilling and development cost (IDC) deductions and percentage depletions to allow for high risks. The 1969 Act reduced the percentage depletion 50 to 22 percent, set a minimum tax rate for long-term capital gains, and set a 50 percent ceiling on earned income taxes. Major changes in 1975 repealed the percentage depletion allowance for major companies. The 1976 Act limits the investor's risk if the venture should fail, reduces the tax benefit of IDC, and increases the portion of return to unearned income so that total tax payments are larger. Sample tax computations demonstrate that major investors will have a decrease in tax savings due to investment, but the amounts will not be significant to smaller investors. (DCK)

• OSTI ID: 7125328
• Journal Information: World Oil; (United States), Journal Name: World Oil; (United States) Vol. 183:7; ISSN WOOIA
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000 -- Petroleum-- Legislation & Regulations
03 NATURAL GAS
031000 -- Natural Gas-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294000* -- Energy Planning & Policy-- Fossil Fuels
ACCOUNTING
CAPITAL
DRILLING
ECONOMICS
ENERGY POLICY
FINANCIAL INCENTIVES
GOVERNMENT POLICIES
HAZARDS
INDUSTRY
INVESTMENT
MANAGEMENT
NATURAL GAS INDUSTRY
PETROLEUM INDUSTRY
TAXES
WELL DRILLING