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Politics : Politics of Energy
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To: Road Walker who wrote (24850)1/15/2011 2:30:51 PM
From: Alastair McIntosh3 Recommendations  Read Replies (1) of 86354
 
Re: Timing is huge, and can be manipulated.

You deduct your IDCs as a current business expense or you can elect to deduct them over 5 years. Please explain how that can be manipulated.

..you are going to make $1M this year and pay $300K in taxes. Or you can invest that $300K in a oil well, before the fact, and pay no tax.

Nonsense. Allowable expenses can only be deducted from taxable income. You would still pay taxes on $700,000.

many oil wells wouldn't be drilled without it.

Well, duh. Of course. Why do you think the accelerated write-off is in place? Could it be to encourage economic activity and promote less use of foreign energy?

..accelerated depreciation is also a subsidy, just not as fast or blatant and not permanent.

How does the IDC differ conceptually from allowing a company to expense the cost of new computer equipment in year 1 instead of capitalizing the cost and taking depreciation expense over a period of years.
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