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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: Alastair McIntosh who wrote (24852)	1/15/2011 6:51:47 PM
From: Road Walker	1 Recommendation Read Replies (3) \| Respond to of 86354

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 If you don't get that you need to talk to an accountant. No way I could explain that here. But don't be naive. Nonsense. Allowable expenses can only be deducted from taxable income. You would still pay taxes on $700,000. Yeah ANY taxable income. Even another business. Ya think very rich people dont .... 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? Sure. But we're talking relative subsidies. Some here have claimed we really don't subsidize oil. Thats the discussion. 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. Conceptionually? This has nothing to do with conception it has to do with accounting. First, it's a permanent subsidy, vs a rare and sporatic subsidy. It's law. The oil industry is treated differently than any other. Second, it's one year, in advance of drilling. No one else gets that tax treatment. Third, it attracts capital strictly for tax avoidance. Not just IDC, but other investor advantages. Listen, you are welcome to say it's a good thing to subsidize domestic oil production, and that's another discussion. But don't pretend it's not heavily subsidized.