Broker Check

Last minute tax savings also available to closely held c-corps

July 10, 2015

Investing in oil and gas partnerships often offer great tax breaks to qualified individuals. For 2011 these tax breaks are available to c-corps held by five or fewer individuals.  As an added bonus the initial tax deductions do not affect alternative minimum tax calculations.  The investment is mainly one for long-term income.  In this case, long-term is 20 or 30 years as the oil and natural gas continues to come out of the ground.

One of the most attractive aspects of these programs is that the income is tied to the price of oil and gas which helps to hedge against inflation.  The investment is not for everyone.  Usually, these programs are private placements meaning they are only available to accredited investors.  Private placement investments are usually considered illiquid investments.  Accredited investors are determined by tax filing status.  Single filers must have an income of $200,000 for last year and this year or have $1,000,000 of investable assets and joint filers must have an income of $300,000 for last year and this year or $1,000,000 of investable assets.  Investable assets do not include one's primary residence.  These income levels may seem high but the DC area has 6 of the top 10 richest counties in the country as determined by median income so these types of investments apply more here than anywhere.   For 2011 tax savings investments in these programs must be made before the end of the 2011 calendar year.

Details can be found at