Bob78164 wrote:
BackInTex wrote:
Bob78164 wrote:
Every law firm I've ever known about pays taxes on a cash, not accrual basis. And to the extent you're talking about contingency fee cases, the expenses we're talking about are cash expenses.
The depletion allowance simply lets oil companies subtract 9% off the income derived from extracted oil for no reason that I can discern. --Bob
Just because you can't understand it doesn't mean its not real or that it doesn't make economic sense.
The percentage depletion allowance is only for independent producers and royalty owners...so Big Oil must use cost depletion which is based on the investment they've made.
Right. So these producers
get to deduct 15% of their income every year no matter how much, or how little, they've spent to generate that income.
In contrast, ordinary W-2 employees don't get to deduct unreimbursed employee expenses at all until those expenses, combined with other "miscellaneous" itemized deductions, exceed 2% of their adjusted gross income. So actual people don't get to deduct their expenses unless they itemize, and even then those expenses are subject to a haircut, whereas oil and gas producers get to subtract 15% of income as a depletion deduction whether they've spent it or not. Sure looks like a subsidy to me. --Bob
Based on that logic 98% of Americans are subsidized because they are in a lower tax bracket than the top 2%. Most get a standard deduction, regardless of their living expenses.
Thank goodness the government gives them some of its money to live on.
You do not understand, you do not try to understand. All you see is someone getting money you are not and you envy them and then must say stuff like they are subsidized.
Not that is matters, but depletion deductions are subject to annual limits regardless of sunk costs, and when looked at from an economic value, depletion is the "cost of goods sold". Yes, some people where "lucky" and their grandparents bought some land that ended up having natural resources beneath it and they don't really have a "cost", other than money spent to develop the wells.
But they shouldn't get to deduct that, should they?.
And others bought the mineral rights or pay royalties and have other development costs that are not otherwise deductible. Plus the deduction is a fixed % of gross revenues regardless of selling price. So when oil is $40 they deduct less than when it is $70. If you purchased the mineral rights at $70, you get screwed when it is at $40.
Tell me Bob. Do you get the standard mileage reimbursement from work? Most W-2 workers do. The employers get to deduct the standard mileage from their income when reimbursed to you. That standard is excessive for most car owners. Do you view that as a subsidy? What about when you get lunch bought for you?
Quit being envious of others and be satisfied with what you have. Or, buy an oil well if you think it is such a great deal. Honestly, you are like a child whose sibling is getting presents for their birthday and you complain your parents are playing favorites because they are getting presents (completely disregarding you got some last birthday and will get some next birthday).