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Most tax strategies give you either a write-off or long-term growth. Oil and gas gives you both. With IRS Code 263(c), you get massive upfront deductions and steady tax-advantaged cash flow.

In this episode, Mike and Nick from US Energy unpack how drilling funds work, the unique tax benefits they provide, and how to use them strategically in your business planning.

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Chapters:

(01:34) What Is US Energy and Their Focus
US Energy’s 45+ year history in oil and gas, working with partners like Exxon and Shell, and why the Permian Basin is the hottest U.S. play.

(04:01) The Tax Benefits of Drilling Funds
IRS Code 263(c) allows investors to deduct 85–90% of their investment upfront through intangible drilling costs.

(06:07) Tangible Costs and Depletion Allowances
Using depreciation and depletion to shelter future income from wells and create long-term tax efficiency.

(08:12) Why Oil and Gas Beats the “Buy a Truck” Strategy
Instead of wasting money on deductions you don’t need, oil and gas offers upfront write-offs and produces an appreciating income-generating asset.

(09:24) Sample Investment Return Breakdown
How a $100,000 investment could produce $45,000 in tax savings and cash flow returns of 1.5–2x over 10 years.

(13:06) Understanding Tax Risk
Audit concerns, excess business loss limitations, and AMT caps, plus how unused deductions can be carried forward.

(18:28) Investment Risks and Hedging Commodity Prices
The difference between exploratory, step-out, and developmental drilling, and how hedging protects against oil price drops.

(22:06) Oil and Gas for QBI Planning
How investments can lower AGI and re-open the Qualified Business Income deduction, creating stacked tax savings.

👉 Learn more about Oil and Gas Investing at US Energy: https://www.usenergyco.com

Podcast Host:

Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings Podcast
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🎙 ABOUT THE PODCAST
The Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks down complex tax topics into clear, no-fluff insights so you can keep more of your hard-earned money.