got into a ng drilling partnership with Atlas energy end of oct 2011 that will drill 153 wells in several states, current 93 are done 10 dry 18 fractured and on line will begin paying out distributions 2Q 2012. 23 more are currently being drilled. faster than I expected with a few more dry holes than expected.
this is not a stock it is actual ownership of the gas well, not very liquid, you get into this for
1) short term tax write offs of 90% first yr
2) long term play on NG
3) well run program
4) monthly distributions exceeding 8% annual with a 15% depletion allowance (as I am retiring this along with #1 are my main incentives) as I dont figure that I can do that well in the stock market as a guarantee but still have 3X stock market as this NG partnership. I need the guaranteed income for living and I didnt want to give uncle sam 45% of my retirement money this way he is paying my taxes on his part of this investment and my earnings are tax free.
500k invested taxes would have been 225k
8% return is 40k per yr with 15% tax free due to depletion allowance is 34k taxable or 14k so I get 20k
now if i paid the taxes and had 275k and it made 8% in the market that would be 22k which I would pay 9k in taxes leaving me with 13k. to make the same return I would have to make 12% in the market guaranteed.
Don't forget that when you sell the stocks you will pay capital gains on adjusted cost basis vs sale price as well as ordinary income on depreciation and depletion captures. The tax benefits are more like deferring tax rather than avoiding tax (similar to IRA)
your acct should be able to give you that information but Atlas provided some of it for me and the agent that I gave above gave me more. It is a simple take the money out declare it as income, get into NG drilling partnership and they send you a K-1 showing business loss of approximately 90% of entry cost in year one. Unless this tax law changes under the Obama administration, it is currently available, then on the income or distributions which are monthly you also get a depletion allowance which shelters part of the income (15%) under current tax law. My understanding from my acct is that any carryover losses from 2011 that I dont use I can carryover to 2012 return. If you want to send me a fax number I can fax you the information I have when I get back to town or you can call Gil at the number above and I am sure he can fax it to you. If you call him you can tell him Rod Beard gave you his number.
is there any source you can reference on how to do this - I have some $$$ in an IRA that I'm searching for ways to "get out" without paying the IRS at full income rates - a site, book, article ??? Thx
well for me it was like rolling my IRA into a gas drilling partnership with no tax implications, then getting a very healthy distribution which will be partially taxed, very decent way to withdraw the funds that I didnt put into a roth. It will also shelter regular income.
the majority of the drilling happened in colorado (nairobi) and west virginia (marcellus shale) I post this to answer a previous question of wishing me luck on this drilling program They have already fractured 42 of the 93 holes w 18 online