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  • Property Accounting Types: Oil and Gas

    Oil and Gas - Property Accounting Types

    I am Jon Gwynn. I am David Hill, Tax Manager.

    Today we're going to talk a little bit about oil and gas depletion both from a U.S. GAAP perspective as well as a tax perspective. I am the audit director for the firm, so I'll talk a little bit about the two U.S. GAAP methods that are accepted. They are called successful efforts and full cost and David will talk a little about the tax methods.

    Right. Now for the tax methods there are two types, there is percentage depletion and there is cost depletion.

    Under U.S. GAAP there are two generally accepted methods to account for oil and gas properties, successful efforts and full cost. So, as a small business if you are just starting to decide on which method to use, there are a bunch of different ideas that go into choosing the method.

    Full cost is probably the easiest to account for, it doesn't take a lot of time, it groups all of your properties together by continent or a region. Successful efforts you have to go to a lower level of accounting forward by well, property, fields.

    So if you have the resources to do the accounting forward I would recommend successful efforts. One of the main reasons for that is if we ever do adopt IFRS successful efforts right now is the most closely aligned with companies that are doing IFRS accounting.

    A couple of other considerations to look into. Full cost method, if you sell properties or if you drill a dry hole then you don't get necessarily a benefit out of it on your income statement, it all just remains within that property group. So there is no real P&L impact to it.

    Okay, I am going to talk about the tax methods for deducting depletion. Jon covered earlier the cost method, and that is also allowed for tax, but we use a little bit different base versus the same formula. That's allowable method, and there is also another one percentage depletion. This is allowed by Congress and this is available for people who own property in the U.S. in your own economic interest. It's not available if you own a refinery or you are a retailer.

    Now what this is, is it's deduction is a 15% of your gross proceeds. And what this does is it gives you that deduction in tax return, which helps minimize your tax liability. It is subject to limits though, one is it's done on a property by property basis and you can't create a loss with depletion, so is that 100% of all your taxable income.

    Now the other one is the 65% and this is for everything you do not just oil and gas. In this scenario you can't take it below that level and that's the only two limitations for percentage depletion on your tax return.

    So these are some of the ideas we want to give you on how to account for your oil and gas properties and the way to do depletion.

    If you have any questions or need us to help you out in any way please give us a call, we're at PriceKubecka.

    For almost two decades, the PriceKubecka Dallas CPA firm has been providing professional tax, audit, and accounting solutions, strategies and assistance for businesses in the Dallas Fort Worth Metroplex and other regional cities. Our team includes seasoned professionals that bring experience from both the private sector and larger, national CPA firms. This synergy of experience enables us to provide unparalleled expertise and specialization to large firms and small businesses alike — all with the personalized attention and responsiveness you deserve.

    PriceKubecka is a professional, strategy-driven CPA accounting firm with the know-how to improve profitability and take the anxiety out of tax, audit and accounting issues. We focus on meeting the accounting, tax and auditing needs of companies on the move — like yours — ensuring your financial situation is in line with your overall business strategy. Let us provide your business the peace of mind it needs to flourish.

    PriceKubecka, PLLC
    16775 Addison Rd
    Suite 500
    Addison, TX 75001

  • Realtor Bernice Edelman Video, Dallas, TX

    Realtor Bernice Edelman of Keller Williams Realty has 28 years experience in the Dallas real estate market. She has built a reputation for client satisfaction, and is devoted to making every step of the real estate process smooth and hassle-free.

    Realtor Bernice Edelman is passionate about helping buyers and sellers accomplish their goals. She loves to save money for buyers, as well as obtaining higher pricing in less days for the seller. She ensures her buyers are always the first to see every house on the market, to find the right property before they are on the open market. She loves to create multiple offers for sellers and win the house in multiple offers for her buyers.

    Bernice specializes in 'homes of character', golf course communities, zero-lot-line properties, luxury homes, and relocation buyers & sellers, to name a few. She is a Distressed Property expert, with certificates in REO and short Sale from the Five Star Institute and Res.Net.

    Bernice uses the latest in information technology, market research, and business strategies to exceed all your real estate expectations. She works with the best professionals in the industry at every avenue, whether it's title company, mortgage officer, insurance agent, appliance company, painter, remodeler, flooring specialist; she negotiates her clients best interest every step of the way.

    As an outstanding negotiator (Her clients consider her one of the best in the business) Bernice knows it's important to look for the best pricing for every amenity. Having an experienced realtor on you side is is crucial...They need extensive knowledge to provide the best deal for their clients. as Bernice cleverly puts it, "It pay$ to use an agent who understands the market in your neighborhood!"

    Contact realtor Bernice Edelman - She'll work hard for you...You have her word on it! Keller Williams Elite 8201 Preston Road Suite 265 Dallas, TX 75225 Office: 214-420-3771 Cell: 214-384-7700 This email address is being protected from spambots. You need JavaScript enabled to view it. Bernice's Designations: ABR, CRS, Luxury Homes Designation, ALC, REO
  • Superior real estate knowledge, quality service & professionalism

    Jeanne White | Superior real estate market knowledge, quality service & professionalism

    For over 25 years, Jeanne White's guidance, expertise, insightfulness and expert negotiating skills have proved invaluable to her many friends and clients. She is known for superior real estate market knowledge, caring quality service and professionalism.

    Whether you are a first time buyer or listing a landmark property let Jeanne put her experience to work for you.

    Here's what Jeanne White says in her Video proFile: 

    I'm Jeanne White with Amelia Bullock Realtors here in Austin, Texas.  Every transaction seems like it has a cast of 1,000 people agencies, title companies, lenders, lenders assistants and I have a knack for bringing all of these people together and getting them really the best out of each and every one of them to make the transaction just as pleasant as it possibly can be.  I just love putting families in the right neighborhoods, in the right schools and in exactly the right size house.  It gives me so much pleasure to do that. 

    I love thinking about them playing in their little yards, walking to the parks, boating on the lake and that is everyone from a tiny house to a huge house.  It just gives me enormous pleasure to do that.  

    I've been in this business now for over 25 years and watched Austin grow, watched the market go up and down and it does give me no question about it a great qualification for helping people and understanding what is today may not be two weeks from now and certainly isn't what it was six months ago and I do think that kind of experience helps me not be surprised by anything that might even come up in any one of these transactions.

    Part of my philosophy is having a win/win situation at the end of any transaction.  Coming out of the title company with people feeling like they had some wins is very, very important to me.

    I've always loved real estate.  I like the real aspect of it something that you can touch and I started out kind of remodeling a bit with small children at home and first a bathroom and then kitchen and loved the creativity of that and the investment, certainly the investment potential as well.  

    Then my mother was in the real estate business with Amelia Bullock Realtors and we started working together and it's just been a delightful experience.  I like selling all over town Dripping Springs to Georgetown, small and large, everything.  Just taking care of my clients and then my client's parents and then my client's children and then my clients nieces and nephews.  It's just a great opportunity to work with people and have a nice time.  

    If I can help you with any of your real estate needs, give me a call or shoot me an e-mail and I will be so happy to help you.