- May 29, 2008
Libs keep talking about the depletion allowance which is little more than depreciation that can be claimed by any company.Tell us about these subsidies, and be specific.
Cost depletion can be illustrated in this way:
An oil company invests $15 million in a property with an estimated oil reserve life of 15 years. The company deducts approximately $1,000,000 ($15 million/15 years) from taxable earnings each year until the initial investment is recouped in tax benefits.
The only legitimate controversy IMO is when companies use a percentage depletion which can result in deducting more than the original cost. This is offered to incentivize companies to keep working old wells that aren't so productive.