I just got into a facebook scuffle with a known wingnut. I spent about an hour trying to research why he was wrong. I'm posting it for a few reasons.
1. To find out if I got it right (so tell me if I"m wrong)
2. So I can find it in the future if I need it.
3. So others can save time and respond to the BS quickly.
Follow me under the twisted line segment for more.
Wingnut: Oil companies get tax breaks for exploration, read your tax code before regurgitate stupid shit by politicians that want to brainwash people into thinking things that divide and conquer, especially when they can't run on their records
Wingnut:Oil companies get tax breaks for exploration, read your tax code before regurgitate stupid shit by politicians that want to brainwash people into thinking things that divide and conquer, especially when they can't run on their records.
I know you are all shocked at the condescending tone....
This is my response.
OK lets get to the lie your repeated regarding that there are no special tax breaks for oil companies.
Here is the IRS code in question.
http://www.irs.gov/...
Take a look at Intangible Drilling Costs
Intangible Drilling Costs
The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. You can usually recover them through depreciation or depletion. However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest.
What exactly are "Intangible Drilling Costs"?
http://www.investopedia.com/...
Costs to develop an oil or gas well for the elements that are not a part of the final operating well. Intangible drilling costs (IDCs) include all expenses made by an operator incidental to and necessary in the drilling and preparation of wells for the production of oil and gas, such as survey work, ground clearing, drainage, wages, fuel, repairs, supplies and so on. Broadly speaking, expenditures are classified as IDCs if they have no salvage value. Since IDCs include all real and actual expenses except for the drilling equipment, the word "intangible" is something of a misnomer.
Sure as heck sounds like that is written specifically for oil and gas interests to me. I don't believe manufacturing companies can expense items such as clearing land for a new factory (although farmers can because there is a specific line item in the tax code for big agriculture as well (shocking I know).
http://cfr.vlex.com/...
...and if you aren't a tax/accounting geek.. its typically favorable to expense these things because you get to increase the cost in the current period rather than spreading out in the future. This in turn reduces your reported profit now rather than in the future. If you reduce your current profit you don't have to pay the tax on that profit now and of course given the time value of money its always better to push a cost out into the future.
Even politifact called BS on this. I started with their analysis in taking this winger down, but I wanted to go right to the source docs myself to validate it.
http://www.politifact.com/...
"The oil and gas industry often argues the tax breaks they take advantage of are available to every industry," the group’s vice president, Steve Ellis, said in an email. "But obviously other industries can’t realistically claim the Intangible Drilling Costs tax credit (created in 1918) or the Expensing of Tertiary Injectants tax credit or the Volumetric Ethanol Excise Tax Credit for blending ethanol into fuel."
There's even more in that link, but I didn't have the time to go back to the tax code on all of them.