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Asked 1/16/2008
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Tax on income from investment I am interested in investing $100k on rights to a oil well. The lifespan of the well is 5-10 years. I should recover my investment in approximatly 3 years, then profit for the remaining life of the well.
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Answer 1/2 - Submitted 1/7/2009
Generally only accredited investors and high tax bracket individuals invest in oil wells, those worth over 1.5 million and make over 250k per year. for the tax right off, generally 80-90 percent is deductable against current taxes. Any income received or return of principal is taxed as ordinary income.
very speculative and risky investment.
Answer 2/2 - Submitted 1/15/2012
Income received on capital gains is taxed the same way. You will need to speak to your tax professional about what tax bracket you fall under as it frequently changes and is often updated according to the laws. You usually can't invest in oil wells unless you are an accredited investor so make sure to speak to your accountant and see what you options are and how to pay the owed taxes.
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