WorldWide Drilling Resource

Drilling Into Money Not Boring by Mark E. Battersby Losses, We’ve Got Losses - and Tax Deductions As the threat of severe winter storms replaces last summer’s natural disasters, many within the drilling industry are discovering the Tax Cuts and Jobs Act repealed the tax deduction for personal casualty losses, except for losses in federally declared disasters. Fortunately, the tax deduction for business-related losses continues to provide some relief. That’s right, the deduction for an individual’s personal casualty loss of property not connected with (1) a trade or business, or (2) a transaction entered into for profit after December 31, 2017, and before January 1, 2026, has been eliminated. Today, a personal casualty loss may only be deducted (1) to the extent of personal casualty gains, or (2) where the property loss was attributable to a “qualified disaster loss,” i.e. one attributable to a “federally declared disaster.” Any drilling operation or business suffering a loss from a natural disaster, theft, or other casualty may be eligible for a tax deduction to help lessen the loss’s impact. While casualty losses must usually be deducted in the year in which the loss event occurred, to help cushion losses suffered by drilling businesses, the tax laws contain special rules for disaster losses in an area subsequently determined by the President of the United States to war- rant federal assistance. For those losses, the drilling business has the option of: * Deducting the loss on the tax return for the year in which the loss occurred, or * Choosing to deduct the loss on the tax return for the preceding tax year. In other words, a drilling business has the option of deciding whether their loss would be most beneficial to offset the current year’s tax bill or better used to reduce the previous year’s tax bill - generating a refund of previously paid taxes. To accomplish this, the drilling oper- ation simply files an amended tax return for the preceding year, figuring the loss and the change in taxes exactly as if the loss actually occurred in the preceding year. While this choice must be made by the due date (not including exten- sions) for the tax return of the year the loss actually occurred, the resulting refund can go a long way to helping the damaged business. Unfortunately, recoveries via tax law are not always smooth, often requir- ing professional assistance or, at the very least, an understanding of how the tax rules work. Wi l l your recovery include a reduced tax bill? Mark Mark E. Battersby may be contacted via e-mail to michele@ worldwidedrillingresource.com New & Used Equipment Elevators SkyRex We Support Our Troops! Stock Sizes: 1” thru 24” for casing, column pipe, tubing, and drill pipe. *Load test certificates available * Available with or without a base UsedWorldwide • Drill Pipe • Drill Collars • Manual Tongs • Spiders • RC Swivels We have elevators of all sizes, types, and weights; can build to any special applications. • Stabilizers • Bits • Bowls • Centrifugal Pumps • Crossover Subs Alignment Clamps 25 WorldWide Drilling Resource ® JANUARY 2019 March Issue Deadlines! Space Reservation: January 25 th Display & Classified Ad Copy: February 1 st