WorldWide Drilling Resource

Dan Carrocci www.drill-safe.com 57 WorldWide Drilling Resource ® MAY 2013 Drilling Into Money Not Boring by Mark E. Battersby ADA + Section 179 = Year-round Tax Savings It has been over 20 years since the Americans with Disabilities Act (ADA) became law. Although many drilling con- tractors and businesses still fall short when it comes to making their opera- tions ADA compliant, under our federal tax laws, an eligible drilling operation or business is entitled to a unique tax credit for expenditures incurred to make a business accessible to disabled indi- viduals - both employees and customers. The ADA is a federal law prohibit- ing discrimination against individuals with physical handicaps - including the design of buildings intended to serve the pub- lic, hiring practices, equipment used by workers and, of course, improving the working conditions of an operation’s em- ployees. A “qualified small business” is an operation with gross receipts of $1 million or less, or one that did not employ more than 30 full-time employees in the pre- ceding tax year. The amount of the tax credit - the disabled-access credit - is 50% of the amount of eligible access expenditures for a year which exceed $250, but does not exceed $10,250. The maximum credit, the amount by which the annual tax bill will be reduced, is $5000. If the cost of making a drilling oper- ation ADA compliant exceeds the qual- ifying amounts for the limited disabled access tax credit, an expense deduction (in other words, an immediate write-off) is available for the cost of newly ac- quired equipment and property, called Section 179 property. The American Taxpayer Relief Act of 2012, the “fiscal cliff” tax law, extended both Section 179’s dollar amount deduc- tion and the investment ceiling. Under the new law, a $500,000 limit on equip- ment and business property purchases that can be treated as a current expense and deducted on the annual tax return exists through 2013. The maximum de- duction is phased out by the amount by which all qualifying property placed in service during the tax year exceeds the investment limitations of $2 million. Naturally, expenditures claimed for the disabled access tax credit cannot also be a Section 179 write-off. How- ever, the balance can usually be depre- ciated over a number of years. Or, those amounts may be claimed as an imme- diate deduction or write-off under Section 179, ignoring the Disabled Access Tax Credit. With extension of the Section 179 first-year write-offs under the so-called “fiscal cliff” taxes and existing tax breaks for ADA compliance, now might be a good time to explore how those incen- tives can help your drilling operation or business profit. Mark admin@ worldwidedrillingresource.com " ; # 511-,(2 0) 20'5&43 %9 4+(3( ,/( $/5)$&452(23 ; 08 029'0/ # ! : : $8 $,- 3$-(3 *,6(/3,/4(2/$4,0/$- &0. "(% ,4( 777 *,6(/3,/4(2/$4,0/$- &0.