WorldWide Drilling Resource

19 WorldWide Drilling Resource ® NOVEMBER 2013 Drilling Into Money Not Boring by Mark E. Battersby Planning Forever Tax Savings Right now may be the best time to think about reducing the tax bill of the drilling business even lower than the point the economy may have driven it to. In fact, the best guarantee of con- sistently low tax bills this year, next year, and so-on down the road is tax planning. Year-end tax planning can be quite simple: the more tax deductions taken, the lower the drilling business’s taxable income will be - at least for the current tax year. Or perhaps, ignoring potential tax deductions this year might mean significant savings in later years when profits - and tax bills - are higher. One basic fact which should be kept in mind is the tax tail should never wag the tax dog. Don't spend money that wouldn't ordinarily be spent merely to reduce the drilling operation’s tax bill. Remember, $1 spent does not equal $1 worth of tax saved: $1 spent creates a $1 deduction, which (depending on the tax bracket, business structure, and state of operation) will only lead to $.00 - $.60 worth of tax saved. Above all, understand whether the drilling operation files its tax return on the accrual basis or the cash basis. Most year-end tax strategies only work for cash-basis taxpayers. Accrual-basis tax- payers report all income in the year it is earned and all expenses in the year incurred. Today, the most important question for most business owners and managers is how to make the moves necessary for those low tax bills before the end of the tax year - especially in the face of all the current uncertainty over tax reform, rates, and deductions. While many drilling business owners and managers rely on the advice and help provided by tax professionals, or utilize software programs to ensure a low tax bill, it should be kept in mind that even the most knowledgeable pro- fessional doesn’t know what will happen down the road. Congress could kick the can down the road again. But, uncer- tainty or no uncertainty, the time for tax planning is now. Remember, when it comes to tax planning, no drilling business owner or manager can wait until lawmakers go home for the holiday recess before ini- tiating their strategies. It will be too late to make the moves that will reduce this year’s tax bill, let alone reduce the tax bills for many years to come. Mark Mark E. Battersby may be contacted via e-mail at admin@ worldwidedrillingresource.com The January issue deadlines are: Space Reservation - November 25 th . Ad Copy - Display & Classified - December 2 nd .