Good morning. I keep seeing advertisements concerning reducing ordinary income of any type when you invest in developing oil and gas property. It helps you write off ordinary income from W 2 wages. Has anyone had experience in investing in this type of venture? Thank you.
Not sure where you are reading this. If you invest in oil and gas working interests which are reported on Schedule C and have a loss, then you write the loss off against some other income. The question is whether later income will offset the losses or it will just be a loser. If it makes a profit, that will be self employment income and subject to 15% FICA taxes as well as income taxes, just like other Schedule C income. These investments can be risky unless you know how to analyze them, including the individual wells. Work with your CPA to review any investment proposals and to understand the tax implications.