You Bill by the Hour. Your Tax Bill Never Clocks Out.
Direct oil and gas ownership lets attorneys deduct up to 100% of a project’s intangible drilling costs against earned income, with every project targeting 3–5x over three to five years.
- Why attorneys look at it
- Partners, associates and in-house counsel
- Before you commit
- Your reading list
Why attorneys look at direct oil and gas ownership
Practicing law pays well, but it leaves very few ways to reduce the tax on what you earn, and very little time to manage anything outside the firm.
| Tax | The top rates apply early | Federal, Medicare and state taxes can all land on the same dollar you bill, year after year. |
| Tax-advantaged space | Retirement accounts fill up fast | Once your 401(k) and other accounts are maxed out, everything else you earn is fully taxable. |
| Time | Your hours are billable | A joint venture doesn’t need you to manage tenants or repairs. An experienced operator runs the wells, and you weigh in on the major decisions. |
| Concentration | Your wealth sits in one place | Your income depends on one profession and often one firm. Owning a share of real, producing assets adds something different. |
Partners, associates and in-house counsel
The deduction works for all three. How much of it you can use in the first year depends on how your income reaches you.
| Partners and shareholders | Paid from firm profits | Your share of the firm’s profits counts as business income, so a large year-one deduction can usually be used more fully in the same year. If your firm makes a state pass-through tax election, ask your CPA how the two interact. |
| Associates and in-house counsel | Paid a salary | A working-interest deduction can offset salary too. A yearly cap limits how much business loss can offset wages, but it only affects very large deductions, and anything above it carries forward to later years. |
What attorneys should check first
You already know the value of reading the fine print. These are the points worth settling before anything else.
- Your firm’s rules Many partnership agreements and firm policies require partners to disclose, or get approval for, outside business interests.
- How you hold it It is usually held personally. Holding it through an entity that limits your liability can stop the deduction from reaching your earned income.
- Liability and asset protection The tax treatment depends on your liability not being limited. Ask what insurance covers operations and review the structure with your own counsel.
- Your numbers The minimum tax, the yearly cap and state rules can all change the result. Your CPA can show how each applies to you.
- Time horizon There is no public market for a working interest. Plan for capital to stay committed for several years.
- Your role As a JV member you hold governance rights and weigh in on major decisions. It is ownership, not a statement in the mail.
The attorney’s reading list
Guides, sessions and articles that answer the questions attorneys ask most, in roughly the order most people find them useful.
Guides & tools
All guidesWebinars
All webinarsOwn the Production, Not the Paper
How direct working-interest ownership works, the four pillars of project evaluation, and the questions to ask before considering an opportunity.