Energy

Businesses are generally allowed to recoup capital costs associated with acquiring or creating an asset by deducting these costs from their taxable income. Typically, the costs are depreciated—deducted each year in proportion to the remaining useful life of the asset, corresponding to the income it generates. For natural resource assets, the costs of acquiring the […]

Tertiary recovery, sometimes called “enhanced oil recovery,” refers to a variety of methods used to increase the productivity of an oil and gas reservoir by injecting materials into the formation to increase the reservoir pressure, increase the mobility of the remaining hydrocarbons within the formation, or increase separation between injected fluids (used for secondary recovery) […]

An investment tax credit is available for power generation projects that use integrated gasification combined cycle (IGCC) or certain other coal-based electricity generation technologies. IGCC and other advanced coal projects must separate and sequester at least 65 percent of the project’s total carbon emissions and gasification projects must separate and sequester at least 75 percent […]

To prevent double taxation, current tax law allows U.S.-based corporations to receive a credit against their U.S. tax liability for the taxes they pay to foreign countries on income earned abroad—the Foreign Tax Credit (FTC). Special rules for claiming the FTC apply to companies called Dual Capacity taxpayers that pay a foreign levy and receive […]

Established for this category in 1966, the expensing of costs associated with exploration and development refers to the ability of some extractive industries to deduct these costs fully from their taxable income immediately or as they are incurred rather than waiting for those activities to generate income. This is an exception to general tax rules, […]