North Dakota oil fields represent real opportunity for investors. The risks and returns associated with oil drilling investments in the North Dakota oil fields will often vary considerably, and some oil drilling investments offer many more benefits than others do. Regardless of the oil drilling investments in the North Dakota oil fields that you might be considering, it is important to make an informed and educated decision about any oil drilling investment, realizing that the lower the risk the lower the return and vice-versa. For the serious, accredited investor, one of the best oil drilling investments available in the North Dakota oil fields is an investment that is structured as either a partnership or a working interest.
How to Invest in the North Dakota Oil Fields
To be an accredited investor in the North Dakota oil fields, you must meet certain income requirements. These include a salary requirement of $200,000 per year ($300,000 for couples). Entities like annuities and trust funds must meet certain criteria as well, but it is often an advantage for the serious investor to pursue accreditation because of the additional benefits available for oil drilling investments in the North Dakota oil fields.
By choosing oil drilling investments in the North Dakota oil fields in which you establish some level of ownership – either a partner in the well development company or units of ownership in the well itself – you may face some higher risk but you also gain access to significant oil drilling investment incentives and advantages.
Advantages of Investing in the North Dakota Oil Fields
One of the primary advantages of oil drilling investments in the North Dakota oil fields that provide the investor with ownership in the well is the ability to offset income with the costs of the development and production of the well. Because there is great incentive available to increase domestic oil drilling investments in the North Dakota oil fields, those investors who choose to participate not only have the opportunity of making an enormous profit on successful oil drilling investments but also are able to deduct and depreciate 100 percent of the tangible and intangible costs associated with the well.
The ability to write off much of the cost of developing the well with oil drilling investments effectively lowers the investor’s tax burden, and because these types of oil drilling investments in the North Dakota oil fields are considered active income and not passive, the ability to make these deductions can also offset income from other sources, reducing the investor’s overall tax obligation.
When deciding to make oil drilling investments in the North Dakota oil fields, an investor should consult with his or her tax advisor to determine the best course of action, but if you have been contemplating oil drilling investments as a method for both increasing your income and lowering your tax burden, oil drilling investments that offer units of ownership are often the best choice.