December 1, 2018

Saving Money On Oil, Gas And Real Estate with Jordon Trice

SMR 7 | Tax Deductions

 

Jordon Trice has been in financial services pretty much all of his adult life. Before he went to college, he thought the best way to make money was to work three to four jobs. Eventually, he realized that you can actually make money with money and brain. Jordon talks about how he got into mortgages, retail banking, investment banking, day trading, education, until finally discovering oil, gas, and real estate while working for a private equity firm. Jordon shares how you can make money and save on tax deductions by investing in oil and gas.

Listen to the podcast here:

Saving Money On Oil, Gas And Real Estate with Jordon Trice

We have a good friend of mine, a colleague. His name is Jordon Trice and he is in Nevada. Jordon, welcome to the show. Tell our audience a little bit about yourself?

I’ve been in financial services pretty much all my adult life. There was a time before I went to college and I thought the best way to make money or to be wealthy was to work three and four jobs. That’s what I’d always done since high school. Eventually I said, “You can make money with money and your brain.” That’s why I learned that sooner. Eventually, I got into mortgages. I was serving at the time but I decided that financial services would be the way to go. I did that with Ameriquest. I was only there six weeks because that was in 2007 before the mortgage debacle. After that, I went into retail banking at Wells Fargo. I love that at least at first because I thought eventually, I would get licensed and do some stuff. It didn’t work out that way. I ended up leaving there. I did investment banking and then back to retail banking. Pretty soon, I found myself day trading futures contracts, oil being one of them. Then I got into education and eventually I got burnt out. I opened my own gym for a while. It wasn’t until later that an opportunity arose and then I got a chance to work in oil and gas and real estate for a private equity firm.

I’m a big fan of oil and gas. I’m a big fan of following the current tax code with oil and gas being one of them. Jordon, tell our audience why is it possibly a good time to look at oil and gas as a possible strategy?

Let me first start off by saying that we’re not talking about investment advice. We’re not advisers. We’re not CPAs. We’re going to talk a lot about that tax code but at the same time, we’re not giving anybody advice. We’re doing some concept stuff here. Those people that are business owners or maybe got a distribution or maybe a large bonus they’re saying, “I just got all this money. What do I do with it?” A lot of those people they find that they don’t need to tap into those funds but they aren’t excited about paying a whole bunch of tax at the end of the year. That’s usually when we start getting calls. Some of the way that stuff works is with oil and gas, there’s this tax code in there. Almost nobody knows about it. It’s 469(c)(3)(a). In that tax code they talk about passive activity. There’s a little caveat in (c)3(a) that says, “It’s not considered passive activity if you invest directly into oil and gas operation and have some level of risk.” What people find is you have the opportunity to write up the vast majority of everything that you invest in the year that you invested. A good example would be John Smith. He’s a high-income earner, maybe W2 and he says, “What’s a good tax write off?” Most of the time we know if we want a tax write-off we think, “Who can I get money to? Maybe 501(c)(3) or something?”

The problem is you may do that, and you probably do some good as well but you don’t get any upside, no income and nothing comes up. You may or may not get to write-off some of that. The great part about oil and gas is if John Smith is a high-income earner, W2 and he puts money into oil and gas, he now has the opportunity to write off almost all of that in that same year. In 2018, he gets a large distribution and he says, “I’m putting this in this project.” The following year he’s going to get what’s called a K-1 and he can say, “I put in X amount and I have almost all of that in my K-1 that I now cannot have to pay. If you put in $100,000 and there is let’s say $80,000 on this K-1, his tax liability is much less. That usually makes people happy because who enjoys paying taxes? I don’t know who your audience is but I doubt that you’d have many people like that. On the other side is now they have upside. They have ability to not pay taxes, make some money and income and that’s exciting.

SMR 7 | Tax Deductions

Tax Deductions: The great part about oil and gas is if someone is a high-income earner puts money into oil and gas, he now has the opportunity to write off almost all of that in that same year.

 

That was probably one of the best examples I’ve ever heard explained on the way it works. We did go into the specifics of it. For example, if I have $500,000 and I put it into an oil and gas project, you’re saying I would get $80,000 bottom line deduction for the year. If I did it before the end of 2018 when I file my 2018 taxes in 2019, I would get roughly about an $80,000 or so, give or take a little bit deduction, correct?

That is correct. I have to caveat that a little by saying that’s what it’s been in the past for many of these projects that are out there. You have some oil and gas drillers that maybe aren’t worried about maximizing that K-1. Maybe you get your K-1 really early in 2019 for 2018 and so it may be a little bit smaller. For other oil and gas drillers out there, they’re really concerned with that first part, which is the tax benefit. They’re going to maximize it. Meaning they’re going to drill and they’re going to have all these intangible drilling costs. Because they’re maximizing it, they’re going to get it later in those operations. They’re going to be happy because the majority of the time, it’s going to be more than 70% or more than 80%. Something we haven’t thought about is the new tax regulations. Guys and girls out there, talk to your people because we are not CPAs, but there are ways that some people can accelerate the other tax benefits into that same year and they can write-off even 100%.

That’s been my personal experience. I’m not a CPA but on my personal experience, is I’m filing my taxes late because I’m waiting on the K-1 from the oil and gas company. I understand that going in. I’m fully educated on becoming an oil and gas investor years ago when I started. I’m always filing my taxes late at the filling extension because I’m waiting on that K-1 to maximize the deduction. Tell us what are IDCs? What does that acronym stand for and what is it?

There are two parts to your K-1. There are the IDCs and the TDCs. The IDCs are the most exciting part because even if we didn’t have the current administration that was changing the tax code, you’d still get up to 85% of a write-off.

What does the acronym IDC stand for?

You can actually make money with money and your brain. Click To Tweet

IDC stands for Intangible Drilling Costs. You could think of those as stuff that you’re not ever going to get back. It could be cement that you put into the ground, piping, or labor. There’s a lot of other stuff that goes into an oil and gas operation. It’s not just the wells themselves. Sometimes these are in odd places. You have to build a road and all of that equipment that gets used to do those things. Maybe put down asphalt or bring in rocks. Those things you don’t get back. Those are part of the whole IDCs. When you’re in these operations, your intangible drilling costs are the majority of everything that it takes to start pulling the oil out of the ground.

What are TDCs?

Those are the smaller amount of everything else. You could think of those as large capital expenditures. If you were to go and buy some PP&Es, Property, Plant and Equipments, where usually you have to use a depreciation structure, maybe over a certain number of years to write that off, those are TDCs, Tangible Drilling Costs. You could think of those as the large expensive pieces of equipment that you still do use in these projects. Because it’s a smaller amount, you get most of your write-off upfront.

That’s what the current administration accelerated to get.

If you’re going to accelerate something, that would be the part that you would have the opportunity to accelerate depending upon your tax situation.

SMR 7 | Tax Deductions

Tax Deductions: If you have a lot of money and you have influence, you’re probably going to want to keep the current status quo of the tax code.

 

I have met with people in the past and people’s question when they learn about oil and gas is always, “Why don’t I know about this? Why am I just finding out about this? Is this true? Is this real? If this is true and real, then why am I just finding out about this?” I just say, “I don’t know.” From my experience in talking with people, most people put their money with traditional financial planners or strip-mall financial advisers, they don’t have access to this. If you want, invest in oil and gas, they’re going to put you in some maybe master limited partnerships or direct stocks themselves. That’s why I don’t think it’s known to the public. I do a couple of other things with the tax code that it’s not well-known. When you think about this, when someone sits down and they go, “I can put $100,000 into this and potentially get back $80,000 deduction?” I say, “Yes, sir or ma’am. That’s what the current tax code says.” In your opinion, why don’t you think this is more bar-casted than what it is? Why is there a lack of education to the general public? Maybe because this investment is not for everyone out there as well. What’s your take on that?

I would start off by definitely agreeing with your last statement which is it’s not for everybody. First of all, if you’re not living in Texas, Oklahoma, or North Dakota, if you’re not living in those oil states, it’s tough to ever hear about it. In addition to that, I’ve had plenty of conversations where I’ve had the same question. I’m talking to a CPA. This is a guy who at least is supposed to know the tax code. He goes, “Is that real?” That’s why I decided to memorize that part of the tax code so I could reference it because it’s not well-known. It’s not well-known because number one, if you don’t live in Texas or one of those oil states, you don’t hear about it. Number two, it’s for those higher income earners. This isn’t something where you’re going to call your friends and try to scrape some money together to invest in. Most of these opportunities are for high-net-worth individuals or accredited investors. People who can do a good job of understanding these projects, the risks that are related and have a little bit more of a complicated tax structure.

Section 469(c)(3)(a) is what you’re referring to?

That’s exactly right.

It’s been the tax code. We can credit Ronald Reagan to some of these tax laws whenever he wanted to encourage American independence of foreign oil. You just go back and you think when there is risk involved like there is when investing in oil and gas and there’s absolute risk for sure. There needs to be some incentive to do it. The American government decided to help out on the tax. This has been enforced since the ‘80s and it’s still there. We went through major tax reform in 2017 and nothing was changed. In fact, it was boosted by what you said on the acceleration of the TDCs. I don’t think this is going anywhere in the future. It’s going to be here for a while as far as on the books. I’m asking you to take out your crystal ball and rub it in and tell me what you think about. We went through major tax reform for the first time in 30 years and it wasn’t touched. If anything, they made it better.

Oil is not going anywhere. It's important that you can see these tax benefits being here for quite a while. Click To Tweet

A lot of the people who are involved in this thing are the largest corporations in America. If you have a lot of money and you have influence, you’re probably going to want to keep the current status quo of the tax code because a lot of people in power use this opportunity. There’s no reason to change it. In addition to that, the whole reason it was even put in the first place, if you remember back then in the Ronald Reagan administration, we were getting the vast majority of our oil from OPEC nations, from Saudi Arabia. It was almost a public outrage. People were like, “Why are we getting 70% of our hydrocarbons from these other nations? We need to be oil-independent.” They said, “We’re going to encourage people that want to invest in these direct operations with small oil and gas operators and drillers. Let’s just see what happens.” If you were to look at any graph on our production of oil and gas, it is straight up because now we’re producing more hydrocarbons, literally the highest in the world. It wouldn’t happen until 2023 but somehow, we managed to leapfrog about five years and surpass everybody. It works. Oil is not going anywhere and it’s important that I can see these tax benefits being here for quite a while.

We haven’t mentioned the income. Once the person starts receiving monthly income, first of all if they hit oil and they are able to extract it, which is the whole point. The first 15% of income as our friend, Tom Powell says, “They receive tax-free into perpetuity of the well.” That’s amazing in itself.

It’s so crazy because we’re already talking about writing off up to 100% of what you invested. You will get that much if you stay in the project the entire time. What’s even more amazing is one of your investments that you put money into that allows you to write off more than 100%. When you get that income from the wells, it’s called the depletion allowance. That means 15% is not taxable at all. That’s not a deferment. That’s not a kick the can. That is straight up. We’re only going to tax 85% of income coming from the wells. Before I get too into the income, it’s important for people to know the difference between, “I wear a big hat. I drive a Cadillac and I have big horns in the front of my Cadillac.” There are drillers out there that do resemble that and we like to call them wildcatters because what they do is super high risk. Sometimes it can be super high reward but more often than not, you’re digging a lot of uneconomic wells. There are other oil and gas drillers out there that are a little bit bigger. Maybe they have some more experience under their belt. They’re going after something very different. That wildcatters, we like to call that in the industry, primary recovery. You have a can of soda in your hand and if you shake that can of soda and open it, what happens?

It bursts out.

You get soda everywhere. If you look inside that soda can, what do you see? You see soda. The first-time, primary recovery is shaken out that soda can and the Earth pushes out this pressure and you get oil. If you don’t have the oil obviously, you don’t get any pressure and nothing happens. You lose money. With secondary recovery, it’s like looking inside that can and knowing for a fact there is oil there and you simply put in a straw. It’s not nearly that simple. For our concepts-sake, you put in a straw and you extract that oil using some technology, waterflood and things of that sort. These bigger oil and gas drillers, they’re going to be able to buy currently producing projects. As you primarily take out oil out of the ground, you’re only going to get about 8% to 25% of the oil that’s in that reservoir. Having done that, the smaller oil and gas operators, maybe they poke a bunch of holes in the ground and they say, “It’s not producing that much. Let’s sell this asset off, let’s go do more of what we already do.”

SMR 7 | Tax Deductions

Tax Deductions: As we’re approaching the New Year, now is a good time to look at oil and gas because people, especially business owners, do their taxes late.

 

Another company can come in and purchase that and say, “We’re going to do secondary recovery on this project.” The best part is that they already know that there’s oil there because it’s been producing. Remember at most, you might get 25% of what’s in the reservoir. Knowing that, you go in and you say, “We’re not wildcatters, we don’t have to go in and guess that there’s oil there. We already know for a fact there is.” We’re going to use technology to build pressure by pushing water into that reservoir. Maybe drilling a few extra holes and then we’ve got higher production. We had less risk and we did it. Let’s not forget the tax benefit.

I’m a big fan of oil and gas. I’m a big fan of keeping up with the tax code and I found a couple caveats. I was introduced to some very intelligent people who are using the current tax code to their advantage. One of the ways is investing money into oil and gas as a strategy. I am probably three miles from ExxonMobil refinery. I have several ExxonMobil retirees as clients as well. Most people when they hear of an investing in oil and gas, they think of maybe owning some Exxon stock, some Chevron stock, maybe bought itself, they’ve inherited some Exxon stock from a mom or dad who worked there. They have some stock in a mutual fund. They have stock in oil and gas companies. Maybe they’re invested in master limited partnerships, which I find very interesting as well. Very few people know about investing in oil and gas, their direct participation. In your opinion, why are there very few people who ever heard of investing in oil and gas the way that we do?

I’ve met two different kinds of people in oil and gas. Every once in a while, I meet a third but it’s usually one or the other. You have the people that have experienced oil and gas and didn’t understand it. They said, “I get tax benefits.” They say, “I lost money. Now, I had a bad taste in mouth.” They have to go through the paperwork to understand what this investment opportunity in front of them is. Then you’ve got everybody else that says, “I’ve never heard of this before.” I say, “That’s because you live in Florida or you live in Washington. There’s not a lot of oil and gas up there.” Unless you live close to an oil and gas state, it’s unheard of. Not to mention it, it’s hard to decipher the tax code. What’s tax code these days, 44,000 pages?

No, it’s a lot more than that. If you stock it up, it’s close to ten feet tall if you stack it up in pages. It’s ridiculous for the regular consumer or everyday worker to understand.

That might be the answer. How do you decipher all that?

You don't want to go after everything. You just want to go after the things you have very high confidence in. Click To Tweet

I would consider Louisiana an oil and gas state. As you know my good friend, Mark McKay, lives in Amarillo. People think of oil and gas Louisiana, we just think of ExxonMobil. We think of the places in Lafayette and Lake Charles, maybe some offshore drilling and the ExxonMobil refinery. The audience that you and I are talking about, at nighttime you can see the flares. In North Dakota, the Permian Basin, at night time the sky is lit up from all these oil wells. I think very few people like in the Baton Rouge area has experienced that. Even though there’s a quite significant play going on a little bit north of Baton Rouge and East and West Louisiana and in Wisconsin and the counties of Mississippi. The Austin Chalk Formation is being targeted right now by several big companies by EOG, Marathon and ConocoPhillips. Everybody’s eyes are on these wells with the drilling coming in. My family own some land up there and we’ve leased the land before to Devon Energy. I think a lot people have experience with that. You hit the nail on the head that very few people know about the benefits of oil and gas. Why is right now a good time to look at oil and gas?

Probably one of the best answers to that question is going to be because people and especially business owners, these people do their taxes late. If you were to talk to somebody about oil and gas early in the year, they’re going to say, “I’m not sure how much I’m going to pay taxes. I haven’t done my returns yet. My CPA doesn’t know what my number should be.” As people finish their taxes in late October, possibly later, they’re going to say, “I really need some tax benefits.” This is the time they start looking. Even I myself get calls from people. I was getting calls in 2017 all the way up until December 31 from people who are struggling to get into something. They know what their tax liability is now. Now they’re looking to lessen it but they didn’t know before.

It’s an education process and that’s what you guys do. When you came down here to Baton Rouge in September and educated current investors and gave them a little up-to-date scenario on the projects going on. It’s an education process about what is already in the tax code and how to take advantage of that. Back to what you said when I asked you why very few people have heard about it, my answer has been just because you haven’t heard about it, it doesn’t mean it’s bad. You’re not familiar with it. I have had numerous conversations with CPAs because if CPAs are not familiar with this. They freak out when they get a K-1. It’s pretty cool what you said when you happened to tell a CPA, the CPA is asking you, “Jordon, is this deduction real?” Your answer is, “Yes, go look at 469(c)(3)(a). Tell us about that conversation. We probably have a couple of CPAs on our audience or someone reading, looking for a deduction about learning and getting educated on oil and gas tax benefits.

The reason that I memorized the passcode 469(c)(3)(a) in the first place was because I had so many conversations with CPAs where they said, “I’ve never heard of this before.” Right away they’re a little skeptical. It’s understandable considering the IRS could be a little hard on people sometimes. I say, “It’s in the tax code.” They say, “Where?” I finally got tired of answering that question I said, “I just need to reference it exactly.” We had some emails go back and forth between me and one or two of these CPAs. I had people completely not believe me. When I gave them a tax code, they get back and they finally say, “This is real. I literally had no idea.” That to me in my experience at least is a very common conversation. They appreciate it because here’s what happens. People love CPAs and they trust them. If your CPA isn’t on board, most people won’t. If I backed them up, then they’ll talk to their client and they’ll say, “This is real and I know how to do that.” In that way when they finally get that K-1, instead of freaking out they go, “It goes right here.”

You gave a great example in the first segment about extracting the oil. I remember my eldest son as a teenager and he was born in 2001. I remember driving around Baton Rouge. My wife was seven or eight months pregnant. If you had a little extra cash, you could go pay for a 3D ultrasound for your pregnant wife. That was sixteen years ago. Now, a lot of the ultrasounds to find out the sex of the child and to find out the health of the baby, they are all 3D now. If you have extra cash, you can go pay for a 4D ultrasound. I relate that to the way oil and gas technology has changed and improved drastically over the last ten, twelve years, much less 30 years. Would you agree?

SMR 7 | Tax Deductions

Tax Deductions: You can think of an oil and gas operator as the guy that goes in and buys an apartment building that is already standing, fixes it up, rents it to market, and then looks to sell that.

 

I would wholeheartedly agree. There was a time where you’re almost blind when you’re trying to drill a hole into the ground. Then finally the technology came along where every 35 feet, you could take a picture and get a good idea of what was in that well as you’re drilling through it. Now the technology is available where you can see every two inches, every half-inch and you can say, “We’re going down. There’s an area we can extract,” and you keep going, “There’s another area we can extract.” It’s not at all the same. Plus with technology being what it is, and this bears in saying, “The technology that is stored is equally important.”

When I say stored, I mean there’s this thing called the Texas Railroad Commission. If you’ve never heard of it, it’s basically a humongous library in Texas of all the wells that were ever drilled. You’re required in that state to give a report card in every well, then it gets stored in this public file. If you’re an oil and gas driller, you can hook up to it with your equipment and download the information and go through hundreds of thousands or more of old wells. What most of us remember, maybe in the late ‘70s, early ‘80s, oil was extremely cheap, probably in the small double digits. Maybe even single digit sometimes. The extraction process to take something out of that resource that’s coming out of the ground may cost let’s say $7 a barrel.

That means if it’s $10 a barrel, it’s too expensive. What they do is they say, “We don’t have the technology to make this work so we’re going to cap it. We’ll move on. We’ll give a report card to this library called the Texas Railroad Commission.” We can go back to those old wells now when oil is at $35 to $70 a barrel. The technologists can say, “This makes sense to track this resource now because it’s only going to cost $7 a barrel to pull the water out of this well and keep the oil.” Because we can do that, now these wells are more economical. It’s because of that technology that allows or any company to go in and find high-quality opportunities in these oil states.

Let’s talk a little about the land. I like the way we set up, the way our company that we work for sets up the land. I’ll let you go into detail a little bit about that.

There’s a whole evolution there because there was a time where when you are a small company, you have to focus on one project at a time. These projects are usually a little bit more aggressive, usually a little bit riskier but you’re going in and you’re saying, “This is a spot that works with our business model.” You may have a few batches of wells maybe one, two or three or whatever. You go in and you say, “I want to buy a lease in this area.” In Texas for instance, a person who has access to the minerals who owns the mineral rights in the property, has more rights to the property than the person that owns the above ground interest.

As an example, you could be renting or even owning a home in Texas and someone could knock on your door and say, “I own the mineral rights. I’m going to drill.” They say, “What?” They may not even know that those mineral rights even exist. Back in the day, a lot of those mineral rights got taken off of the entire package that was the land and the above ground rights maybe were sold off, and the person who owned everything kept just the mineral rights. As those go around over the last 100 years, a company can stumble onto those or we find out who owns them. We knock on their door and we say, “We want to purchase this lease.”

After you get the lease, you can go into this person’s house and say, “We’re going to put a well in your front yard.” That’s how much rights you have. Of course, nobody makes friends doing that but that’s an example. Once you’ve got one lease and that lease begins to produce oil, you can have that lease into perpetuity as long as you’re at least producing maybe a barrel a month or something like that would be a good example. What you’re thinking is there is resource under the ground. We’re going to get this one lease and then we’re going to get some other leases around it. As you get those leases, you can pump oil and you can extract more of that resource out of the ground. That’s that primary recovery that I’ve talked about in the first segment.

Fast forward a few years almost a decade, companies that have grown can buy leases, multiple leases on a property that’s already producing. That’s what it’s all about. It’s like maybe a builder that wants to build a single home and so he buys the property and then buys all the equipment, and then builds the home, rents it out, eventually sells it. That’s a very arduous higher risk process. You can think of a more grown oil and gas operator as the guy that goes in and buys an apartment building that is already standing, fixes it up, rents it to market and then looks to sell that because now he’s got a track record. He’s got cashflow. It all starts with the leases because those leases are the things that give you access to the resource under the ground.

There are lenders who can lend money to the company for some of that. I think a good analogy like for our land, my family’s land in Ethel, Louisiana, which is a little bit north here in Baton Rouge. When we lease that land to Devon Energy in 2011, how did Devon Energy get the money to pay that land? They’re a publicly traded company. They have stockholders and shareholders. Our company is not public. We use lenders to help lease some of that land. Going back to what you said something in the first segment. We go after the low-hanging fruit of oil and gas. What do we mean by low-hanging fruit?

We have a company that is trying to work these wells. You don’t want to go after everything. You just want to go after the things you have very high confidence in. You could do horizontal drilling. You could do vertical drilling. We like to do the vertical drilling because it’s cheaper and if you find the right wells or the right projects, you don’t have to spend a lot of money to make a lot of money. That’s all we focus on. In addition to that because there are so many companies in the space, the people that are at a certain level in the beginning maybe $5 million to $50 million, there’s a lot of competition there. In the $200 million and all the way up to the publicly-traded companies, there’s a lot of competition there.

There’s this vacuum, this space, where there’s very little competition. We like to play in that space. In addition to that, to acquire these leases, we’re using debt. We’re using investors in that debt as opposed to banking. When your bank is also your business partner, it can get a little hairy when the price of oil drops because you’ve got all this debt covenants and these other things we’re not going to get into that can ruin your business relationship. Because they can do things like call the loan. What we do is we say we’ve got these investors. It keeps the company nimble and flexible and when things go bad, it’s great for us because we can go in and purchase those leases at a very large discount and now have access to way more resource we would have had, had we had banking finance.

In real estate or anything, you make money on the buy. When you’re able to buy things at a discount, that’s how you make money. If you want to tell our audience in the greater Baton Rouge area, any last words of wisdom?

There is still time. If there is a need for some tax benefit, it’s a great way to go because you have two things right off the bat. You have de-risked your investment because if you buy a publicly traded company. It is what it is but you don’t get to write off anything in your taxes, which means if you invest a certain amount, that’s how much you have at risk. In this situation, it’s absolutely not that. In addition for those that have more complex tax strategies and want to talk to their CPA, an interesting afterthought for those people who maybe want to take money from their traditional IRA to their Roth, they’re going to have a tax consequence. There’s a way to minimize that tax consequence using oil and gas.

That is definitely a strategy that people are taking advantage of.

Lastly, of course you can always 1031 exchange into direct participation programs for oil and gas. There are a lot of real estate people out there. They may be thinking, “The real estate market is a little hot. I’d sure like to take my gains and put it into something else but I don’t want to pay taxes.” You can 1031 exchange into projects like this as well. That’s great because instead of having to find a replacement property, that’s a certain amount of money and maybe you don’t want to put extra cash into it. There is the opportunity to slide into one of these projects.

You did a fantastic job explaining to our audience in Baton Rouge the ins and outs and public information. Going over the tax code of what’s out there and breaking it down in everyday people’s terms. I appreciate that. Thank you for being a guest on the show. I appreciate it.

My pleasure. Thanks for having me.

You did a great job. Thank you.

That was a pretty good show right there, Mr. Jordon Trice out of Nevada. He’s a good man and intelligent man. He is very good when he gets in front of a group of people explaining the strategies and explaining the current tax code that we follow as American citizens. There are ways to reduce your tax burden. That’s what he and I talked about in the first segment a little bit and a little bit into the second segment was that when I meet somebody, and they ask about oil and gas they are like, “Is this real? This sounds too good to be true as far as talking about the deduction.” “It’s real. Just because you haven’t heard about it, doesn’t mean it’s not real.” Show me another investment where the first 15% of income every year is tax-free. There’s nothing else out there like this. There is no other strategy that gives the deductions that oil and gas give as well as not paying taxes on the first 15% of income. I know there are some others, some solar power stuff and some conservation easements and things like that that people get into. When it’s all said and done, oil and gas has been around for a while and there’s nothing else out there.

I encourage you to get educated about that and learn if it’s a good fit for you. Call me 202-SAGE, that’s 202-7243. The website is SageMoneyRadio.com. You can send me an email. As Jordon said going over section 469(c)(3)(a) of the tax code, I typed it in Google whenever he was talking about it. It talks about working interest in oil and gas property. This is straight from the tax code, “The term passive activity shall not include any working interest in any oil or gas property, which the taxpayer holds directly or through an entity which does not limit the liability of the taxpayer with respect to such interest.” Basically, that’s telling you about the write-offs and the deductions for oil and gas. We’ll be the first to tell you we don’t drill wells for the tax deductions. That is not the purpose. This is what we call lagniappe. It comes along for the ride. The deductions for oil and gas, we drill to make money. The deductions come along for the ride. I hope you enjoyed the show.

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About Jordon Trice

I exist to help people see opportunities they did not know existed before. In a world of people working to sell you things that are really in their best interest, I simply show people a different door to wealth and opportunity. If they want to walk through it, that is their decision.

I live to consult and connect with people about financial matters. If you want to level up, then you’re in the right place.

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