The Wealth Elevator Podcast: Real Estate, Taxes, Investing · Lane Kawaoka, PE

Taxes Before Year-End: Using Oil & Gas Investments to Lower Ordinary Income

·1 hr 4 min·3 clips

With a $100,000 investment at 80% intangible drilling costs, you reduce your taxable income by $80,000 in year one

The show starts with a community invite and says members have passively invested over $230 million with the group to acquire over $2.1 billion in real estate. It also points listeners toward pre-release access to the 12-module master class for accredited investors. From there, the host lays out two buckets: ordinary income on one side and passive income on the other. He ties ordinary income to W-2 wages and 1099 income from a job or business. He uses a simple example to show how an $80,000 intangible drilling cost deduction can reduce the adjusted basis on a $100,000 investment to $20,000. The point is not just basis math; it is the income reduction that can affect AGI. The host warns that people often mix up real estate depreciation with the ability to offset ordinary income. He says passive losses are a better fit for passive income, not a catch-all. The discussion then shifts into oil and gas investing as a possible way to lower ordinary income before year-end. A co-host asks about intangible drilling costs and tangible drilling costs. The response distinguishes between actual drilling costs and the physical equipment tied to the project. Equipment like compressors and pipes falls into depreciation treatment because it is a separate asset, and the show says that equipment is subject to seven-year depreciation under the tax law being described. It also explains that 100% bonus depreciation is really acceleration, not extra depreciation. The practical appeal is timing: front-loaded deductions can keep more money in the investor's pocket now instead of later. The conversation ties that back to the idea of creating a new business that drills wells, sells oil and gas, and partially shelters the revenue it produces. The host keeps repeating that the listener should consult a CPA and not treat the discussion as legal or tax advice. After the tax walk-through, the show turns back to its community calendar, including a monthly webinar and the possible unveiling of a new circle group. It ends with an invite for an onboarding call and a reminder about the annual retreat on January 16th to the 18th in Honolulu, Hawaii.

As heard by us

A plainspoken walkthrough of how oil and gas deductions are framed against ordinary income.

The episode presents a year-end tax angle that treats oil and gas investing as a way to generate deductions that may offset ordinary income from W-2 or 1099 work, while passive income remains in its own bucket.

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Why you'd press play

You want to see how a year-end oil and gas deal can reduce ordinary income.

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