TAX EFFICIENCY STRATEGIES
Interactive Tax Advantages
Explore powerful tax codes and strategies. Use the arrows or drag a card to discover the next advantage. Each card flips to reveal more.
IDC
Intangible Drilling Costs (IRC § 263(c))
How It Works:
Certain oil and gas working interest investments may qualify for a full deduction of intangible drilling costs—expenses such as labor and site preparation—when incurred, subject to IRS rules.
Example:
An investor allocates $500,000 to a drilling partnership. If $400,000 qualifies as IDC, that amount may be deducted in the same year, depending on structure and eligibility.
Who Can Benefit from IDC?
- Individuals with high ordinary income
- Accredited investors in direct energy interests
- Taxpayers comfortable with oil and gas-related risk
- *Consult a qualified tax professional before investing.*
ABD
Accelerated Bonus Depreciation (IRC § 168(k))
How It Works:
Eligible business-use property (such as equipment or cost-segregated real estate components) may be depreciated more quickly, with up to 40% deductible in the first year (2025), subject to change.
Example:
A business places $1 million of qualifying equipment into service in 2025. Based on current rules, $400,000 may be deducted immediately, with the rest depreciated over time.
Who Can Benefit from ABD?
- Business owners acquiring capital assets
- Real estate investors using cost segregation
- Entities looking to accelerate expense recognition
- *Rules may differ by state; confirm with a licensed tax advisor.*
QOZ
Qualified Opportunity Zones (IRC § 1400Z-2)
How It Works:
Taxpayers may defer capital gains by reinvesting them into a Qualified Opportunity Fund (QOF) within 180 days. After 10 years, appreciation on the new investment may be excluded from federal tax, if requirements are met.
Example:
A taxpayer reinvests $250,000 of capital gain into a QOF. That gain is deferred until 2026. If held for 10+ years, future appreciation may qualify for tax exclusion under current law.
Who Can Benefit from QOZ?
- Investors realizing recent capital gains
- Long-term investors targeting tax-advantaged growth
- Investors aligned with geographic redevelopment projects
- *QOFs are subject to compliance and risk. Consult a tax professional.*