This is singling out the oil industry too, and it doesn't sound right. A fisherman can claim his boat and nets as capital equipment, but not the fish.
One big difference: Did the fisherman have to buy the fish in the ocean? Nope. Well, the oil companies have to buy or lease the land they drill, the costs of which includes the cost of the oil.
In business, if you have to buy it, you get to deduct the value of that expense over time. Simple example: BEOC (Big Evil Oil Company) spends $1B on an oil lease. One of their “costs of doing business” is that $1B they spent on the lease. BEOC gets to deduct a PART of that each year as a “depletion allowance.” They don't even get a break for the entire amount they spent in the year they spent it — the deduction gets spread out over years.
But Obama wants to take that away. Now, that's a recipe for a killing an industry.
.....................Right now, oil in the ground is treated as capital equipment.
This is singling out the oil industry too, and it doesn’t sound right. A fisherman can claim his boat and nets as capital equipment, but not the fish......................
The oil company has either rented the property above the oil, or paid huge lease fees to the government to attempt to find more oil under the seafloor, or on government owned property. Rather expensing these up front costs, they are allowed to claim them as capital investment, and write down over time.
The fisherman didn’t pay anything in advance to try to catch the fish, thus no capital investment.