Drilling Into Money Not Boring by Mark E. Battersby The One Big Beautiful Bill Act The new Budget Reconciliation law, the so-called “One Big Beautiful Bill Act” (OBBBA), prevents an over $4 trillion tax hike from occurring at the end of this year by extending and making many of the temporary tax cuts of the 2017 Tax Cuts and Jobs Act (TCJA) permanent. Under the OBBBA, the favorable 20% deduction from the income of pass-through businesses, such as sole proprietorships, partnerships, and S corporations is now permanent. The partnership tax rules have long insisted that services and property transfers (or disguised sales) be at arm’s length. Now, thanks to the OBBBA, there is a “technical clarification” that expands the guidance and makes them applicable unless there is an exception. One of the key elements of the 2017 TCJA was a 100% bonus depreciation write-off which allowed a drilling operation or business to immediately deduct the full cost of equipment and other assets. Today, the full 100% bonus depreciation is back. What’s more, the deduction will apply through 2029 for property acquired after January 19, 2025. In addition to bonus depreciation, the OBBBA doubles the current amount allowed as a Section 179 first year expensing deduction from $1,250,000 to $2,500,000 and increases the asset acquisition limit from the current $3,130,0000 to $4,000,000. And then, there is the new tax deduction for overtime pay. Workers making less than $150,000 can deduct as much as $12,500 for single filers and $25,000 for those filing jointly. For the drilling operation, the employer, overtime is still considered as wages for FICA tax purposes, meaning the wages are subject to Social Security and Medicare tax. However, since workers can only deduct overtime that is reported on information returns, such as Form W-2, this year the employing drilling operation or business can approximate overtime pay using a “reasonable method.” Those drilling professionals concerned about the OBBBA’s addition to the Corporate Alternative Minimum Tax (AMT) can relax. The OBBBA has added another category for expenses related to developing gas and oil wells. Although the corporate AMT routinely imposes a 15% minimum tax on the adjusted financial statement income, not its taxable income, fortunately it only applies to large corporations - with income in excess of $1 billion. These and many other changes will obviously require all drilling professionals to adjust their tax strategies. In addition to monitoring further developments, seeking professional assistance can help both with planning and reaping the potential tax savings. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com G&O 16 SEPTEMBER 2025 WorldWide Drilling Resource® October 1-2, 2025 ~ Get ready to attend the National Drilling Association’s DRILLEXPO, the premier event for geotechnical and environmental drilling professionals. Competitors will become colleagues at the Huntington Convention Center in Cleveland, Ohio. Enjoy 18 holes at the Stonewater Golf Club or take the Rock and Rock Hall of Fame Tour before the trade show opens at 4:30 p.m. on Wednesday, which is followed by a rooftop social. Along with expert industry presentations on Thursday, get inspired by Keynote Speaker Ross Bernstein’s “The Champion’s Code: Building Relationships Through Life Lessons of Integrity and Accountability from the Sports World to the Business World” during the Presidents Dinner. Register now at https://cvent.me/R7AnQE October 7-9, 2025 ~ Where the utility industry goes to grow, The Utility Expo is held every other year at the Kentucky Exhibition Center in Louisville, Kentucky. With over 1.5 million square feet of equipment, products, and services on display, there is surely something for everyone. Visitors are encouraged to climb in and demo the machines, ask questions, and compare brands. Plus, there are over 30 education sessions to bring you up to speed with the latest ideas and techniques, along with practical training you can use right away. More details at www.theutilityexpo.com See more events at www.worldwidedrillingresource.com online issue. Are you planning to go? WorldWide will be looking for you! Join WWDR
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