7861 / What tax deductions and credits are available through an oil or gas limited partnership?

The two deductions that are particular to oil and gas programs (and certain other extractive industries) and which provide the major incentives for investing in an oil or gas limited partnership are (1) the deductions for intangible drilling and development costs (see Q 7866 to Q 7869), and (2) depletion (see Q 7870 to Q 7884). Of course, subject to certain limitations (see Q 7862 to Q 7865), deductions for interest, taxes, depreciation, and operating expenses may be passed through and deducted by the limited partner. See Q and Q for a discussion of the new interest deduction rules imposed by the 2017 tax reform legislation.

See Q 7733 regarding electing large partnerships.