* Oil & Gas Working Interest - Recapture of Intangible Drilling Costs *

Client is considering investing in an oil & gas working interest.  I do knot know if he would receive a 1099 or if it would be reported to him on a K-1.  Does this matter? 

From what I have researched, he can expense intangible drilling costs rather than capitalize them.  He REALLY likes this idea since he is looking at a year with high income.  However, it appears he'll be subject to recapture of these costs at ordinary rates in the future. 

For a working interest, wouldn't the well be abandoned if it were dry or eventually became unproductive years later?  If so, do you still have recapture with a working interest "sale" of $0? 

I need to advise my client.  Up front it appears to be a good deal tax-wise, but I am worried about years down the road.  I appreciate anyone's response who is experienced in this area.  (I don't need advice about the riskiness of the investment -- we know the well could be dry.)  Thanks!!

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