American Oil and Gas Reporter - March 2018 - 96

The tax reforms signed by President
Trump in December will provide direct
and indirect beneﬁts for operators, predicts Don Nestor, a partner in Arnett
Carbis Toothman LLP and chairman of
the Independent Oil and Gas Association
of West Virginia's Tax Committee.

shareholders in certain pass-through entities, including partnerships, LLCs and
sole proprietorships, he reported. Kiss
told IOGAWV in addition to the direct
economic benefits to companies, the new
tax policy sought to increase repatriation
of corporate dollars held overseas.
For the oil and gas industry, aspects
of the tax code that avoided revision-
particularly eliminating or reducing deductions for intangible drilling costs, percentage depletion and marginal wells-
are as important as what was changed,
Kiss said.
"Most of the significant changes originally proposed for oil and gas were taken
off the table. You will not see any major
shift there. To some extent, that probably
indicates some stability for your industry,"
he predicted.

For individual taxpayers, Kiss reported
most will experience lower tax rates, an
increase in the standard deduction from
$12,000 to $24,000 balanced by elimination of most personal deductions, and
a cap on home mortgage interest deductions. "Obviously, every individual taxpayer and where they shake out in this
process is going to be a function in large
part of those first two items," he said.
The Tax Cut and Jobs Act also doubles
the personal exemption under estate tax
rules, to $10 million, Kiss pointed out.
"The number of estates in West Virginia
that are taxable probably is in the 1 percent
range; at the national level, it may be 2
percent or somewhere in that range. Now,
even fewer estates will be subject to the
estate tax," he described. "For those of us
who have been pursuing gifting strategies
to future generations, you now have an
opportunity of an additional $5 million to
gift. Assuming these provisions stay in
place, you will have those for a long
period. Because some future administration
may want to revise them, you will want
to take advantage of those opportunities
now, before there are changes."
State Tax Issues
When West Virginia Governor Jim
Justice asked Mike Hall to serve as his
chief of staff, Hall recalled, the governor
expressed how one of his new administration's main concerns was modernizing
the state's natural gas laws.
"We have spent hours in conversations
with people from your industry, as well
as legislators, looking at bills that deal
with your industry," Hall said. "We were
very well aware that the states that surround West Virginia have different laws,

Mike Hall, chief of staff to West Virginia
Governor Jim Justice, says West Virginia's business tangible personal property tax remains a challenge for industry
operations in the state.

and activity seems to be greater around
us. From our office's perspective, we are
working very hard with legislative leaders
who are taking care of several bills."
One of the challenges West Virginia's
producers face is the state's business tangible
personal property tax's impact on oil and
gas equipment, machinery and inventory,
Hall said. Most of the revenue from that
tax goes back to county governments for
education funding. Adding to the problem
is that the state constitution prohibits
revising property tax laws without amending
the constitution. Most states that had not
tied such a tax to constitutional requirements
got rid of it years ago, he indicated.
According to West Virginia's legislative
website, in addition to the fiscal burden,
the personal property tax system requires
businesses to file state forms identifying

The Independent Oil
and Gas Association
of West Virginia recognizes several individuals and companies at its winter meeting, held Jan. 23-24 in
Charleston, W.V. LEFT:
Former IOGAWV President David Haney (left)
poses with Jim McKinney after Haney was
presented with the association's 2017 Gunslinger Award, which
honors individuals who
have made unique contributions to the state's
oil and gas industry.
McKinney, also a former association president, received the
award in 2015. RIGHT: IOGAWV also recognized recipients of the West Virginia Oil and Gas Reclamation awards at the winter meeting.
Honored by the state Office of Oil and Gas were, front row from left, James Pancake, Tug Hill Operating LLC; and Sam Minardi, XTO Energy
Inc. Standing, from left, are Phil Keaton, EQT Production Co.; Dee Southall, SWN Production LLC; and Nick Staffieri, Chevron Appalachia
LLC. Also recognized were Noble Energy Inc. and Mountain V Oil & Gas Inc.

96 THE AMERICAN OIL & GAS REPORTER

American Oil and Gas Reporter - March 2018

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