CPA Midland AlternativeThe tax already taken off the check

On crude, the production tax is 4.6 percent of market value. The first purchaser calculates it, pays it, and reports it. The report is due on the 25th of the month after the production. By the time the money reaches an owner, the tax has already left. The statement is the only place many owners ever see it.

That is why the deposit is smaller, and why a conversation that starts with the gross will not match the bank. We start with the net that arrived, then we put the tax back on the page as its own line so the year is whole. We do not invent a volume. If the statement does not show the gross, we say the gross is missing instead of filling it in.

Depletion, a drilling cost, and the question of whether a well is still worth what the books say are real questions. They are not answers this page is allowed to invent. Bring the statement and the cost records. We will say what the file supports and what it does not. A hopeful percentage offered before that reading would be a sales trick, and we will not do it.

Natural gas has its own rules. If your check is gas, say so. We will read that statement on its own terms rather than force the crude rate onto it.

Every Texan who follows the field knows the second boom that came with the Spraberry trend, still spoken of as one of the country's great oil fields by what it holds. We share that history as Texans, and we do not confuse it with a balance in one owner's books. A famous field can still produce a messy deposit. The close does not get easier because the geology is famous. It gets easier because the statement and the bank are put on the same page.

Production tax and sales tax are not the same bill. A yard that also sells parts in town can owe sales tax on the 20th and still receive royalty deposits that were already net of production tax. We keep the two calendars apart so a payable does not get paid twice or missed because it looked like the other one.

A useful statement shows the gross, the tax the purchaser computed, and the net that was paid. If any of those three is missing, we say which one, and we do not fill the blank with a barrel count from a conversation. Your amounts stay in your file. This page only shows the shape.

Interest in a well and a check that looks like one are not always the same interest. A joint interest billing, a revenue deck, and a one time lease bonus can arrive in the same month and none of them is a substitute for the others. We ask what the statement says it is before we pick an account.

The worry underneath a smaller deposit is usually that something was taken that should not have been. Sometimes that worry is right, and the statement will show it. Sometimes the tax was the whole difference, and the relief is just seeing the three lines. We would rather give you that relief from the paper than from a speech.