EnergyFunders Yield Fund I Is Now Live!

Active vs Passive Tax Benefits

What Makes EnergyFunders Different

With EnergyFunders you can invest as a general partner or limited partner.

The main reason to invest as a general partner vs. limited partner is to be able to deduct your investment from active income. If you invest as a limited partner, you deduct your investment from passive income.

However, if you are a general partner, you have unlimited liability, and if you are a limited partner, you have limited liability. This is also a factor to consider when choosing whether to be a general or limited partner.

EnergyFunders converts all general partners to limited partners when the well begins producing. This allows general partners to minimize tax liability when the well is producing. These tax benefits are in addition to the oil and gas tax deductions all investors can.

If you want all the legal details, read on.

GENERAL PARTNER INTERESTS

Tax Consequences

Generally, if you invest as an investor general partner, then your share of the partnership’s deduction for intangible drilling costs will not be subject to the passive activity limitations on losses. You may claim a deduction in an amount equal to not less than the percentage of your net subscription amount used to pay for intangible drilling costs for all of the wells to be drilled by the partnership in that taxable year.

Please consult your tax professional to determine how this applies to your particular tax situation.

Unlimited Liability

If you invest as an investor general partner (GP), you will have unlimited liability regarding the partnership’s activities.

This means that if (1) the partnership’s insurance proceeds from any source, (2) the managing GP’s indemnification of the investor general partners, and (3) the partnership’s assets were, collectively, not sufficient to satisfy a partnership liability for which the investor general partners were also liable solely because of your status as general partners of the partnership, then the managing GP would require the investor general partners to make additional capital contributions to the partnership to satisfy the liability.

In addition, the investor general partners will have joint and several liability, which means, generally, that a person with a claim against the partnership and/or an investor general partner may sue all or any one or more of the partnership’s general partners, including you, for the entire amount of the liability.

Assessibility

You will be able to determine if your interests are subject to assessibility based on whether you buy investor general partner interests, which are assessible, or limited partner interests, which are non-assessible.

LIMITED PARTNER INTERESTS

Tax Consequences

If you invest as an investor limited partner, then your use of your share of the partnership’s deduction for intangible drilling costs will be limited to offsetting your net passive income from “passive” trade or business activities.

Please consult your tax professional to determine how this applies to your particular tax situation.

Limited Liability

If you invest as a limited partner, then you will have limited liability for the partnership’s liabilities and obligations.

This means that you will not be liable for any partnership liabilities or obligations beyond the amount of your subscription amount in the partnership and your share of the partnership’s undistributed net profits, subject to certain exceptions set forth in the materials provided.