By reviewing the IRS site > http://www.irs.gov/publications/p535/ch09.html I have found that independent companies along with "Related Person" can both claim deductions - either by cost or percentage depletion. I am sure that the large oil companies have a significant ownership or interest if by nothing else but the downstream product.
I guess where I am going with this is... if the government would stop spending useless cash on oil subsidies, the claim is that all of the independent companies would go out of business and 4 million people would be without jobs. But that would also suggest that the 90+% of all domestic oil that is being produced today by the independent would be stopped. I just don't but into this. Why wouldn't the independent companies be incentivized by the simple market demand of their product? If large oil corporations were no longer able to purchase the downstream product - wouldn't they step back into the picture and either take over exploration / production....or subsidies these independents with their deep pockets?
For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. A partnership and a trust are related persons if one person holds a significant ownership interest in each of them.
For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following.
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The value of the outstanding stock of a corporation.
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The interest in the profits or capital of a partnership.
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The beneficial interests in an estate or trust.
I would like to know if anyone can tell me where to find factual information on who is actually benefitting from oil subsidies. The recent rhetoric suggests that only the smaller companies benefit but they also claim that they are drilling most of the wells. So I am trying to understand how removing this subsidy would impact the small independent company. How interdependent are the large oil "Big Oil (Exxon/Shell/Chevron/BP)" companies on the smaller independent companies. I try to equate this to my business where we subcontract our dirty work (wire pulling) out to smaller independently owned companies. I have tried to use simple common sense logic to this and apply the same principles.