Hall, Kistler & Company http://www.hallkistlerblog.com Blog Mon, 20 May 2019 19:07:06 +0000 en-US hourly 1 http://www.hallkistlerblog.com/wp-content/uploads/2019/01/HK-logo-Twitter2.jpg Hall, Kistler & Company http://www.hallkistlerblog.com 32 32 How do Footnotes and Disclosures Expand My Numbers? http://www.hallkistlerblog.com/how-do-footnotes-and-disclosures-expand-my-numbers/ http://www.hallkistlerblog.com/how-do-footnotes-and-disclosures-expand-my-numbers/#respond Mon, 20 May 2019 19:07:03 +0000 http://www.hallkistlerblog.com/?p=428 One significant but often overlooked part of GAAP-compliant financial statements are the footnotes and disclosures that accompany the numbers. It’s easy to ignore these when you are in a rush to “see how the year went” and “see how much …

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One significant but often overlooked part of GAAP-compliant financial statements are the footnotes and disclosures that accompany the numbers. It’s easy to ignore these when you are in a rush to “see how the year went” and “see how much we made.” However, the footnotes provide additional information and color and allow a reader to obtain a better picture of the financial condition of a company. Remember, management and ownership may not be the only readers of the financial statements. Bankers and potential investors may be carefully reviewing these statements as well.

Financial statements of oil and gas producers have several footnotes that are unique to the industry. Some of these footnotes are related to items we’ve discussed previously. For example, any company with an asset retirement obligation related to their wells will generally have a footnote describing how the obligation is calculated and also showing a table with beginning balances, changes during the year, and the ending balance that ties to the balance sheet. This allows a reader to see more detail as to why the obligation increased or decreased during the year. Was it due to more wells brought online? Did the Company plug a large number of wells during the year? Was there a change in how the amount was calculated? The footnote will provide the reader with that information.

A second footnote commonly seen is related to hedging transactions and derivatives. This footnote will usually provide more detail about the Company’s hedging arrangements; for example, when do the agreements run through? What volume is the Company hedging? Is it based on NYMEX or WTI or Henry Hub? A reader will obtain a greater understanding of the accounting treatment of these transactions and how they are calculated from the footnote.

A third footnote might be related to reserves held by the Company. This is a required footnote for publicly held companies, but many private companies elect to include this information as well. For example, a table might show changes in reserves, similar to the asset retirement obligation described above. Why did reserves increase substantially this year? Or conversely, why the significant decrease? A footnote can explain the changes and show a reader that the change was due to prices going up or down. Or it might be because the Company bought or sold reserves during the year. Are the reserve totals using escalated prices? What discount rate is the Company using to determine total reserves. These and other questions can be answered and expanded upon within a footnote.

As we’ve mentioned above, the Company may not be the only reader of a financial statement. Bankers and investors read them as well. That’s why it’s essential to have strong and supportable numbers in your financial statements, and footnotes that are compliant with GAAP and allow for analysis and discussion. This is crucial for any company, whether you’re drilling your first well, or getting back into the game, or taking the next step to grow your Company.

This wraps up our series on GAAP for the oil and gas industry, To read other blog posts on this topic, search under the Category “Oil & Gas.” You can also subscribe to our newsletter or contact us at 330-453-7633 for more information about your oil and gas accounting needs.

Thanks for reading and if you have suggestions on topics, let us know at info@hallkistler.com.

Hall, Kistler & Company has been helping producers in the oil and gas industry since we opened our doors in 1941. We know what it takes to produce proper GAAP financial statements for oil and gas companies and can provide guidance along the way. Let us help when you are coming off of the sidelines and BACK INTO THE GAME.

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Where do I account for Hedging Transactions? http://www.hallkistlerblog.com/where-do-i-account-for-hedging-transactions/ http://www.hallkistlerblog.com/where-do-i-account-for-hedging-transactions/#respond Wed, 27 Feb 2019 15:58:11 +0000 http://www.hallkistlerblog.com/?p=419 Risk management is an important part of any business, especially in the oil and gas industry. Because oil and gas is a commodity, one significant risk that oil and gas producers have to deal with is the risk related to …

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Risk management is an important part of any business, especially in the oil and gas industry. Because oil and gas is a commodity, one significant risk that oil and gas producers have to deal with is the risk related to the price of that product. There are many strategies that producers use to deal with this risk. One strategy is to enter into agreements called derivative instruments or hedge agreements. These agreements might be a swap agreement, where the producer pays or receives amounts based on the difference between the “hedged” price and a market price from NYMEX or another index. Another strategy is to enter into what’s called a costless collar arrangement, where call and put options are used to create a net-zero effect on commodity price and reduce downside risk.

Regardless of how a company chooses to deal with the risk of price fluctuation, any time derivative instruments or hedging agreements are present the next question becomes, “How do I account for these?”.

How Do I Account for Hedging Agreements?

Accounting standards require that if these arrangements are designated as “hedges” by an entity, and function as such, they are recognized on the balance sheet at fair value, but any unrealized gains or losses associated with the arrangements are deferred through accumulated other comprehensive income on the financial statements.

As an example, think of a hedging swap agreement. Every month, the hedge agreement price is compared to an index price, and the difference is paid to or paid by the company, depending on where the agreement price fell in relation to the index price for that month. However, the agreement can run from one to two or even three years. Thus, until the agreement is finished, there’s always what’s called an “unrealized” portion that might be based on futures prices, again from an index like NYMEX. As each month is “realized,” the gain or loss hits the bottom line through the income statement, but what remains going forward still has value. Current futures prices might dictate that the Company has an asset and an unrealized gain through other comprehensive income if their hedge price is better than the futures prices. Conversely, if the company’s hedge price is less than the futures prices, a liability will be recorded as well as an unrealized loss through other comprehensive income. The objective is to reduce earnings volatility by more closely matching gains or losses from a derivative with the underlying item being hedged (usually production revenue in this case).

As if This Weren’t Complex Enough…

An entity can elect NOT to designate its derivative instruments as hedges. If this occurs, the fair value is still recorded on the balance sheet, and the realized gain is still recorded on the income statement, but the unrealized gain is now also recorded as a current period gain or loss rather than being deferred through other comprehensive income. In this instance, the gains or losses from the derivative are recorded in the current period regardless of when the gains or losses on the underlying item being hedged are realized.

As you can see, hedging transactions and derivative agreements can create complex accounting and disclosure requirements. However, these arrangements can effectively mitigate risks related to commodity price and thus can potentially be an essential component of GAAP financial statements for oil and gas producers.

Wrapping up our series on GAAP for the oil and gas industry, our last blog will discuss financial statement disclosures commonly seen in the oil and gas industry and what they might mean for your company’s financial statements.

To read other blog posts on this topic, search under the Category “Oil & Gas.” You can also subscribe to our newsletter or contact us at 330-453-7633 for more information about your oil and gas accounting needs.

Hall, Kistler & Company has been helping producers in the oil and gas industry since we opened our doors in 1941. We know what it takes to produce proper GAAP financial statements for oil and gas companies and can provide guidance along the way. Let us help when you are coming off of the sidelines and BACK INTO THE GAME.

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Why You Need a Reserve Report http://www.hallkistlerblog.com/why-you-need-a-reserve-report/ http://www.hallkistlerblog.com/why-you-need-a-reserve-report/#respond Wed, 16 Jan 2019 15:23:38 +0000 http://www.hallkistlerblog.com/?p=386 By Andy Griffin, CPA, Supervisor and Keith A. Arner, CPA, CVA, Partner
“Do I really need to spend money to have an engineer prepare a reserve report for me?” As an oil and gas producer, you may have asked this …

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By Andy Griffin, CPA, Supervisor and Keith A. Arner, CPA, CVA, Partner
“Do I really need to spend money to have an engineer prepare a reserve report for me?” As an oil and gas producer, you may have asked this question before. Reserves are the most significant measure of the value of your company to an outside party. Whether you’re trying to obtain financing from a bank, attract outside investors to a drilling program, or buy or sell an oil and gas producer, the ultimate question that will have to be answered is ”What is the value of what you have in the ground?”

Some companies produce their own reports using the data they have on hand and pricing based on the situation (e.g., year-end NYMEX or possibly escalated pricing based on estimated future commodity prices); however, more common is the use of an outside petroleum engineer with experience in the field.

 One additional situation that often gets overlooked compared to the others listed above is the importance of reserve reports in producing statements that comply with generally accepted accounting principles (GAAP). 

Your calculation of depletion expense is a critical area where reserve reports play a part. One of the interesting and tricky parts of depletion is the fact that total reserves change every year. Factors such as how much you produced in the past year, and commodity price changes dictate the remaining reserves. Thus, an updated reserve report is essential in the calculation of this number. Remember, there is no way of knowing how much you depleted unless you know what you have left.

A second item that the reserve report is needed for is the calculation of your asset retirement obligation, which we have discussed in our blog in the series. Simply put, how are you going to calculate a retirement obligation or plugging liability on each well without estimating when that well is going to be plugged? Again, this is where the reserve report comes into play. The report should have an estimate of the remaining useful life of each well, or at a minimum the life remaining in each group of wells or field that you have.

Yet another important use of the reserve report is in calculating potential impairment of the value of your oil and gas properties. GAAP requires the evaluation of whether or not the fair value of an asset has fallen below the reported value on the financial statements. If the future value is less, an impairment has to be recorded, and the asset is written down to the fair value. The best way to calculate the value of your oil and gas properties to make this calculation is a reserve report using reasonable and supportable estimates of the future value of your wells/acreage/properties.

A unique twist we want to note that affects any companies following the full cost method of accounting (rather than the more common successful efforts method) is what’s called a cost ceiling test. Without getting into the intricacies of the calculation, it is similar in concept to the impairment calculation described above but is much more complex. So once again, the reserve report plays a significant role.

As you can see, it’s essential that your company has a solid and reasonable estimate of the value of “what you have in the ground.” A reserve report will allow you to make the calculations necessary to produce GAAP-compliant financial statements.

In our next blog post, we will discuss financial statement footnotes and disclosures related to oil and gas exploration and production companies.

For other blog posts on this topic, search under the Category “Oil & Gas.” You can also subscribe to our newsletter or contact us at 330-453-7633 for more information about your oil and gas accounting needs.


Hall, Kistler & Company has been helping producers in the oil and gas industry since we opened our doors in 1941. We know what it takes to produce proper GAAP financial statements for oil and gas companies and can provide guidance along the way. Let us help when you are coming off of the sidelines and BACK INTO THE GAME.

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2018 Kiddie Tax on Child’s Unearned Income May Be Higher http://www.hallkistlerblog.com/2018-kiddie-tax-on-childs-unearned-income-may-be-higher/ http://www.hallkistlerblog.com/2018-kiddie-tax-on-childs-unearned-income-may-be-higher/#comments Wed, 19 Dec 2018 19:20:42 +0000 http://www.hallkistlerblog.com/?p=381 By Sandra Orcutt, EA, Supervisor

Although the so-called “kiddie tax” will be easier to calculate thanks to the Tax Cuts and Jobs Act (TCJA) of 2017, the unearned income of eligible children (or grandchildren) could be taxed at a higher …

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By Sandra Orcutt, EA, Supervisor

Although the so-called “kiddie tax” will be easier to calculate thanks to the Tax Cuts and Jobs Act (TCJA) of 2017, the unearned income of eligible children (or grandchildren) could be taxed at a higher rate.

For tax years 2018 through 2025, the TCJA has changed the kiddie tax taxable structure. Unearned income is now taxed at the rates paid by trusts and estates. The highest bracket of the trust/estate rates for ordinary unearned income is 37 percent (or as high as 20 percent for long-term capital gains and dividends). Before the TCJA, the kiddie tax was taxed at the parent’s marginal tax rate. With the lowering of individual tax rates for 2018, this change to the kiddie tax could have significant tax consequences for children who derive more than half of their support from unearned income.

Earned income is defined as compensation from a job or self-employment, which is not subject to the kiddie tax. Unearned income is income other than wages, salaries, professional fees, and other amounts received as compensation for personal services. Unearned income subject to the kiddie tax may include capital gains, dividends, and interest — typically received through trusts and estates.

Under the TCJA, the IRS provides these eligibility requirements to determine if unearned income is subject to the kiddie tax:
1. The child does not file a joint return;
2. One or both of the child’s parents are alive at year-end;
3. The child’s net unearned income exceeds the threshold for that year and the child has positive taxable income after subtracting any applicable deductions (i.e., standard deduction). The unearned income threshold for 2018 is $2,100.

If the unearned income threshold is not exceeded, the kiddie tax does not apply. If the threshold is exceeded, only unearned income in excess of the threshold is applicable to the kiddie tax.

The kiddie tax can apply until the year during which the child turns age 24. For ages 19-23 at year-end, the kiddie tax can only apply if the child is a student. A child age 18 or under at year-end is almost always subject to the kiddie tax if meeting the above requirements. These age rules can be tricky, so it’s important to consult with your CPA on whether your child or grandchild is subject to this tax.

The following tax rates will be used to calculate the kiddie tax for 2018 through 2025:

[make this a chart?]
2018 Trust and Estate Tax Rates for Ordinary Income
10% tax rate $0-$2,550 = 10% of taxable income
24% tax rate $2,551-$9,151 = $255 plus 24% of the excess over $2,550
35% tax rate $9,151-$12,501 = $1,839 plus 35% of the excess over $9,150
37% tax rate $12,501+ = $3,011.50 plus 37% of the excess over
$12,500

2018 Trust and Estate Tax Rates for Long-Term Capital Gains and Dividends
• 0% tax rate $0-$2,600
• 15% tax rate $2,601-$12,700
• 20% tax rate $12,701+

One final note: Due to the tax rate change, the kiddie tax is also subject to the Net Investment Income Tax if the child has undistributed net investment income and adjusted gross income is over the dollar amount at which the highest tax bracket for a trust begins. For 2018, this threshold is $12,501. The tax rate for the Net Investment Income tax is 3.8 percent for 2018.

If your child (or grandchild) derived more than half of his or her support from unearned income sources for 2018 and meets the eligibility requirements, contact the tax team at Hall Kistler with your questions.

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E&P Estimating for Accrued Revenue and Related Expenses http://www.hallkistlerblog.com/ep-estimating-for-accrued-revenue-and-related-expenses/ http://www.hallkistlerblog.com/ep-estimating-for-accrued-revenue-and-related-expenses/#respond Mon, 10 Dec 2018 18:33:36 +0000 http://www.hallkistlerblog.com/?p=375 By Andy Griffin, CPA, Supervisor and Keith A. Arner, CPA, CVA, Partner 

In the world of oil and gas, we know that production cash receipts and income tend to lag a month or two (or sometimes three) behind when the …

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By Andy Griffin, CPA, Supervisor and Keith A. Arner, CPA, CVA, Partner 

In the world of oil and gas, we know that production cash receipts and income tend to lag a month or two (or sometimes three) behind when the volumes are produced. This is due to a variety of factors, including the time required to read meter charts, shipping to the marketer, and processing of the payments.

Generally Accepted Accounting Principles (GAAP) require that income be recognized when it is earned, not necessarily when it is paid, and also that related expenses need to be recognized when incurred, not when you actually write the check to pay for those expenses. If your company’s goal is to produce GAAP-compliant financial statements, it’s imperative that you have a good estimate of oil and gas produced but not yet paid at the end of the month/quarter/year.

There are several ways to estimate accrued revenue and related expenses. Some are very high-level; for example, you might take volumes produced in November and December of last year and apply current prices to those amounts to estimate this year’s revenue. For the related expenses, if those are consistent and there were no major changes, you could use amounts paid out by your company last year in January and February to represent November and December expenses of that prior year. Another quick method would be to use an average of the oil and gas revenue and related costs in the first 10 months of the year (or nine or 11, depending on your accrual period), and then multiply that amount times the months in your accrual period. These methods generally work best if your production is consistent year over year and throughout the year, but any large price swings must be taken into account at the end of the year.

Some companies prefer to use a more precise method. They might use detailed production reports to get a better estimate of what they will be paid on. They might factor various basis differences into the equation, or possibly an average of indexes (Dominion, TCO, NYMEX, etc.). Much of this will depend on the company’s ability to gather data and whether it is indeed paid on different indexes or has basis adjustments (Dominion vs. NYMEX price, for example). Other reasons to use a more precise method include when a company grows substantially during the year, making last year’s amounts outdated, or if there is a significant change in commodity prices toward the end of the year that may skew any averages used.

Another option, which depends on how quickly financial statements need to be produced for a bank or for shareholders, is to simply wait until actual cash is received for amounts produced at year-end but not paid. For example, if a company historically receives cash for November and December production by February 15, of the next year, it might be more practical to just wait until that point to record a final accrual adjustment.

As with other accounting estimates, it’s important to remember that this is just an estimate. Your calculation of accrued revenue and expenses is never going to be exact to the penny. However, it’s important to have a reasonable basis for any estimates made, one that can be supported by data and historical financial information. Critical thought and sound judgment are required for this essential part of GAAP-compliant oil and gas financial statements.

In our next blog post, we will discuss the importance of getting an official reserve report, specifically for calculating plugging costs on your financial statements.

For other blog posts on this topic, search under the Category “Oil & Gas.” You can also subscribe to our newsletter or contact us for more information about your oil and gas accounting needs.

Hall, Kistler & Company has been helping producers in the oil and gas industry since we opened our doors in 1941. We know what it takes to produce proper GAAP financial statements for oil and gas companies and can provide guidance along the way. Let us help when you are coming off of the sidelines and BACK INTO THE GAME.

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What’s This Asset Retirement Obligation I Keep Hearing About? http://www.hallkistlerblog.com/whats-this-asset-retirement-obligation-i-keep-hearing-about/ http://www.hallkistlerblog.com/whats-this-asset-retirement-obligation-i-keep-hearing-about/#comments Wed, 14 Nov 2018 19:51:23 +0000 http://www.hallkistlerblog.com/?p=363 By Andy Griffin, CPA, Supervisor and Keith A. Arner, CPA, CVA, Partner

As we’ve described previously, one of the components of “getting back in the game” for small independent E&P companies is producing financial statements that are compliant with Generally …

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By Andy Griffin, CPA, Supervisor and Keith A. Arner, CPA, CVA, Partner

As we’ve described previously, one of the components of “getting back in the game” for small independent E&P companies is producing financial statements that are compliant with Generally Accepted Accounting Principles (GAAP). One of the items required by GAAP is something called an asset retirement obligation liability.

So what does this mean? And how is it calculated?

To put it simply, an asset retirement obligation (ARO) liability represents your costs to plug a well. However, it does not necessarily mean the amount you’re laying out today in cash to have someone plug a well for you (or to do it yourself). What it really measures is your liability today for wells to be plugged in the future. Per GAAP, you can’t just wait to expense those costs as they occur.

GAAP dictates that liability is created once a legal obligation to retire an asset exists. So once you commence drilling a well (or acquire a well) you have already established a liability; in other words, once you’ve punched a hole in the ground, that hole has to be plugged at some point by state law. The questions now become:
1) How long is this well going to last and when are we going to plug it?
2) How much is it going to cost to plug the well, at the point that we’re
actually going to plug it?

One thing to remember when thinking about an ARO calculation: it’s an estimate. Obviously, we don’t know how long each well is going to last. We don’t know to the penny how much it’s going to cost to plug each well. And we don’t know where commodity prices are headed, which might have an effect on which wells get plugged and when. However, even though it’s an estimate, it’s still critical to calculate the amount using solid, reasonable assumptions that can be supported with evidence.

The best way to determine “well lives” is to obtain an engineer’s reserve report on all of your wells. This step may be expensive, but it is essential for a reasonable basis of determining the life of a well. Most companies have this report done every year, due to changes in the market that might change “well lives” and thus affect the calculation. For example, if price per MCF is $2, that might mean many more of your wells are going to be uneconomical to operate and may dictate candidates for plugging. If the price per MCF is $8, now those wells are economic and viable, and plugging is going to get pushed further into the future. An engineer will use estimates of future pricing and other factors such as the formation the wells are in to generate an estimated life for each well.

As mentioned above, the other question is how much is it going to cost? Remember, these wells might be plugged 30 years (or more) from now. Calculating an ARO involves inflation factors and also a present value factor to determine what the obligation in the future is valued at in today’s dollars. However, to do that correctly, you have to start with a sound, reasonable estimate that can be supported (sound familiar?). This might require an analysis by company engineers of the depth of a certain type of well, or how much cement might be needed, or the cost of labor to have a crew plug the well, or how much it would cost to do it internally vs. outsourcing, or vice versa. It might also require looking at the Department of Natural Resources filings. It might even be helpful to talk to other companies in the industry to get a feel for what they see regarding costs to plug their wells.

As you can see, calculating an ARO requires some critical thought and analysis, and good, conservative judgment. These are the most critical and essential steps for any accounting estimate. It may seem like a lot of work for something that just exists on paper, but remember, it’s a critical part of producing GAAP-compliant statements. Proper financial statements are going to be a necessity as your company grows.

For other blog posts on this topic, search under the Category “Oil and Gas.” You can also subscribe to our newsletter or contact us for more information about your oil and gas accounting needs.

Hall, Kistler & Company has been helping producers in the oil and gas field since we opened our doors in 1941. We know what it takes to produce proper GAAP financial statements for oil and gas companies and can provide guidance along the way. Let us help when you are coming off the sidelines and BACK INTO THE GAME.

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Get Back in the Game: E&P Financial Reporting http://www.hallkistlerblog.com/get-back-in-the-game-ep-financial-reporting/ http://www.hallkistlerblog.com/get-back-in-the-game-ep-financial-reporting/#respond Wed, 24 Oct 2018 14:28:24 +0000 http://www.hallkistlerblog.com/?p=333 By Keith A. Arner, CPA, CVA, Partner and Andy Griffin, CPA, Supervisor

During the mad dash for deep shale acreage, when exploration and production companies like Chesapeake, Gulfport, Ascent, and others were acquiring leases, many independent producers in the Utica …

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By Keith A. Arner, CPA, CVA, Partner and Andy Griffin, CPA, Supervisor

During the mad dash for deep shale acreage, when exploration and production companies like Chesapeake, Gulfport, Ascent, and others were acquiring leases, many independent producers in the Utica Shale region sold their deep acreage rights. For several years, these independent producers watched from the sidelines, sometimes just breaking even while operating their shallow wells in a very tough environment for commodity prices.

Now, time has passed and many of the larger exploration and production (E&P) companies, due to their large overhead, are unloading their acreage and wells because they are not able to economically produce in the current market. However, many independent smaller producers have found that they are able to produce economically — by observing and studying the processes of the larger companies and benefiting from the new technologies those companies developed over the years.

To use a football analogy, independent producers have studied the offense and watched the game film, and are now coming off the sidelines and getting back in the game.

At this point, any E&P company will find that, in order to obtain financing or enter into credit facilities with financial institutions, one of the requirements is usually going to be a set of financial statements that follow generally accepted accounting principles (GAAP). GAAP requires several items and adjustments that are somewhat unique to the oil and gas world. As we help producers with their financial statements, the following questions usually come up:

• What’s this “asset retirement obligation” I keep hearing about?

• Why do I need to record any accrued production? Payments are usually two to three months behind in the oil and gas world.

• Do I really need to spend the money to get a reserve report from an engineer?

• My banker told me we’ll need financial statements with footnotes and disclosures? What does that mean? Am I disclosing everything that needs to be in there?

• This is the first year we entered into any hedging transactions – where do these go on our books?

We are going to answer each of these questions in upcoming blog posts, so search our blog under the Category “Oil & Gas.” You can also subscribe to our newsletter or contact us for more information about our oil and gas services and experience.

Hall, Kistler & Company has been helping producers in the oil and gas industry since we opened our doors in 1941. We know what it takes to produce proper GAAP financial statements for oil and gas companies and can provide guidance along the way. Let us help when you are coming off of the sidelines and BACK INTO THE GAME.

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Family Business Succession Planning http://www.hallkistlerblog.com/family-business-succession-planning/ http://www.hallkistlerblog.com/family-business-succession-planning/#respond Tue, 14 Aug 2018 20:27:45 +0000 http://www.hallkistlerblog.com/?p=327 I’m often asked by my clients, “How do I transition my company to the next generation?”.

In order for a succession to be successful, it needs to work for both parties. Clients are advised early in our business relationship about …

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I’m often asked by my clients, “How do I transition my company to the next generation?”.

In order for a succession to be successful, it needs to work for both parties. Clients are advised early in our business relationship about succession planning so that they are in a stronger financial position when the time comes to transition the company. The objective is to eliminate debt and maximize their retirement so there is not a significant strain on cash flow during the transition process.

One of the first issues we discuss is what their cash flow needs are to fund their lifestyle. Once I know how much is needed to maintain their desired lifestyle and the value of their company has been assessed, I will work with them to determine how the next generation and the company can make a smooth transition.

I recently worked on a transition plan to the fourth generation (father to son’s) in which we did a combination of gifting and the sale of stock in order to make the transition cash flow. This provided the third generation the cash flow needed for their lifestyle and allowed the fourth generation and the company to cash flow the transition without overburdening the company.

Succession planning takes a coordinated effort between the shareholders, your accountant and your attorney to make the transition as smooth as possible. If you or someone you know is struggling with or is curious about succession planning, do not hesitate to contact me at franklin@hallkistler.com or 330-453-7633.

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Ohio Tax Amnesty is January 1, 2018, through February 15, 2018, for Individuals and Businesses http://www.hallkistlerblog.com/ohio-tax-amnesty-january-1-2018-february-15-2018-individuals-businesses/ http://www.hallkistlerblog.com/ohio-tax-amnesty-january-1-2018-february-15-2018-individuals-businesses/#respond Mon, 04 Dec 2017 21:14:41 +0000 http://www.hallkistlerblog.com/?p=322 Avoid ALL penalties and HALF of your interest!

If you have unpaid taxes, Ohio Tax Amnesty could help you avoid 100% of penalties and 50% of interest due. Ohio Tax Amnesty will help you achieve a fresh start and settle …

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Avoid ALL penalties and HALF of your interest!

If you have unpaid taxes, Ohio Tax Amnesty could help you avoid 100% of penalties and 50% of interest due. Ohio Tax Amnesty will help you achieve a fresh start and settle your unpaid taxes that you have unreported* or underreported that were due and payable as of May 1, 2017.

You may qualify if you have certain unpaid taxes that were due as of May 1, 2017, and have NOT been contacted by the Ohio Department of Taxation. Not all taxes are eligible for Ohio Tax Amnesty; however, the following taxes are eligible:
• Individual Income Tax
• Individual School District Income Tax
• Employer Withholding Tax
• Employer Withholding School District Income Tax
• Pass-Through Entity Tax
• Sales Tax
• Use Tax
• Commercial Activity Tax
• Financial Institution Tax
• Cigarette or Other Tobacco Products Tax
• Alcoholic Beverage Tax

To be approved for Ohio Tax Amnesty, you must submit an application, all appropriate tax return(s) and full payment before the deadline. No partial payments or credit card payments can be accepted. The Ohio Tax Amnesty does not apply to you if the Ohio Department of Taxation has been in contact with you about your tax debt or if you filed a tax return but did not pay taxes.

If you are unsure if you have unreported or underreported taxes, please contact me at 330-453-7633 or sandrao@hallkistler.com.

*Unreported means you know you owe back tax but have not yet been contacted by the Ohio Department of Taxation.

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Credit for Production of Natural Gas from Marginal Wells – Why it’s not too late to claim! http://www.hallkistlerblog.com/credit-production-natural-gas-marginal-wells-not-late-claim/ http://www.hallkistlerblog.com/credit-production-natural-gas-marginal-wells-not-late-claim/#respond Wed, 29 Nov 2017 20:46:04 +0000 http://www.hallkistlerblog.com/?p=317 This past fall Notice 2017-51 was issued by the IRS to provide guidance on the marginal well production credit. The notice computed the credit amount for calendar year 2016 at $0.14 per mcf as well as provided guidance on claiming …

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This past fall Notice 2017-51 was issued by the IRS to provide guidance on the marginal well production credit. The notice computed the credit amount for calendar year 2016 at $0.14 per mcf as well as provided guidance on claiming the credit. This credit is computed on a taxpayers production from a marginal well as defined by the code in which the taxpayer holds an operating interest. The notice states that a taxpayer who filed a 2016 return on or before October 2, 2017, and either did not claim the credit or claimed the credit in an amount that differs from the amount determined using the applicable reference price stated in this notice may file an amended return.
Although the credit is not as high as was predicted, we have found this credit to be very beneficial to our conventional producers. If you need any assistance in amending returns or calculating the credit, please contact me at 330-453-7633 or keith@hallkistler.com.

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