Good morning. This is The Iron Horse Daily Brief for Tuesday, October 21st, 2025. Today we're answering the question Courtney Moeller gets asked most often by accredited investors: "How are 80 to 85 percent first-year tax deductions even legal?" The short answer? Congress wrote the tax code specifically to encourage domestic oil and gas production. Let me show you exactly how it works. **The Breakdown:** When you invest in an oil and gas working interest, your capital goes into two categories: intangible drilling costs and tangible equipment. Intangible drilling costs—or IDC—represent 70 to 80 percent of your investment. This includes labor, site preparation, drilling mud, chemicals, and everything consumed during the drilling process. Under IRC Section 263(c), these costs are 100 percent deductible in the year they're incurred. The remaining 20 to 30 percent goes toward tangible equipment: wellheads, casing, pumps, and surface infrastructure. These assets are depreciable over seven years using MACRS depreciation schedules. In year one, you can typically deduct another 10 to 15 percent from this category, bringing your total first-year deduction to 80 to 85 percent of your investment. **The Truth:** This isn't a loophole. It's explicit tax policy designed to incentivize domestic energy production. Congress understands that energy independence is a national security priority. The U.S. became the world's largest oil producer because the tax code rewards private capital willing to take on the risk of drilling. Without these incentives, America would still be dependent on foreign oil, and your portfolio would have fewer tools to offset W-2 income. Here's what most CPAs won't tell you: these deductions offset ordinary income, not just capital gains. If you're a high-earner in the 37 percent federal tax bracket, an $100,000 investment generating an $85,000 deduction saves you over $31,000 in federal taxes alone. Add state taxes, and the savings compound even further. That's real money staying in your pocket instead of going to the IRS. **The Move:** Iron Horse Energy Fund 1 is structured specifically to maximize these deductions for accredited investors. We partner with tier-one operators like EOG and Continental on proven reserves in the Permian Basin—not speculative wildcats. You get the tax advantages, the monthly cash flow, and the peace of mind that comes from working with operators who've drilled thousands of successful wells. The fund closes November 30th. That's 41 days from today. If you're serious about offsetting your 2025 income and building a diversified portfolio that works as hard as you do, visit JoinIronHorse.com. That's your brief for Tuesday. Let's keep building.