Examples of Tax Benefits in a sentence
If the site host can efficiently use the project’s Tax Benefits and is willing to accept performance risk, then either balance sheet finance or a capital lease (or a bank loan) may be appropriate, depending upon the extent to which the site host can fund the up-front cost of the system.
U.S. Department of the Treasury, Office of Tax Analysis, Distribution of Selected Income Tax Expenditures: Tax Benefits as a Share of After-Tax Income, July 28, 2014, at http://www.treasury.gov/resource-center/tax-policy/ Documents/Analysis-and-Research-Selected-Credits-Deductions-Exclusions-2015.pdf.
In addition, as with a normal PPA/service contract, the pre-paid contract may include a site host purchase option (at the greater of fair market value or a contractually agreed upon amount) exercisable at some point after the project’s sixth year, once the Tax Benefits have been exhausted.
By the end of six years, the early buyout price could be relatively low, given that the project’s Tax Benefits and cash incentives (i.e., CBIs or PBIs) will have been exhausted.
The flip is assumed to occur at the end of 18 years, which is relatively late in the project’s life, particularly considering that the project’s Tax Benefits will have largely been exhausted by the end of six years (and hence the flip could occur that early).