The flip-deal partnership structure allows partners to allocate income, profits, losses, tax credits and/or cash deductions and distributions under the terms of the partnership agreement. Die interne Rendite (IRR) fer eine typische Solarsteuer-Beteiligung liegt im Bereich von 15%. If a solar developer does not have sufficient tax debt to benefit from tax incentives, the developer will look for a tax equity investor. This report proposes an introduction to the general mechanism for financing tax justice. To facilitate the presentation of the tax fairness approach to subsidies, three categories of tax credits that currently use this mechanism or have recently benefited from this mechanism are examined: the Low Income Residential Real Estate Tax Credit (LIHTC); The new market tax credit (NMTC); and two energy-related tax credits – the Tax Credit for Renewable Power Generation (TPC) and the Energy Investment Tax Credit (ITC). Instead, this report focuses on explaining the structure and operation of tax fairness agreements. In the United States, whether in the name of ideological principle or political necessity, we have decided to encourage the use of renewable energy through our tax code. This gave a Byzantine system of rules and regulations for the financing of solar installations. The result is the proliferation of countless complex partnerships with dynamic participations, led by a cabal of accountants and lawyers. In an increasingly competitive market, where margins are declining and performance barriers are constantly depressed, success may depend on the effective allocation of equity among company members of each last tax benefit decrease, while managing transaction costs. Even if the corresponding tax credits were repaid, there could be a role to be played for tax participation. Current tax equity tax credits are delivered over several years or when investment in skilled real estate is completed and tax returns are filed.
However, project proponents generally need prior capital to make their investments. As a result, developers (for-profit and non-profit) can still rely on tax capital markets to monetize tax credits, even if they have been repaid. In addition, the repayment of tax credits could make it easier for projects to rely on debt financing. Lenders may be more likely to lend on favourable terms to a project that expects a refundable tax benefit in the future. This structure verifies the box for tax advisors (more below), but like the time-based partnership, it assigns inefficient losses to a partner who cannot monetize them. Although the equity tax investor is allocated losses corresponding to his property in the partnership (even beyond venture capital), these losses cannot be monetized in real time. A number of provisions (i.e. the rules in IRC 704 (d) effectively put these losses on hold. This bag of excess losses is stored until they can be used to offset the positive income attributed to the tax investor in equity (which is why the 99% return after the incineration of most depreciations). The return of a private equity investor depends on the price paid per credit and the benefits that the investor guarantees in return.