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Clean Energy Investment Tax Credits
Reducing Carbon Emissions Through Clean Energy Programs

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Image by Science in HD
A Stable Commodity

One constant during stock market ups and downs, economic cycles, seasonal changes and other uncertainties is the need for electricity.  Clean sustainable energy can reduce carbon emissions, but also capitalize on the byproducts of electricity production with commodities such as CO2, Distilled Water, Urea and more.

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Renewable energy is a fast-growing industry, with significant capital expenditures expected over the next several decades.
○  Today, renewables make up 17% of US capacity, but          are expected to make up:

               ○  25% in 2025       ○  64% in 2050

○  $5-10 Trillion of capital is required to meet future              projections for renewable energy capacity needs


○  37 states have current mandates or goals to increase          sustainable renewable power generation
Data provided by US Energy Information Administration, Bloomberg NEF
Renewable Power Plants

A renewable power plant provides supplemental electricity to utility providers who use that energy to reduce consumer prices.  Renewable energy companies align with utility providers under long term contracts; typically, between 15-25 years; called Power Purchase Agreements (PPAs).  These PPAs can provide a stable stream of cash flow.

Clean Energy Investment Tax Credits

Internal Revenue Code (IRC) Section 48 provides an investment tax credit (ITC) for certain energy-related investments.  The incentive was enacted in 1978 and has been substantially modified over time, however there is a permanent 10% ITC for solar and geothermal technologies.

Certain investments in renewable energy property qualify for an ITC.  The amount of the credit is determined as a percentage of the taxpayer’s basis in eligible property (generally, the cost of acquiring or constructing eligible property).  The tax credit rate and other credit parameters depend on the type of property or technology for which the credit is being claimed.

 

The Tax Cuts and Jobs Act increased the bonus depreciation percentage from 50 percent to 100 percent for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. This includes qualified CHP property and equipment with a life of less than 20 years.

 

Investors in an established LLC have a significant benefit in the ability to allocate profits, losses and ownership percentages, accordingly, to maximize the investor’s tax benefit in the joint venture.  The tax credits and bonus depreciation are subject to the recapture rules within the first five years of taking the benefit.

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All securities offered through Patrick Capital Markets, LLC Member FINRA / SIPC.  Investors should review any transaction and the various tax deferred and tax exclusion strategies and structures available with their tax and legal advisors.  Alternative Wealth Management does not provide tax or legal advice to individual investors.

The information provided in this website is for educational purposes only and does not represent an offer to purchase, acquire or engage in any transactions.  Securities discussed above would only be purchased through Private Placement Memorandum.  Securities and strategies discussed herein may be speculative and entail a high degree of risk.  Investments in Private Placements are suitable only for investors who have adequate means of providing for current needs and personal contingencies, can bear the economic risk of the investment, and have no need for liquidity.

The following is a brief overview of some of the risks that Alternative Wealth Management deems appropriate to highlight.  It is not and is not intended to be, a summary of all the risks associated with the strategies and securities discussed herein.

Delaware Statutory Trusts (DSTs) - DSTs are regulation D private placements that offer fractional ownership of real estate.  Investors should understand the risk factors of participating in such investments as outlined in this section in addition to the private placement memorandum; in particular real estate risks, liquidity risk, change of tax status among others.

Real Estate Risks – Real estate risks include those of specific property issues, the economy of the geographic locations, environmental hazards, the risk of loss of tenant and other factors typically associated with a real estate investment.

 

​Change of Tax Status - IRS tax rule changes may alter or eliminate certain benefits related to current strategies.

Performance Expectations – There is no guarantee that the investment and tax strategies discussed will elicit the optimal results.  Each taxpayer is unique.  Past performance or the results of other individuals is never an assurance of future results.

Reduction or Elimination of Cash Flow – Investments in real estate may experience temporary or permanent disruption of cash available for distributions, such as, from a reduction in tenant payments or if the property sustains substantial damage.

 

Potential for Property Value Loss - All real estate investments have the potential to lose value during the life of the investments.

 

Impact of Fees/Expenses – There may be substantial fees paid to Sponsors, affiliates, and others, related to the strategies and securities discussed herein and such fees typically are paid regardless of the performance of the investment or strategy you seek.    Such fees and costs may impact investor returns and may outweigh any anticipated tax benefits.

 

Liquidity Risk – Private Placements are il-liquid with no secondary market.  You should consider these long-term investments regardless of your circumstances.

 

Sponsor Risk – There are substantial conflicts of interest between investors and the self-interest of the Sponsor, Master Tenant, affiliate companies and others who will profit from the private placement for their services regardless of their results.  Their decisions related to the offering and operation of the private placement is critical to the success of the private placement and the return of your investment.  The offering sponsor could take actions that might not be in the best interests of the shareholders of the private placement.  Those types of conflicts of interest could influence the decisions in the management and operation of the private placement that are contrary to the best interests of the Investors.  Investors will have no control over their decisions.

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