Initial system cost for a 5 kW system at $7 per watt: $35,000

Federal Tax Credit (30%): $10,500
* claimed the year the system is put in to service; can be carried forward up to 20 years by businesses, 10 years by individuals.

NC State Tax Credit (35%): $12,250 (taken over 5 years in equal installments of $2,450)
* claimed the year the system is put in to service; businesses are required to take the credit equally over a five year period - each yearly credit distribution has a five year carryforward. A business taxpayer must consider other NC tax credits they've received when accessing the value of this credit. See this NC tax form for more details on this tax credit.

Total MACRS depreciation over the first 6 year of system operation: $29,750.00
* Year 1 $5,950.00 (20%) - Year 2 $9,520.00 (32%) - Year 3 $5,712.00 (19%) - Year 4 $3,427.20 (12%) - Year 5 $3,427.20 (12%) - Year 6 $1,713.60 (6%)

Total MACRS depreciation real dollar value at a tax rate of 30% : $8,925.00

Donation value at a tax rate of 30% : $0.00

Final system cost after tax benefits: $3,325

Tax benefits as a portion of the system's total installed cost of $35,000.00

* NOTE: the MACRS depreciation and the Federal tax credit are only available to individuals with passive income, such as rental income, or certain business investors. To find out whether you are elegible, speak with your tax professional or see IRS Publication 925

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Average electricity production per month for the 5kW solar electric system in kilowatt hours: 525 kWh
* System size in kW (5 kW) x Average peak sun hours (4.6 hours) x 365.25 days/12 months x Overall system efficiency (0.75)

Income from the NC Green Power electricity purchase for the 25 year life of the system: $22,051.97 ($882.08 per year)
* NC Green power currently pays $0.15 per kilowatt hour (kWh) for electricity generated by solar electric systems under 10 kW in size. Contracts for power purchase are negotiated yearly. For more information on NC GreenPower visit http://www.ncgreenpower.org/

Income from your electric utility's electricity purchase for the 25 year life of the system: $4,725.42 ($189.02 per year)
* Electrical Utilities pay the wholesale rate for electricity generated by ratepayers and placed on the utility's electrical transmission network or grid. This rate is currently $.03 per kilowatt hour (kWh)


Gross revenues from electricity sales, after fully realizing tax credits and MACRS depreciation, over the 25 year life of the system: $23,452.39

Income and Cost Recovery by Year for the Life of the LLC


 Year   Federal
Tax Credit 		  NC Tax
Credit 		  MACRS
Depreciation 		  Electricity
Sales 		  Total
Income 		   Fees, 
Yearly 		  Total Expense   Net Expense 
 1    10500     2450     1314     1071     15335    (600)   (35600)   (20265) 
 2        2450     2385     1071     5906    (600)   (20865)   (14959) 
 3        2450     1243     1071     4764    (600)   (15559)   (10795) 
 4        2450     557     1071     4078    (600)   (11395)   (7317) 
 5        2450     557     1071     4078    (600)   (7917)   (3839) 
 6            43     1071     1114    (600)   (4439)   (3325) 

The yearly simple interest rate received by the LLC for their total investment of $38,600 over the 6 year life of the LLC after fully realizing the tax credits, MACRS depreciation, and projected electricity sales : 0%


* consult your tax and/or accounting professional to ascertain how the above tax credits and MACRS depreciation apply to your tax portfolio.

* No provisions were made for income taxes on profits, insurance, maintenance, and property taxes for this estimation. While likely small, these factors should be considered by the system purchaser.

* For an detailed real-world example of how tax benefits can be utilized for the business purchase of a solar electric system, visit the website of TS Designs - the World's Premier sustainable t-shrit producer - at http://tsdesigns.com/solar-payback/.