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- Create Date November 2, 2026
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Fair Skills Financing and Using Tax Losses
The Fair Skills Financing and Using Tax Losses guide (FSG-IR-03, Version 10, October 28, 2026) is nonbinding general education on the standard $225,000 seller loan and how a tax loss might be used. It describes the loan as a direct Trust-estate obligation, with no individual personal guarantee or replenishment duty. No installment or lender collection is due for the first 180 days after Installation, no contractual interest accrues through day 150, and 5.5% simple interest begins on day 151. The regular installment is $1,838.44, and maturity is 84 months after Funding. Operating distributions are capped and deferred for the first 180 days, with no fixed yield or minimum distribution. Basis and at-risk amounts depend on actual tax ownership and enforceable economic burdens, not note labels or 99% ownership alone.
The second half separates the tests that can limit use of a loss. Outside basis, amounts at risk, material participation, business-interest limits, excess-business-loss rules, net operating losses, and state rules are each treated as independent. A contractual minimum of 107 substantive hours per year, with monthly involvement and contemporaneous software records, is stated as a contract term, not an automatic tax test. A hypothetical full-year illustration starts from a $39,219.80 pre-interest operating result and $255,000 of qualifying depreciation, producing a pre-interest-limit loss of $215,780.20 plus actual tax interest, then a post-interest-limit figure after § 163(j). Contractual cash interest and tax interest or original issue discount are separate. No deduction, refund, savings, or penalty protection is assured, and individual advice requires a separate written engagement.
