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- Create Date November 2, 2026
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Fair Skills Structure & Allocations
The Fair Skills Structure and Allocations guide (FSG-IR-01, Version 10, October 28, 2026) is nonbinding general education on how Fair Skills combines equipment ownership, operations, and intended partnership reporting to actual federal tax owners. Separate Series treatment and performance of the agreements must support that treatment. Operating distributions are capped at the lesser of 18% of positive Machine Revenue and 99% of available distribution cash under FSG-03, with Holdings receiving the corresponding 1% pool share. No operating or discretionary tax distribution is paid during the first 180 days after Installation. Initial-period cash is retained for debt service, after operating priorities and reserves, without a later catch-up. The first eligible Distribution Period starts on day 181 and ends at the first calendar quarter-end strictly after day 180, with payment within thirty calendar days and calendar quarters thereafter. Required loan collections and principal sweeps begin on the first monthly 18th strictly after day 180. No fixed yield or minimum distribution is promised.
Acquisition funding is described as a $255,000 package using $30,000 of Trust acquisition capital and $225,000 of seller financing, plus a separate $1,000 Holdings reserve. The separate $5,000 TPF administration fee makes initial Trust cash $35,000 and is outside Series capital and illustrated equipment basis; its tax treatment follows actual services. TPF commissions come only from TPF’s unrestricted general operating budget, not Series acquisition capital or financing. Ordinary income, losses, and the permitted operating-distribution pool are shared 99%/1%, subject to mandatory tax rules, but actual opening capital remains $30,000/$1,000, and liquidation follows adjusted positive capital accounts after creditor claims and enforceable restorations. Percentages do not rewrite contributions or establish deductible losses. Holdings is passive and nonvoting. Systems is Seller, Lender, and nonmember Manager, and Arcade operates. A K-1 allocation, a cash distribution, and economic profit are treated as different measures, and owner-level limits determine current deductibility. It cites Treas. Reg. § 1.704-1 and IRS Publication 541, and it assures no deduction, refund, savings, investment return, or penalty protection.
