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- Create Date November 2, 2026
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Investor Tax Overview
The Investor Tax Overview (FSG-50, Version 10, October 28, 2026) is nonbinding general education for a hypothetical 99%/1% Device Series. Acquisition uses $30,000 of Trust capital and $225,000 of seller credit, plus $1,000 of Holdings reserve cash. A separate $5,000 TPF fee makes initial Investor cash $35,000 and is outside Series capital and not automatically deductible. Ordinary items and permitted operating distributions follow 99%/1%, while opening capital remains $30,000/$1,000 and liquidation follows adjusted positive capital and restoration terms. The Trust’s additional principal or restoration commitment is $225,000 in aggregate, coordinated with actual payments, and Holdings has a separate $2,250 commitment. No second $225,000 commitment or personal guarantee is created. Operating distributions are capped at the lesser of 18% of positive Machine Revenue and 99% of available distribution cash, with no payment during the first 180 days after Installation and no fixed yield. The seller loan is a direct Trust-estate obligation, with no collections for the first 180 days, no contractual interest through day 150, then 5.5% simple interest, a regular installment of $1,838.44, and maturity 84 months after Funding.
The overview then separates a hypothetical loss from a usable deduction. A 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). Gross depreciation of $252,450/$2,550 is not a net loss, cash distribution, or refund. Contractual cash interest and tax interest or original issue discount are separate, and a coupon above a quoted applicable federal rate does not by itself establish adequate stated interest. Outside basis, amounts at risk, passive-activity rules, excess-business-loss limits, net operating losses, and state rules are independent tests. Ninety-nine percent ownership does not automatically allocate 99% of loan face amount, and the 107-hour covenant is not a safe harbor. The Series reports allocated items, but the proper owner and a separately engaged preparer determine return treatment. It cites partnership, depreciation, loss-limitation, and interest authorities, and it assures no deduction, refund, savings, investment return, or penalty protection.
