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Contractual Language TAX question proposed to benefit customer/company as the “purchasing” client.

Hi Everybody, Contractual Language TAX question proposed to benefit customer/company as the “purchasing” client.

Scenario: Company contracts to re illuminate warehouses with a new lighting bulb and fixture product. Product is purchased with no out of pocket expense initially for installation and ultimate ownership. Payments are made based on actual savings of kWh (electric bill reduction) from use of newly installed lighting product. They pay nothing up front but do pay a portion of saved expense over time. (Customer benefit-immediate increased cash flow.)

Question: How to word purchase agreement in such a way that client/company “purchaser” may take advantage of tax benefits from IRS sec 170, and “interest payments” as the product has a base price for out right purchase or a “shared energy savings program” which ultimately cost more in real dollars “over time” (5yrs at a percentage of actual expense reduction.) (Product may be installed as a fixture (hard wired to electrical infrastructure) or plugged into a fixed ceiling outlet. Should agreement be worded as a lease to own, rent to own, etc with interest above initial purchase price disclosed or exemplified as INTEREST paid at some point etc, or some other scenario.

Please respond with any pointers or recommendations.

Thank you,

William ‘Bill’ McPhee


John Kogan
Title: CEO/CFO
Company: Proformative, Inc.
(CEO/CFO, Proformative, Inc.) |

You really need to hire a tax attorney and ask them a bunch of questions! This is so very specific to what your company is doing I think it will be tough to find an answer from anyone who is not a paid professional with a lot of time to get to your specifics.


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