Depreciation and RECS

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Paul Gilman
Depreciation and RECS

We are planning to get construction done in 2013. We understand we can get 50% first year bonus depreciation but its not clear to us how to calculate that. Would you please address the following:

To model bonus depreciation in SAM, you must choose one of the Advanced Utility IPP financial models. For example, the Single Owner financial model represents a project with one owner, and can model bonus depreciation.

1) What is the limit for the max deduction for solar and does SAM use this limit?

SAM applies the bonus depreciation that you specify in year one of the project cash flow. It does not apply a limit to the amount.

2) How does SAM determine the adjusted basis? Do we count the RECs in some way? California has a funny REC (TREC) market so I am not sure how RECs can come into play?

SAM shows the depreciable basis amounts in the Cash Flow table under "State Depreciation & ITC" and "Federal Deperciation and ITC." The calculations are described in the Cash Flow Variables Help topic for Single Owner.

3) Can you show us the schedule SAM uses to calculate the depreciation including the first year 50% bonus?

The schedule depends on the allocations you specify on the Depreciation page. A table of the schedules for each depreciation type that SAM can model is available in the Depreciation Help topic, under "Depreciation for Single Owner, Partnership Flip and Sale Leaseback Projects."

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