Energy Project Financing : Resources and Strategies for Success

Appendix A 203

Table A-1. Federal tax rates based on the Omnibus Reconciliation Act

of 1993

Taxable Income Taxes Marginal
(TI) Due Tax Rate

$0 < TI ≤ $50,000 0.15*TI 0.15

$50,000 < TI ≤ $75,000 $7,500+0.25(TI-$50,000) 0.25

$75,000 < TI ≤ $100,000 $13,750+0.34(TI-$75,000) 0.34

$100,000 < TI ≤ $335,000 $22,250+0.39(TI-$100,000) 0.39

$335,000 < TI ≤ $10,000,000 $113,900+0.34(TI-$335,000) 0.34

$10,000,000 < TI ≤ $15,000,000 $3,400,000+0.35(TI-$10,000,000) 0.35

$15,000,000 < TI ≤ $18,333,333 $5,150,000+0.38(TI-$15,000,000) 0.38

$18,333,333 < TI $6,416,667+0.35(TI-$18,333,333) 0.35

uct or service. Allowable deductions include salaries and wages, materi-

als, interest payments, and depreciation, as well as other costs of doing

business as detailed in the tax regulations.

The calculation of taxes owed and after tax cash flows (ATCF) requires

knowledge of:

• Before Tax Cash Flows (BTCF), the net project cash flows before the
  consideration of taxes due, loan payments, and bond payments;


• Total loan payments attributable to the project, including a breakdown
  of principal and interest components of the payments;


• Total bond payments attributable to the project, including a breakdown
  of the redemption and interest components of the payments; and


• Depreciation allowances attributable to the project.

Given the availability of the above information, the procedure to deter-

mine the ATCF on a year-by-year basis proceeds by using the following

calculation for each year: