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<br />FIVE-YEAR OPERATING STATEMENT
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<br />,YEAR 1 '2 3 4 5
<br />Net Operating! Income $27,500 $28,325 $29,175 $30,049 $30,951
<br />Depreciation - -, $ 6,154 $ 6,154 $ 6,154 $ 6,154 $ 6,154
<br />Interest $15,906 $15,686 $15,452 -$15,198 $14,916
<br />Taxable Incom~ $ 5,440 $ 6,485 $ 7,569 $ 8,697 $ 9,881
<br />Tax Rate 36% 36% 36% 36% 36%
<br />TaxesS $ 1,958 $ 2,335 $ 2,725 $ 3,131 $ 3,557
<br />Usable Credit;4 $ 9,000 $ 9,000 $ 9,000 $ 5,982 $ 0
<br />Usa,ble Credit;! $ 1,958 . $ 2,335 $ 2,725 $ 0 $ 0
<br />A.cctup.ulative Credit Used $10,958 $22,293 $34,018 $40,000 $40,000
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<br />./ FIVE YEAR CASH FLOW STATEMENT
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<br />YEAR 1 2 3 4 5
<br />Net Operating! Incdme $27,500 $28,325 $29,175 $30,049 $30,951
<br />Debt Service6" $18,524 $18,524 $18,524 _ $18,524 $18,524
<br />Before-Tax Cash Flow7 $ 8,976 $ 9,801 $10,651 $11,525 $12,427
<br />Taxes $ 1,958 $ 2,335 $ 2,725. $ 3,131 $ 3,557
<br />After-Tax Cash Flo~ $ 7,018 $ 7,466 $ 7,926 $ 8,~94 $ 8,870
<br /> - , $ 5,982
<br />Usabl~ Tax Credit;! $10,958 $11,335 $111725- $ 0
<br />After Credit Cash Flow $1,7,976 $18,801 $19,651 $14,376 $ 8,870
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<br />! Income increasing at 3% per year -
<br />z Net operatiI].g income less depreciation and interest
<br />,3 Taxable income x tax rate
<br />4 This is the amount of credit the owner is entitled to under the passive loss
<br />exception provision -
<br />5 This is the amount of the credit usable to offset passive gains _
<br />6 Principal and. interest payment
<br />7 Net operating income less debt service
<br />. 8 Before tax cash flow less taxes
<br />9 After-tax cash flow plus useable tax credit
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<br />This explanation of the historic rehabilitation tax credit was reproduced from J
<br />A Guide to TfJX-A.tJoantoged ReltalJilitotion published in 1986 and revised in 1994 by
<br />the National Trust for Historic Preservation. This self-help text was prepared by
<br />Donovan D. Rypkema. To order the complete A Guide to TfJX-A.tJoantoged ReltalJili-
<br />to~n contact: Information Series, National Trust for Historic Preservation, 1785
<br />Massachusetts Avenue, N.W., Washington, D.C. 20036, (202) 588-6286. The cost
<br />per booklet is $6 with a 50 percent discount for orders of any 10 or more bookletS:
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