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  "documentTitle": "Sunrun Inc. (RUN)",
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  "authorName": "Carson C. Block",
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  "presentationDate": "2022-07-28 00:00:00",
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  "notes": "The slide uses a quote from a Norton Rose Fulbright memo to support the thesis that tax equity investors in solar may be viewed as lenders rather than partners.",
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      "text": "We find that the Partnership Flip is a convenient, non-arms-length conduit for overvaluation.",
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      "text": "A former RUN executive stated that the economics from the Tax Equity Investor's perspective look much more like those of a financing, while RUN referred to tax equity as “effectively debt.” We believe that such characterizations may pose a significant issue for IRS audit.",
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      "text": "In our view, RUN's financings are exactly this kind of cautioned transaction: One in which economic parties with mutual interests come together to create the illusion of an elevated FMV, and where, RUN effectively never relinquishes control of the asset.",
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      "text": "We find that the Partnership Flip is a convenient, non-arms-length conduit for overvaluation. RUN effectively transfers the vast majority of the value associated with the 20- or 25-year PPA to itself, while the Tax Equity Investor takes the ITC and tax losses and generally recoups its investment by the end of the first year.",
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      "text": "There has been an internal debate within the IRS for a number of years about whether the agency should issue separate guidelines for solar transactions... is the tax equity investor a real partner with meaningful upside and downside risk of a business or is it a bare purchaser of tax benefits or a lender earning essentially a fixed return?",
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