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TAX CREDITS/INCENTIVES

CALL GREG SHEPARD AT 1-801-699-2284 TO PARTICIPATE IN THESE TAX CREDITS

There are some huge tax credit and tax incentives available right now with IAUS not only
for big projects but individual
investors as well. A 30% Tax Credit is now available from
the U.S. government on Solar Energy. There are also accelerated depreciation advantages

as well as state incentives for using solar power.

IAUS has a program right now where using $9,000 that was going to be paid in federal taxes
can
now be used to help build a solar power plant. By using the tax credits and tax
incentives, the $9,000 that was going to go in taxes now turns into a $20,000 investment
return.
Contact us for complete info.

WHY? The United States needed to do something fast to bring renewable energy to fruition. Before
IAUS, renewable energy systems cost more than fossil fuel systems like coal plants. Hence, the
need for tax incentives to get the ball rolling.

WHAT DOES IT MEAN TO IAUS? Since IAUS is the only renewable energy company that can easily
compete with fossil fuel energy, the United States government tax incentive program is really intriguing.
Take 30% off an already low cost and then reduce costs further with the accelerated depreciation plan.
This should make things very exciting for power entities wanting to build a power plant of any kind. Now
add the tax incentives given by the individual states and the bottom line costs dwindle even further.

HOW TO FILL OUT YOUR TAX FORMS FOR 2006:

First, get Form #3468. This form is for your Tax Credit. Go to irs.gov. On the Home Page in the upper right hand
corner is a search box. Enter 3468. That will take you to a list of forms. Highlight and click Form 3468
(Rev. December 2006). You can make a copy from the PDF file.
Below is how to fill out Form #3468 based on
purchasing a $30,000 Solar Unit and putting $9,000 down. You get that all back using this form.

Next you will need to transfer this $9,000 amount to Form #3800. Go to irs.gov as before to get
this form. Below is how to transfer the $9,000 to IRS Form #3800.

Your next step is to declare the depreciation of your solar property, Shown below is IRS
Form 4562. Just take the $30,000 and subtract 50% of your tax credit which is $4,500.
This equals $25,500. You are allowed to depreciate solar energy over five years and then
to get the most return in the fastest way, use a Double Depreciation Basis (DDB). This
gives a depreciation of $5,100 (20%). You can take 32% in the second year. If you are in
the 30% tax bracket, this means another $1,500+ in your pocket in just the first year.
Also, since your bottom line on your taxes is now reduced with your tax credit and
depreciation, your state taxes will be reduced significantly.

Go to http://www.seia.org for comprehensive information on the new United States Tax
Incentive program for solar energy and then contact us at greg@iausenergy.com.

IAUS Solar Unit Purchase Overview

About International Automated Systems, Inc.
International Automated Systems, Inc. [IAUS: OTCBB] is a research and development company that went
public in 1988. IAUS was the pioneer of self-service check-out lanes, and sold its patents to the company
that has installed systems in stores today such as Wall-mart, Home Depot, Kroger’s, etc. IAUS was also the
first company to patent and develop automated fingerprint identification (biometrics) small enough to fit onto
the magnetic stripe of a credit card. IAUS is a pioneer in self-service order and pay systems for restaurants-
a technology that will likely be immerging in the industry in the near future. Most recently IAUS has
completed a unique patented and patent pending solar power system that is the first solar power technology
having the potential to compete head-to-head with gas, coal and gasoline.

IAUS Technology: Thin-Film Solar Lenses
IAUS’s solar technology is less expensive than any other solar power technology. IAUS’s unique thin-film
solar lenses are made of a durable grade of inexpensive acrylic plastic with thousands of small ridges that
focus the radiant heat of the sun to a single point (like a magnifying glass) to produce super-high
temperatures. Heat produces steam that turns a unique patented bladeless turbine developed by IAUS. This
turbine drives an electric generator.
The lenses operate at a constant 90 degree angle to the sun (dual axis) which increases efficiency by more
than 30% over non dual-axis solar power systems such as solar reflector troughs and most photovoltaic
systems. Once the lenses are installed, no more adjustments are necessary, which significantly lowers
operation and management costs. Other solar thermal technologies such as solar reflector troughs and dishes
require regular adjustments.
The life-span of IAUS’s lenses is 30+ years. The total replacement cost of the lenses is approximately 10%-
15% of the cost of the unit. This is very different from photovoltaic (PV) solar. The cost to replace PV solar
after its 20 year lifespan is virtually 100% of the cost of the system- basically re-purchasing the system all
over again.

IAUS Technology: Bladeless Turbine
In an expensive, multi-stage blade turbine, each blade must be hand-set using a meticulous costly process.
IAUS turbine has no blades, therefore, production and operation is much less expensive. In a traditional
turbine blades must be within 3 mil distance from the wall of the inside chamber so that steam will not
escape over the top outside edges of the blades. This is not a concern with the IAUS turbine.
Today’s multi-stage, blade turbines require high-quality, dry steam, or excessive damage and/or a sharp drop
in efficiency will occur. Water must first flash to steam and then is super-heated. Energy in this phase change
from water to steam is wasted. The IAUS turbine can use any quality of steam (low, medium, high),
including a bi-phase flow (water + steam) without any damage or wear to the turbine.
High-pressure, super-heated water is flashed at the rocket nozzle of the IAUS turbine - losing none of the
energy in the phase change from water to steam. This also allows IAUS to recycle the water in a closed-loop
system without damaging the turbine. This feature is very important in desert areas.
The steam condenser design of IAUS’s turbine is more effective and efficient. The actual chamber of the
turbine can be used as a condenser, whereas a typical multi-stage turbine cannot have steam condensing
within its chambers as this would cause a loss in efficiency and damage to the turbine blades.

IAUS Solar Technology: Energy Mediums Produced
IAUS’s technology can convert the sun’s energy into electricity and gasoline replacements such as hydrogen
and methanol. Most major car manufacturers have already produced cars that can operate on hydrogen- fuel
cell cars and hybrid combustion engines that can burn either gasoline or hydrogen. Methanol can be used as
a gasoline replacement or can be used to power fuel cell cars. Methanol is liquid at ambient room
temperature and therefore it is easier and more cost effective than hydrogen to store and transport.
Power generation for commercial, industrial and residential, however, is IAUS’s first targeted market.
IAUS’s technology can produce electricity competitive with electricity generated using fossil fuels. The
lower cost of IAUS’s solar technology makes it a promising replacement for the dirty fossil fuels.

Solar Equipment: Purchase
The new IAUS solar lens is circular in shape and 22 feet across. Included with the lens is the receiver/heat
exchanger that converts the solar energy into super-heated water/steam. The lens and receiver has a 30+ year
life. IAUS is selling one lens and receiver, which comprises one solar unit, for a price of $30,000.

Solar Equipment: IAUS Financing
IAUS’s solar unit can be purchased with a down payment of $9,000. The balance of $21,000 is financed by
IAUS interest free over a term of 30 years. The first five years of the loan are deferred to the end. Once the
first five years are over, the buyer pays 30 annual loan payments of $996.
IAUS believes that paying the five deferred installments at the end of the thirty years is much more profitable
for the purchaser than in the first five years. The wholesale price per kWh will likely follow the average U.S.
GDP inflation rate of 2.9%. If so, the wholesale price of electricity would be at 13 cents per kWh at thirty
years and over 15 cents per kWh by thirty-five years.
Purchased solar units will be nested with other solar units in an array selling steam to a commercial power
plant that will be owned and operated by LTB LLC. The power company LTB LLC will use the steam to
generate electricity and in turn, sell it to customers such as residents, businesses, or other power companies.
LTB LLC will maintain and operate the plant and market the power generated by the solar units. LTB LLC
will pay the solar unit owner a quarterly payment for the purchase of the steam at a rate of 72% of the retail
price of electricity sold. The average rate of electricity in the U.S. is 7.6 cents per kWh of electricity,
therefore, the potential price per kWh to the solar unit owner will be 5.5 cents per kWh. The retail price of
electricity in hot dry regions such as the Southwest is generally quite a bit higher than the national average.
IAUS guarantees that the solar unit will operate by itself for the entire term of the loan. If the system stops
functioning for any reason during the duration of the loan, IAUS will fix it without charge. Any legitimate
solar hours missed due to system failure will be deducted from that year’s loan payment to IAUS. However,
the company will not credit any hours lost that go above the due amount of the loan payment in any given
year, even if the loss is due to failure on IAUS’s part. The company will not credit any hours lost, for
whatever reason, during the first five years wherein no annual loan payments to IAUS are due.

Solar Tax Credit to Participants
The person buying a solar unit receives a $9,000 tax credit from the IRS for each solar unit purchased. For a
solar unit purchased during the year 2006 or 2007, the Federal Government Energy policy gives a 30% tax
credit. The retail value of IAUS’s solar unit is $30,000. The federal tax credit at 30% of $30,000 equals
$9,000. The tax credit is a dollar for dollar credit. It is not a deduction. The maximum credit that can be
taken is $25,000 plus 25% of the remaining balance of taxes owed. However, this credit can be used one
year back and 20 years foreword.
Example:
Let’s say a person pays an average of $50,000 Federal Income Tax each year. This person purchases five
lenses for a total of $45,000 dollars in 2006. When this person files his 2007 taxes, he can use/deduct
$25,000 plus 25% of the remaining balance (of $25,000) which comes to $6,250 (0.25 x $25,000). The total
tax credit for 2007 is $31,250 ($25,000 + $6,250). Therefore $31,250 of the $45,000 invested is returned in
a tax credit for 2007 leaving only $13,750 un-credited of the $45,000 invested. However, in the same 2007
filing, this person can also take up to another $25,000 in tax credits plus 25% of the remaining balance of
taxes owed for the year 2006. This option credits and returns the remaining $13,750. When necessary, any
excess credit can be taken when filing for successive years, for up to 20 years foreword.

Income From Depreciation
Fifty percent of the $9,000 tax credit is considered taxable income by the IRS. Since the other half of the tax
credit ($4,500) is not taxable income, it must be subtracted from the $30,000 dollar purchase amount when
using it to calculate depreciation of the equipment. Therefore, only $25,500 of the $30,000 value can be
depreciated. This can be taken over a period of six years. How does depreciation work? It is based upon
what income tax bracket the buyer falls into. For example, if the buyer is in a 30% income tax bracket, 30%
of $25,500 (which amounts to $7,650) can be taken off from the buyer’s personal taxes over a period of six
years. The percentage of the $7,650 that can be taken in each year is broken down by the IRS in the
following sequence:
Year 1 20% $1,530
Year 2 32% $2,448
Year 3 19.2% $1,468.80
Year 4 11.52% $881.28
Year 5 11.52% $881.28
Year 6 5.76% $440.64

Estimated Net Income to Participants
As previously discussed, the power company LTB LLC pays the solar unit owner a quarterly payment for the
purchase of the steam at a rate of 72% of the retail price of electricity sold. The average rate of electricity in
the U.S. is 7.6 cents per kWh of electricity, therefore, the likely price per kWh to the solar unit owner will be
5.5 cents per kWh. At this rate, if the buyer is in a 30% income tax bracket, he would have a potential net
income of $11,585.02 in the first five years. This same buyer would have a net income of $27,569.35 over a
total of 35 years.

Disclaimer
This is not a solicitation to buy or sell securities. This material is for information purposes only. The figures contained herein are
based upon reasonable estimations. Therefore, the numbers are subject to change and will obviously differ depending upon various
circumstances. Statements contained in this material that are not strictly historical are forward-looking within the meaning of the
"Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are made based upon information
available to the company at the time, and the company assumes no obligation to update or revise such forward-looking statements.
Editors and investors are cautioned that such forward-looking statements invoke risk and uncertainties that may cause the company's
actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to,
demand for the company's product both domestically and abroad, the company's ability to continue to develop its market, general
economic conditions, and other factors that may be more fully described in the company's literature and periodic filings with the
Securities and Exchange Commission. This material is not for the purpose of giving tax advice to individuals or any other entity.
International Automated Systems, Inc. is not a tax professional and encourages every taxpayer to seek advice based on the taxpayer’s
particular circumstances from an independent tax advisor before relying on any information given in this presentation.


Example 1
Tax Bracket of 25%
Year 1 Year 2 Year 3 Year 4 Year 5
Expenses
Down Payment <$9,000> $0 $0 $0 $0
Loan Payment $0 $0 $0 $0 $0
Operations $0 $0 $0 $0 $0
Total Expenses <$9,000> $0 $0 $0 $0
Income
Tax Credit $9,000 $0 $0 $0 $0
Depreciation $1,275 $2,040 $1,224 $734.40 $734.40
kWh Revenue $825 $849 $874.39 $900.19 $926.74
(5.5 cents/kWh)

Total Income $11,100 $2,889 $2,098.39 $1,634.59 $1,661.14
Income Less Expenses $2,100 $2,889 $2,098.39 $1,634.59 $1,661.14
Total Net Income Years 1-5 $10,383.12
Total Net Income Years 1-35 $35,396.91

Disclaimer
This is not a solicitation to buy or sell securities. This material is for information purposes only. The figures contained
herein are based upon reasonable estimations. Therefore, the numbers are subject to change and will obviously differ
depending upon various circumstances. This material is not for the purpose of giving tax advice to individuals or any
other entity. International Automated Systems, Inc. is not a tax professional and encourages every taxpayer to seek
advice based on the taxpayer’s particular circumstances from an independent tax advisor before relying on any
information given in this presentation.

Example 2
Tax Bracket of 30%
Year 1 Year 2 Year 3 Year 4 Year 5
Expenses
Down Payment <$9,000> $0 $0 $0 $0
Loan Payment $0 $0 $0 $0 $0
Operations $0 $0 $0 $0 $0
Total Expenses <$9,000> $0 $0 $0 $0
Income
Tax Credit $9,000 $0 $0 $0 $0
Depreciation $1,530 $2,448 $1,468.80 $881.28 $881.28
kWh Revenue $825 $849.34 $874.39 $900.19 $926.74
(5.5 cents/kWh)
Total Income $11,355 $3,297.34 $2,343.19 $1,781.47 $1,808.02
Income Less Expenses $2,355 $3,297.34 $2,343.19 $1,781.47 $1,808.02
Total Net Income Years 1-5 $11,585.02
Total Net Income Years 1-35 $36,745.35

Disclaimer
This is not a solicitation to buy or sell securities. This material is for information purposes only. The figures contained
herein are based upon reasonable estimations. Therefore, the numbers are subject to change and will obviously differ
depending upon various circumstances. This material is not for the purpose of giving tax advice to individuals or any
other entity. International Automated Systems, Inc. is not a tax professional and encourages every taxpayer to seek
advice based on the taxpayer’s particular circumstances from an independent tax advisor before relying on any
information given in this presentation.

Example 3
Tax Bracket of 35%
Year 1 Year 2 Year 3 Year 4 Year 5
Expenses
Down Payment <$9,000> $0 $0 $0 $0
Loan Payment $0 $0 $0 $0 $0
Operations $0 $0 $0 $0 $0
Total Expenses <$9,000> $0 $0 $0 $0
Income
Tax Credit $9,000 $0 $0 $0 $0
Depreciation $1,785 $2,856 $1,713.60 $1,028.16 $1,028.16
kWh Revenue $825 $849.34 $874.39 $900.19 $926.74
(5.5 cents/kWh)
Total Income $11,610 $3,705 $2,587.99 $1,928.35 $1,954.90
Income Less Expenses $2,610 $3,705 $2,587.99 $1,928.35 $1,954.90
Total Net Income Years 1-5 $12,786.58
Total Net Income Years 1-35 $38,093.79
Disclaimer
This is not a solicitation to buy or sell securities. This material is for information purposes only. The figures contained
herein are based upon reasonable estimations. Therefore, the numbers are subject to change and will obviously differ
depending upon various circumstances. This material is not for the purpose of giving tax advice to individuals or any
other entity. International Automated Systems, Inc. is not a tax professional and encourages every taxpayer to seek
advice based on the taxpayer’s particular circumstances from an independent tax advisor before relying on any
information given in this presentation.