Where Is The Crypto Tax?

March 3rd 2020

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It’s an accounting practice that ultimately determines what type of tax liability someone has. You have to realize that the people who wrote the tax laws created a way for themselves to pay little or no taxes. They also create policy, certifications and licensing for the tax professional so that people like you and me only perceive they are getting tax benefits. What they have really accomplished is tricking the average person into adopting and following certain habits so he will be forever stuck in this tax system.

Keep in mind that while most people are interested in these concepts for tax purposes, you will soon discovery that taxes are the least of your long list of risks to manage. What I’m describing here is far more comprehensive than just reducing or eliminating taxes, even though we’ll do that quite effectively.

Here are two videos that explain the concepts, and then this article is written to give you and your accountant references if you want to do more research.

https://youtu.be/3j_arn2XXUo and https://youtu.be/auFFBGsXoMU

In this article, I use the term “Bitcoin” to include all crypto-graphic assets, tokens and coins. What changes in the law, in any country, now impose a tax on Bitcoin? There are no new laws imposing a tax on Bitcoin or any other crypto-graphic assets because they have been defined by every taxing authority to be “property”. This brings in all the laws regarding taxation of property and property rights for at least the last one-hundred years. In some counties it will be several hundred years. While most of this article pertains to the United States’ system of taxation, I am confident that the tax treatment you will discover in your own country will be identical.

This is also discussed in an interview with VJ at Rogue News here, https://youtu.be/auFFBGsXoMU

Keep in mind that the following concepts assume you have a “know-your-customer” (KYC) process for trading from dollars to Bitcoin, but that www,bitcoin.com now has an application that allows anyone in the world, from any currency, to buy and sell in and out of Bitcoin Cash (BCH) without any KYC. If there is no KYC, you have total privacy and there is no need for the strategies I’m describing here, especially when it comes to smaller amounts of money such as living expenses.

The one exception to the “know-your-customer” relevance when using a business account with Caleb & Brown in Australia, no matter where the business is registered, Caleb & Brown does not report on U.S. citizens. Likewise there are no FinCEN or IRS disclosure requirements for U.S. citizens or U.S. registered businesses such as limited liability companies or limited partnership in the U.K. or Canada who have crypto accounts with Caleb & Brown. This type of account avoids many of the issues described in this article, so you will want to visit the registration website for Caleb & Brown for more information and how to get a 30% discount on trades at partners.calebandbrown.com/aceofcoins.

The first concept you want to understand is that Bitcoin is defined as property. No new laws are needed, not for taxes or property rights in general. It was defined as property by the IRS in its Revenue Bulletin of 2014. This is very important. Before we continue, let me demonstrate how we are conditioned to believe something a certain way, that can change how we do things. People believe that they pay sales taxes at the grocery store. You look at your receipt and there is the itemization of what you paid, including sales tax on some items and then the total. Ask anyone and he will agree. However, what if we are simply seeing one of the operating costs of the grocery store, and that is being made to appear as if we are paying the tax when in fact the store is not only liable for the tax, but is in fact paying the tax?

Why isn’t the store’s cost for electricity for that hour pro-rated on the receipt, and how about its labor costs, why don’t those appear on the receipt also? Because the sales tax is what the store is paying as part of its operating costs and itemizing it on the receipt makes it appear that the customer is directly paying the sales tax, when in fact the store is responsible for paying this tax, the store is the taxpayer, not the customer. Why does this matter? Well, because if you believe you are the taxpayer in this scenario, you will more easily believe other things that are not true, but that can be used to manipulate your decisions and habits.

The second concept is that any tax will be paid in a government currency for the government agency imposing the tax, not Bitcoin itself. If you are not paying the tax in the thing being taxed, it’s not taxable. Only the gains you receive from the disposition of the asset are taxable in the government currency you are using to pay the tax.

If you pay tax because of a Bitcoin transaction, it’s likely because you disposed of the property to a third party, not another wallet address or under a different title, such as moving from a paper wallet to another wallet on an exchange where the account holder is “your” limited liability company or trust. The term “your” implies that you or your family are still intended to receive the benefits of the holding, you still haven’t sold or conveyed it (Bitcoin, etc.) to a third party.

The same is true for any property or property rights; great examples of this include stock and precious metals. You don’t pay a tax on gold just because the price increased.

I recently spoke with an accountant in Australia on these very concepts and she was so quick to talk about paying tax on gains until I asked her where the gains came from and she stated that “…well, eventually you will want to take profits because your holdings (cryptos) are worth more…”, and I said “Yes, but at the moment, just because the property is worth more, it doesn’t create a tax liability, correct? And she admitted that this was correct, but then asked, “so you’re just never going to take profits?” I explained that this wasn’t the question, the question is whether or not I have a taxable gain just because my property value increased against the currency and she had to concede that there was no tax liability at that point. I did not go on to explain how it’s possible to manage the property rights and retain a tax deferred status.

I think this is another really good analogy. If I buy Digibyte with my Bitcoin and then the prices change so that I buy back Bitcoin again with my Digibyte and now I have more Bitcoin, that would be “more money” or “profit”; however, it won’t be taxable until I price my “gain” in terms of the taxable currency, such as the dollar and then sell my new amount of Bitcoin for dollars. I would then have to at least report the transaction if it were in my name, and possibly pay tax on it. However, even though I now have more Bitcoin, I don’t have more dollars. If Bitcoin were truly taxable, I could pay a tax on the “profit” between Digibyte and Bitcoin, in Bitcoin, but I am not required by any law anywhere, to go out and obtain dollars somehow and then pay tax on the Bitcoin. As long as I do not dispose of the asset for the currency being taxed, there will be no tax.

The third concept to understand is that the exchanges are government agencies. Many of them have been delegated certain authorities to collect information and make reports on their account holders. This is not problem, it doesn’t change anything as far as whether or not an account holder would have a tax liability, it’s just important to know with whom we are dealing. The cleanest way to manage your purchases on these exchanges is to buy only stable coins on the exchanges, then move those to a wallet such as a BitFi or Atomic Wallet, which are decentralized and private wallets, and then allocate your stable coin into the crypto-coins you want. This way you will avoid creating any type of record of which coins you bought on which dates and it would render an audit summons for these records useless. When you take profits, use escrow, loan arrangements and reverse this process with the stable coin through your limited liability company as the account holder. This will create zero tax consequences or at least give you the full control over when and how much tax you want to pay.

My purpose in describing this is not to demonstrate how to hide your money and trick the system or even break the law, there is nothing illegal about keeping your privacy and managing your assets through an investment vehicle.

The fourth concept is understanding the process that would create a tax liability you did not have, if you don’t understand, and most accountants don’t understand. A report from a third party claiming you sold or disposed of your assets for dollars will eventually cause you to create a tax consequence when you may have had none. Let’s examine the audit process, paraphrasing from my interview on Pulse Wave Trading, February 5, 2020, beginning at the 22:00 minute mark1, …where you did not get a 1099, you’re going to get audited because what the agents will do is summon your exchange records, and then run the coin tracker software and generate a similar report as the 1099 that you didn’t receive from the exchange, and send you a deficiency notice and it will force you to either amend your tax return or get the notice corrected and tax court will not help you. You don’t want to amend your tax return, and/or file a petition in tax court, because then you will have created the tax liability from which you will not escape. Instead, you’ll have to request a determination letter on the statement in the deficiency notice.

Likewise, receiving a 1099-K or similar report regarding exchanges between coins, requires you to get the amounts corrected (minus those where you actually sold for taxable dollars) by making a formal request for determination letter with the Secretary of the Treasury.

The fifth concept is that there is no law requiring a taxpayer, in his own name, to invest in Bitcoin. The taxpayer can manage his property rights in the asset using a legal entity or other arrangement that does not create a tax consequence, or at least defers it. It’s a matter of restructuring property rights to legally avoid any tax in the same way you can legally protect your assets against creditors. No matter what plan you’re using to protect assets, the central strategy involves divesting (relinquishing) your exclusive rights to sell property. If you do not have the exclusive right to sell property, it cannot be taken from you by a creditor and if you do not have the exclusive right to receive income, it cannot be considered a gain or taxable to you. I think it’s safe to conclude that this is true in any jurisdiction, anywhere in the world.

Maybe this explanation sounds a bit cryptic, so it’s talk about specific methods and I’m sure you all will be able to relate to the ideas. If you’re a sole proprietor running a business, you have 100% liability for everything, taxes, creditors, all contracts and any other types of liability. If you are a partner in a partnership, depending on its terms, but generally, the general partner takes on all or most of the liability and the limited partner is only liable for the value of his contribution.

If I owe a tax on income that I receive, and if my brother owes a tax on his income, it’s easy to understand. Each of us is a taxpayer. But if both of us together own an undivided interest in income, together our association (my brother and I) cannot possibly owe a tax on that income, even though it would normally be taxable to either of us individually. This income would not be subject to any tax or even reporting until we claim that together (as an association of some type) we owe the tax or until each of us individually claims a portion of the income and we divide the interest between the two of us, and then report and claim the income for tax purposes.

In fact, depending on our individual situations, we may each have a different tax amount for the same income after it’s divided. This is easy to understand, but the most important concept here is that when my brother and I receive income together where the interest is not divided, if someday there would be a tax liability, it won’t be until we divide our interest and each claim the income individually. This is the reason why corporations can pay the tax after they spend all their money and why people pay taxes on wages before they receive them. People are being taxed on gross income and corporations are being taxed on net income. The difference is an accounting function, based upon ownership rights. Those rights are established by written agreements but also by the relationship and habits involved with managing the income and asset.

If my brother and I together form a partnership and register it with the state and obtain a tax number and then file a report at the end of a tax period, then we will have created a new taxpayer by making our partnership an income reporting, tax paying “person”. This is a very common example of what people do everyday around the world.

Consider the relationship between two brothers as an unincorporated association, until that relationship is registered with the state and a tax report is filed. It’s “unincorporated” because it’s private. Incorporated simply means included, and of course both brothers are included, but it’s a private association in which each brother is a member. This association excludes other individuals who are not brothers, only certain people can be in this association. We can also formalize this into what many people recognized as a limited liability company or limited partnership.

Everyone is a member of many types of associations, for example, because you had parents, whether or not they are still here, you are a member of a private association commonly known as a family. If you use a car, you are part of an association of people that use cars, it’s more common than you think. Let’s consider the example of a family with 7 members, the mom, dad, brother, sister, uncle, niece and mother-in-law. This is a private membership association (PMA) and it’s not an individual taxpayer. It could be if the family members used a common name, obtained a tax number and filed a tax return as a corporation or partnership or trust, but this is not required under any circumstance, and this is not what I’m suggesting of course.

While a limited partnership (LP) or limited liability company (LLC) can have a single owner or member, in the case of an LP you would have two designations, one as general partner and one as limited partner, but it’s nearly the same. The LLC or LP can be an account holder at the bank and pass-through all gains, profits or income (and losses) to the member owners. The standard accounting is to maintain a capital account for each member or partner and to close the books each tax period and pass all income through to the owner or member. But you can write the agreement so that there is an undivided interest (only one capital account) and the books are not closed until the members or owners make a decision to do so; in other words, it’s not automatically scheduled and it’s not required (even with only one member in the case of an LLC or one partner acting as both general partner and limited partner in the case of an LP). There is no law requiring anyone, at least that I’ve ever seen, to take profits ever, or on any specific date or within any specific time period. You decide how to manage the income and account for everyone’s interest.

The owner of your LP or your LLC can be your entire family, or any unincorporated association. Your family, or your PMA can own anything, including an entire company. The company can be a taxpayer or not, and it can obtain a tax number and receive income and then pass its income or gains onto the owner, the PMA. Because the PMA never became a taxpayer and because it’s not required to, any tax obligation would occur only when one or more of the association members was allocated his interest and then he would have to claim that in a tax return after receiving a disbursement from the association. The association itself, the PMA, would never been seen as a taxpayer.

It’s not like I alone created this idea in my head, this is the cornerstone of our entire system of taxation, and I believe it’s world-wide. In the United States, under the Bank Secrecy Act which was amended by The USA Patriot Act to require financial institutions to collect identifying information from account holders, this law excludes unincorporated associations from having to provide identifying documents or tax numbers. The PMA is immune from the anti-money laundering rules that apply to individuals (what you and I believe we are). To be more specific, the “know-your-customer” (KYC) rules only apply to (legal entity) account holders and signers for the account holder, they do not apply to attorneys, organizers of the account holders or unincorporated associations. This works much like a “back-door” for the people who actually write these laws and policies, but people like us are never apprised of these benefits by tax and legal professionals (even though they must know about them). This is further illustrated in my recently published Bank Secrecy Act Compliance Memorandum.

The ideal account holder would be limited liability company owned by a PMA or a limited partnership in which the general partner is a foreign entity or a PMA and the limited partner is the local resident, individual taxpayer. It creates a situation where third party tax reports are not able to create any tax consequence and the only time a tax would be paid is if a member of the PMA claimed his share, paid himself and filed the tax report. You will discover shortly that even this can be avoided, and legally of course.

Let’s review the first five concepts so far:

1. Bitcoin is defined as property.

2. If you are not paying the tax in the thing being taxed, it’s not taxable.

3. Exchanges are government agencies, so buy only stable coins on the exchanges, then move those to a wallet such as a BitFi or Atomic Wallet, which are decentralized and private wallets, and then allocate your stable coin into the crypto-coins you want.

4. A report from a third party claiming you sold or disposed of your assets for dollars will eventually cause you to create a tax consequence when you may have had none.

5. The taxpayer can manage his property rights in the asset using a legal entity or other arrangement that does not create a tax consequence, or at least defers it. if both of us together own an undivided interest in income, together our association (my brother and I) cannot possibly owe a tax on that income, even though it would normally be taxable to either of us individually.

The sixth concept I wanted to cover is where the IRS requests that you say “yes” or “no” on Form 1040 relating to having purchased any crypto-coins. My general recommendation is to tell the truth, because it will still not create a tax consequence, but you may be audited and you may receive an erroneous notice of deficiency. You may want to say “no” in any case, or at least say “no” if you did not get a 1099 from any exchange, just to avoid an audit. Otherwise, if you bought some in your name, say “yes”. If you are using a company such an an LLC, say “no”.

In the United States, we file an annual income tax known as a tax return on Form 1040. The latest change to the form asks if you bought any crypto-graphic currency for the previous tax period. Answering the question either way does not create any new tax consequence, however, it could create an audit if you answer “yes”. What many people have been doing is moving to managing their crypto portfolios via a limited liability company so that they can always answer “no”, but for the previous year, you still need to answer. The general practice is to answer “no” if you did not receive a tax report, such as Form 1099-K or something similar. If you answer “yes”, there is a good chance you will be audited and the Internal Revenue Service will run the “coin tracking” software and create their own version of the 1099 that you did not receive because your transactions did not exceed the threshold of 200 exchanges or $25,000 for the year.

In that case, you can correct the situation by obtaining a determination letter from the Secretary of the Treasury. Don’t expect your CPA to know how to do this, most do not and if they did know the procedure, they would not know how to write the legal memorandum, and even if they did, would be too afraid. Just be aware of these things, but there is no need to fear them.

The seventh concept I wanted to discuss is moving your personal crypto-coins into a newly formed company or trust such as an LLC or LP. It’s the same as for any property or property rights, you can sell them to a third party and that is a “disposition of assets”, but if you convey them from your name to a trust or company in which you retain the same beneficial interests, then the conveyance is not a disposition of assets, instead, it is considered a conveyance for estate planning purposes. My video about preparing the quit claim deed in the members area at www.privacyfightclub.com explains this in greater detail.

You can convey property or property rights from your name to another organization or entity and if you retain the same beneficial interests, it’s not taxable. Additionally, just like there was no tax consequence when you bought the asset, investment or property, such as real estate, stock, precious metals, crypto-coins or other property, there is no tax consequence when you exchange it for another asset, such as to fund another investment.

Your accountant will insist that you have to report the transaction as a sale or disposition of an asset, and if you take that advice, he will be correct and you will likely pay a tax on the transaction; however, if you don’t take that advice and you move from one property to another, for whatever reason, and do not report it as a disposition, you will also be correct and you will avoid creating a tax liability. Keep in mind that as long as you do not realize a gain, meaning, you did not receive dollars in exchange for the property, then there is no disposition of assets, it does not matter if you price the assets in dollars or discuss the assets in terms of dollars, as long as you do not receive dollars in exchange for the property, it’s not taxable. Remember that the dollars are being taxed, not the property.

Let’s look at what the supreme court held in Eisner v. Macomber, 252 U.S. 189 (1920). It was a tax case before the United States Supreme Court that is notable for the following holdings:

A pro rata stock dividend where a shareholder received no actual cash or other property and retained the same proportionate share of ownership of the corporation as was held prior to the dividend by the shareholder was not income to the shareholder under the Sixteenth Amendment.

Ironically, a few years earlier the Supreme ruled that the Sixteenth Amendment did not give the government any more taxing authority than it already had. The case is Stanton v. Baltic Mining Co., 240 US 103, which held that “… the Sixteenth Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged“.

The eighth concept involves a review of the pertinent statute for filing tax returns. First of all, the statute alone is not the authority and does not compel someone to act, only the statute and regulation together impose a legal duty for which their can be penalties for failure to comply. But let’s just talk about the statute as it is the law. There is no statute that requires a limited liability or any other legal entity or any person to file a tax return; however, there are penalties for those who are required to file and do not file.

This is stated under Title 26 USC §7203 in which the single paragraph begins with “Any person required…” and goes on to state the penalties for willfully failing to file a tax return. Let’s back up for a moment and read the first three words of the statute, “Any person required…”. Remember, these were written by very smart people, where many well-educated professionals debated the language of the statute for months and months before adopting this final language which has been unchanged for about a hundred years. This language has withstood constitutional challenges of all sorts, and we still have it.

Let’s consider this at face value, “Any person required…”. Which person is required? Any person. Does that mean every man, woman and child on Earth? Does this include the deceased, how about the unborn, how about college students, what about the insane or invalid, or corporations, trusts and other organizations? Do parents have to file tax returns? What about grandma, even though she’s never worked at a job in her entire life? We know that people file tax returns, so do corporations. But who is any person required? Who is required? The statutes do not tell us, but I will tell you now how this works.

The person, meaning a corporation, or you and me, the person who actually files a tax return is the person required. And if you stop filing in most cases, you will have severe penalties and consequences; however, for those persons (people and corporations) who have never filed a tax return, there is no presumption of any requirement to file, so the IRS will never, never and I mean never question it. I know this after working with thousands of cases over 26 years and talking with IRS personnel, studying the IRS operations manuals, regulations and reading more case law that I care to admit.

I do not protest the U.S. or any tax system, I just believe that we should only pay the taxes that are owed and that we are under no duty to participate in any other scheme that would create a tax liability when we have other options. I believe this for no other reason than I have morality and I believe that my decisions about using money are moral and to allow an insane person such as a government or corporation have the money instead, is irresponsible. Look at what they have done so far, wars, public policies that destroy ancient social mores, imposing a currency on the people that always loses value, etc., etc. If we have to follow the law or a statute, let’s do that, but let’s not volunteer for more than absolutely necessary.

The ninth concept, and this will be brief, is that it takes at least several years of debate and public notices with public hearings to adopt new laws in most countries, especially when it concerns more taxation. I have yet to see any notices in the Federal Register or otherwise, calling for public debate on any new laws for crypto-graphic assets. Instead, we all witness one IRS Bulletin that defined crypto-graphic assets as “property” and a very misleading letter ruling that talk about “air drops”.

If there was a new law upon crypto-assets, we would have adopted it within the legislature, then it would have been codified into a statute, and then the agency responsible for assessing, imposing and collecting the tax would have promulgated very specific regulations, within the statutory framework, expressing how the crypto-assets would be taxed. The taxing regulations would include a section that set forth the type, kind or class of tax, and a tax table with rates of taxation and other requirements. There is no need to do that because the crypto-assets have simply been defined as property and the thing being taxed is the same as always, it’s the currency being taxed, not the property.

The tenth concept involves what most people really want to talk about. They want to know how to take their profits and retain the tax deferment, that is, move their new windfall into another asset while keeping all of the new principal.

This involves using escrow to buy your next asset such as real estate with Bitcoin; for example, you can use escrow to buy anything, and we all probably have used escrow before when we bought a house or used eBay or PayPal to buy or sell something. But let’s just use real estate as a very common example. I want to take my new $10,000,000 worth of Bitcoin and buy a hotel. I’ll pay cash now and later I’ll get my financing. We have escrow agents that can do this of course, but you want a qualified escrow agent that knows how to source dollars for the closing from Bitcoin. You deposit your Bitcoin with the escrow agent, opening an escrow contract for a specific property where the seller has already accepted your offer. The escrow agent will procure the dollars for the closing and at the closing, be sure to take title of the hotel in a new company name. You will want to register a new company for this, no matter how you are buying it.

The eleventh concept involves structuring the disposition of the asset as a loan or simply paying cash and taking the title in the name of a trust or company. Loans are not taxable and buying something for a trust is not taxable. You’ll need to sell your Bitcoin for cash and leave that cash in your LLC account so you can access the funds. If it’s a car, you simply tell the dealer that you already have a loan approved and then make your deal. Once you know how much money you need to buy the car, go get the cash from your LLC account in certified funds, naming the LLC as the payor and explain to the dealer that the LLC is the lender. Simply provide its address and EIN and the dealer will prepare the title documents accordingly, so that your LLC is shown as the lender on the lien side of the title certificate. This allows you to keep the car in your name if you have any issues with insurance rates and registration tax for not keeping it in your name.

Another simple way is to buy the car and simply inform the dealer how you want the car titled and make up the name of a trust at the dealership. Be sure to write it down so when you get home or back to the office, you can create the trust documents on your computer just to keep good records.

If you pay off personal debt, such as credit cards, those accounts are not subject to audit, so the money you pay would not be visible to the IRS even during an audit. But generally, when you use the LLC money to pay personal debts that can be discovered, such as mortgages, it will be considered income unless you structure or record a new loan to replace the first.

Paying off a mortgage is quite simple, but let me first suggest that you should not be so quick to pay off personal debt with your returns, instead, use your returns to acquire assets nd use the income from those assets to off-set the payments required for personal debts, without paying them off in one lump sum. It will make much more sense why you’d want to do this as you learn more. It has to do with internal rate of return and time value of money and your “personal” net worth. In any case, once you get your pay-off statement from the bank, remit the funds from your LLC within the time limit and that will satisfy the mortgage. You will want to prepare a new mortgage instrument with a new note and record the mortgage or trust deed (not the note) in the same county recorder’s office as the original mortgage was recorded. Do this within a short time, such as 30 days, so then it will be considered a re-finance and not just the payment of a personal debt. Make your regular loan payments back into the LLC so you will be able to show it was a real loan if ever the question is asked. There are a myriad of ways for doing this, so please ask me for help as you need it.

The twelfth concept is a more formal, effective and profitable way to use loans when taking profits. You have to work with an insurance agent who does this and of course we have the agent that will. You take cash out of your Bitcoin, so you’ll need an LLC or LP account for this, and then fund a whole life insurance policy. There are certain requirements in this process, especially for your first contract and after the brief waiting period, you’ll be able to borrow the money out of your policy, still earning interest on the whole amount, and use it to buy the asset you want.

You can also use it to fund your living expenses, tax free. The catch is that if you want to avoid having to make regular loan payments to repay the loan, you simply pay the interest on the loan in one lump sum and the rest of the money is after-tax money that you are free to spend however you want. In over two-hundred years, no contract has defaulted and the money is never invested in the stock market or the banking system, so the systemic risk of which most of us are aware does not affect these insurance contracts.

Let’s review the last seven concepts:

6. On your tax return, say “no” if you did not get a 1099 from any exchange,

7. If you are using a company such an an LLC, say “no”.

8. There is no statute that requires a limited liability or any other legal entity or any person to file a tax return

9. The taxing regulations would include a section that set forth the type, kind or class of tax, and a tax table with rates of taxation and other requirements.

10. using escrow to buy your next asset such as real estate with Bitcoin

11. Structuring the disposition of the asset as a loan or simply paying cash and taking the title in the name of a trust or company is nothing new.

12. You take cash out of your Bitcoin, then fund a whole life insurance policy, then borrow the money out of your policy, still earning interest on the whole amount, and use it to buy the asset you want.

1https://youtu.be/wiD9XCDiJRY

HOW TO BUY AN ASSET

Most people live out their lives and never buy any assets. I think this may be attributed to people getting their basic costs of living needs met with a job and saving some money, such as in pension fund. A house in which you live is not an asset, but a house that you own and rent out to a tenant can be an asset. If managed properly, it will pay you a regular income, that is an asset. Your car is not an asset, but a collection of antique cars that people pay admission to come and see may be an asset, or a fleet of taxis that you lease out to taxi drivers may be an asset. Just because you can sell something does not make it an asset. An asset provides regular income for the asset holder, hopefully it is positive income (profit). By implication, everything else is a liability.

Example

Yes, that work of art you bought at the auction for $7,500 and had appraised for $10,000 is still a liability because it’s not generating regular cash flow, good job on buying low however. Owning assets or the rights to cash flow from assets is how you acquire and build a net worth. While most people know how to acquire long term debts for college, homes and cars, they have no clue about buying assets. If you create a scale on buying assets, the best assets are those for which you have no liabilities for ownership, but derive the benefits from the cash flow, and make infinite returns. That means none of your own “cash in”, but you get “cash out”, profit. These are the kinds of deals I like the best and it’s becoming easier and easier as we have developments such as the Internet and blockchain and cryptographic currency. That’s at one end of the scale.

At the other end would be something like, you get an option on a commercial real estate site, and draw in capital from investors, develop some retail space and begin making 7% on your money in about 5 years. It’s still an asset, and might be worth more cash than the infinite returns deal, or maybe not. Every deal is different. But how would the average person who has never bought an asset or never really considered this subject until now, go about “acquiring” assets?

First, you need a way to own the asset, or manage the cash flow, or hold title to whatever it is you want to buy. I’ll start with something that most of us can relate to, let’s buy that coin operated car wash in our town. That is very close to a commercial real estate deal, but without the commercial lease agreement, presumably, and without employees, these are my specifications for this example, especially if you are just getting started. The car wash is actually a real estate deal and those have publicly recorded titles, so you would use a corporation to receive the conveyance of the title as part of the sale.

Second, if you don’t already know what you want, you have to go shopping. Either you can do this yourself, or through a broker or some other agent that can help you find the deal or deals you want, where you want them.

Third, you need to be able to make an offer, it should be in writing, but this is not required.

Financing

Fourth, you should always look for financing, even if you pay cash, you will still want financing at some point so you can make the best returns on your money. Here is where many people run into a brick wall. They either believe they don’t have enough money or cannot get the financing because of their personal credit score. What most people don’t know is that most of these types of deals for example (the car wash) are not usually done with personal credit or lots of cash.

Imagine buying an asset, such as retail zoned real estate in your town, on credit and with little or no cash of your own. Yes, it can be done, and once you see how this works, you will want to do this all the time even if you have enough cash to just buy the property without any financing. Always risk the least amount of your own cash on a new deal.

Let’s take a closer look at financing the purchase of an asset. First of all, you are buying an asset on credit, much easier than buying a liability based upon the fact that you have a job (such as your home). The first consideration for lending should always be with the seller. Ask yourself, if the seller is selling his asset, something that is paying him on a regular basis, why is he doing that? This information comes from a discussion with the actual seller, not his agent. Let’s say he has a good reason for selling, and that the asset is really a good deal, the seller should be willing to “bet on himself” or the “profitability of what he’s wanting to sell you” by financing it to you. But maybe there are so many buyers that he won’t consider it, this is an important consideration.

The second consideration in getting financing is to understand that the collateral for the financing is the asset you are buying, it should be paying for itself. It’s not like you are buying a house and your ability to make payments depends upon you keeping your job. It’s a much better financing situation to buy a business than to buy a home. Remember that I explained previously, an asset can be owning the thing that pays you, or it can be the actual cash flow coming from the asset, whether or not you hold the title. In fact, it makes more sense to buy a business or two and use that money to offset the purchase of a home or finance a liability.

Let’s say our car wash generates $50,000 of gross income annually, and let’s say that a fair asking price is $50,000, the asset’s annual income, and this assumes that the real estate comes with the business, same owner (doesn’t have to be though). You may never find a deal like this, but I’m only using this as an example. Estimate your financing based upon a short term debt, such as 3 to 7 years. And let’s just be optimistic that the seller is so excited about financing this deal that he’ll be jumping for joy upon receiving your offer.

It’s already generating a monthly income of $50,000 / 12. You will want your monthly payments to be a fraction of this amount, after all, you want positive cash flow and you still have to factor in operating costs (taxes, insurance, materials, supplies, maintenance, etc.) If your monthly gross is $4,166, structure your financing for one-third of this, or $1,388 and get a three year note. You’ll have some wiggle room for the interest rate by doing it this way.

There are several ways of managing the title during this transaction, the easiest one is likely to be with an exclusive options contract where the seller gives you (or sells you) an option to buy (take the title) at some point during the life of the note, or upon full payment of the note. Let’s say the seller of your local car wash agrees to sell you his car wash, under the provisions of an options contract in which you take the title after the note is paid in full, three years from now. Within 30 days of the closing, you will be keeping about 2/3 of the $4,166 or $2,777. This will be your new income, and you didn’t have to go begging to the bank or use your personal credit. Instead, you would have probably had to show the seller that you had solvency in a company, which only takes a few months to establish.

I’ve just described a very simple and boring transaction that created nearly $3,000 a month in new income for you. Let’s step back for a moment and talk to all of you who believe you would never get “owner financing” for a moment. If the seller won’t carry a note, maybe there are others whose business it is to only carry notes? Yes, of course there are. You would then need to find a third party lender, and in some cases you might prefer this. If the seller insists on doing it this way, then he will need to transfer the title at the closing. Or, maybe the seller will finance it (second position) if your lender contributes 25% to 50% of the purchase price, there are many options.

In this case, the title holder will be your company, that will have shown its solvency to the eventual note holder or lender. You don’t want to be the personal guarantor on this, where your personal credit is being used. These deals can always be done using the company’s credit, even if this is the first asset being acquired by the company.

Who would hold a note on commercial real estate with a history of positive annual cash flow of $50,000? You will find many lenders for this. I would suggest that your best options do not include any traditional banking organizations. You want to look for cash or hard money lenders, let those organizations source the lender for the loan they are giving you, that’s how it works. Where would you find these? I would start with a business broker, maybe it’s the same broker who helped you find the deal. He or she can probably connect you with real loan money, hard money, again, not bank “funny money”. I use the term “funny money” because you don’t want to get tied up in loan contracts with the evil banking system since you are not in that business, let someone else do that, you get a hard money loan and let that lender deal with financing of his loan portfolio.

You might also find equity financing, that is, someone with cash who doesn’t want to be a lender, but wants a share in the business, in the equity of the deal. These are also very good ways to get financing, just write your contract so that your equity partner has a clear exit strategy or includes a buy-out clause so the deal has the most flexibility for everyone. I would not suggest selling actual shares or even advertising for the sale of shares; rather, I would look for a partner who brings cash to the table and his rights and interests are expressed in an operating agreement and or a joint venture contract. You don’t want to be under the purview of selling securities; however, once you become a little more sophisticated, you may want to look into “Reg D financing”, I’ll save that for another article.

Notice that so far, I haven’t mentioned anything about writing a business plan or a marketing plan, or even a financing plan. These are important and you should have them, but don’t let not having them prevent you from moving forward. Like I’ve explained, you want to show solvency in the business. You can do this with a balance sheet and income statement. Once you form the company, have a bookkeeper create your balance sheet and income statement, even if you show only the $100 you used to open its bank account, that is where you begin. The next step may simply be you depositing an additional $100 a week or month into the business bank account as a contribution for your interest in the company. This creates a record of regular cash flow, it doesn’t have to be millions of dollars, just regular.

Consider additional ways to create funding, such as grant money. I would start with finding a grant writer to prepare a grant application and then shop it around for a grant. It doesn’t have to be substantial, just get one grant and it will do wonders for your future ability to attract more capital. Along with finding a grant writer, contact the Small Business Administration to review what is required for a grant application, just so that you know, even though your grant writer will be working you through that process. The SBA is not the only place to get grants, that’s why I suggest starting with the grant writer, and a grant broker, but only use the SBA as just one possible source and a way to learn about the process.

Grants.gov is also good place to start when looking for grants. There are professional grant services such as eCivis, Inc. This one provides a suite of Web-based software applications, along with grant-writing and grant-management services. Grants.gov is the federal government’s e-portal for 26 grant-making agencies. The website is a central storehouse for information on more than 1,000 grant programs and provides access to approximately $500 billion in annual awards. You may also want to get a copy of Grant Writing for Dummies, 4th Edition (John Wiley & Sons, 2011).

You may also find that getting a short term loan from the SBA would be beneficial in getting your venture going faster. Remember that you want the business to get the financing, not you personally, never disclose your personal credit information for a business loan, but before you look at getting a business loan from the SBA or bank, you will need to create, not only a balance sheet and income statement, but a real business credit file with Dunn & Bradstreet. There are many services that can help you do this, even some that guarantee a certain amount of unsecured credit within a short period, such as six months. That should be one of the things you do in the first year, and before you submit any traditional loan applications. I’ll discuss this along with business brokers in more detail.

The SBA is a good source, but don’t overlook state and local sources for grants. It will be useful to consider the economic development office of the state, county and city in which your business operates. These grants are often less restrictive than federal government grants and it is likely there is less competition.

Another good source for small business loans would be a company called Start Up Nation, at https://startupnation.com/. Let’s review the process of setting up business credit before we go any further. I didn’t want you to think that your only financing source depends upon a high credit score, I’d rather you think of it as just another tool. I’ve done many lucrative projects with no credit whatsoever, so don’t let this prevent you from getting the assets you want.

Business Credit

Once you have a corporation registered, you want to be sure it has a business location as its address, maybe it’s a virtual office space or maybe it’s your barber shop because your friend works there and his boss doesn’t care if you use his address as yours for a short time, or you really do have a business location for the company address, not just a mail box. You can also use a mail box, but your main address should be a business location. The next step is to get that business information listed in the 411 directory, this can be done online and there are specific instructions to help you.

You’ll want to review http://www.ehow.com/how_5828088_business-listed-411-directory.html. Keep in mind there are services that will charge you a fee or monthly to list your business, and some of them may be really useful, but I’ve found that it’s enough to list your business yourself, for free.

If you can be patient, you should receive a letter from Dunn & Bradstreet within about 60 days of registering on the 411 directory, welcoming you to the service and giving you an account number. The objective here is to sell you business services, and these are not required in order to get a business credit file, even though you might find some useful. I don’t recommend turning down D&B offers for services, instead, just explain that you have to discuss them with your partner and ask for additional information and explain you will call back. In the meantime, you will have a D&B account with no credit score. D&B is actively looking for new businesses and once you get on its radar, it will create an account for you. The next move is yours, as you will eventually need a credit score. That takes a little more planning and you have to understand some basic concepts.

You will need four “net 30” accounts, there are were you buy supplies for example, on store credit and pay the bill when it arrives. You don’t need 5 or 6 and 2 or 3 would not be enough. The trick is to buy things you already need, such as office supplies, and be sure that the retailer reports to your business credit file and never use your personal credit information to obtain the store credit with the retailer. Sometimes you have to call a different office or search online to get the actual business application that does not require any personal guarantee, never settle for being the guarantor, ever. Next, pay the bill immediately, don’t wait for the full term, in fact, you may want to call in advance of receiving the bill and pay within 5 days of using the credit. This will result in a D&B creating an actual credit score for your business’s use of credit. The scores range from 0 to 100, and your first score may be above 90. A higher score is not better. You want a score that shows you are able to use debt and manage the business properly, so that score would be around 75 – 80. The more debt you have and the better your balance is, the more creditworthy your company becomes. It’s because your company is using debt to increase it’s net worth. People can’t do this because typically consumer loans are based upon limited income, wages, and those don’t go up with more debt.

The next step is to take unsecured loans for about $20,000 to $50,000 within the first six months of starting your business credit profile. It’s important that the lender reports these accounts to your D&B file, you must confirm each time, do not assume. Once you do that, it’s then just a matter of managing your company, but again, you should be able to obtain financing just by thinking through a deal and not be totally dependent upon asking an institution or bank per se.

Business Broker

I mentioned a business broker earlier. What can a business broker do for you? If you are new to this “business” of buying assets, it’s best to start with a business broker. Tell him what you want, what you are looking for and ask what will be needed in terms of your company’s financial records, in order for the seller to even consider your offer. This will be such a great education, better than taking on huge student loans to get your MBA.

I talked with an MBA student one time. She said she was studying how Star Bucks runs its business, so I asked her how it does. She could not answer me. What’s more, I asked her the general question, how would she create a corporation, the main tool of business. She couldn’t tell me. So I suggested that if she really wanted to know how a business operated, including Star Bucks for example, that she get together with her classmates and form a corporation and then get into a licensing deal with Star Bucks (which is how that works by the way, no franchises). I think she was mortified at the thought, but this is my point, it’s not difficult and if you’re going to study it, you should do it, that’s the best way. I remember presenting a thesis to my college professor about how it would be a good business to teach elementary school children how to do high school algebra. I thought I was so smart, so I was surprised when she wasn’t that impressed after reading it and suggested that I actually go out and do it. So I did, and I made lots of money, and then she was impressed.

Business brokers will help you with pricing the business with a professional valuation and then drafting an offering summary, sometimes called a confidential business review. This piece becomes one of the most important marketing tools for the offering, and is provided to prospects only after they have signed a confidentiality agreement and been qualified by the broker.

Marketing the business to the widest possible audience while maintaining strict confidentiality. This is one of the important distinguishing differences between business brokers and real estate agents. Real estate agents put a sign in front of their properties and typically without the need for confidentiality, advertise widely the specific location. Business brokers are trained to maintain strict confidentiality. When you contact the broker, he will research his database for the deal that works for what you want.

Your broker will also facilitate meetings between you and the seller. When it’s time, he can also writing an offer to purchase the business and be involved in negotiating between both parties. Your broker can work for and represent only you, or work for both parties, it depends on the contract. Either way, he can also facilitated the due diligence investigation, as most offers to purchase are made contingent upon a due diligence finding. And as I’ve mentioned earlier in this article, your broker can assist you in obtaining financing. He may not be as creative as what I’ve described in this article, but that is your job after all. Your broker can help you through the entire deal, even scheduling and facilitating the closing of the transaction. This article would not be complete with at least a brief review of crowd funding.

Crowd Funding

This is a way to get funding from a large number of people who like your idea, but may not necessarily know much about business or being a lender for profit. Crowd funding allows the average person to benefit from your ideas with low risk and avoids the need to sell securities or do any public offering.

While you may have planned a marketing and advertising campaign for selling your actual product, you will need a marketing and advertising campaigning to raise money through crowd funding. The idea of “its not what you do, but why you do it,” really hits home here. By focusing on a bigger purpose, the driving force behind a brand, project creators will be able to create a unique community of like-minded individuals. Each campaign is set for a goal amount of money and a fixed number of days. Once the project is launched, each day will be counted down and the money raised will be tallied up for visitors to follow its success.

Instead of traditional investors, crowdfunding campaigns are funded by the general public. Typically, most successful startup fundraising efforts receive about 25-40% of their revenue from their first, second and third degree of connections. This could include friends, family, work acquaintances, or anyone that the owner is connected to, including their second and third degree connections. Once a project has seen some traction, unrelated consumers start coming out of the woodwork to support campaigns they believe in, but you must have a story that appeals to people, such as for the car wash, your business is involved in developing the community (sounds lame, but you get the idea). You may want to launch the campaign with pre-arranged contributions that are made immediately with the launch.

Here is a list of the top 25 crowd funding services, http://fitsmallbusiness.com/best-crowdfunding-sites/

This is a very cursory review of how to buy assets, but the references should really help you get a better view of how it’s done and hopefully, why you should buy assets, at least one new asset a year.

LIVING WELL WITHOUT A SOCIAL SECURITY NUMBER

Over the last 25 years I’ve been providing clients, friends, partners and subscribers with little pieces of the whole picture on how to live well without using any social security number. Now I realize that some of you are committed by having disclosed or associated a social security number with, at least, a driver license or professional license. The same is true of myself; however, I’m going to show you how to live well without associating a social security number that was assigned to your legal name. This will especially apply to my anticipated following of the “GenZ” or “iGen” demographic, people born between 2000 and possibly 2025. I know this time period may change somewhat, won’t matter. Let’s understand a few things about this social security number scheme. It’s a Nazi system of numbering people, it was described in the Bible, and so what. It was dredged up into our legal system by Eleanor Roosevelt, FDR’s wife, during his term as president. If you read your history well enough, you’ll discover that FDR was responsible for “The New Deal”. It was a collection of congressional acts, executive orders and federal regulations that re-organized the bankruptcy of the United States under Title 5 USC §552(a), otherwise known by two names, The Government Reorganization Plan or by the Administrative Procedures Act. I’ll leave the why and how for a later time, let’s focus on this numbering scheme.

First, no law requires anyone to obtain or use a social security number as a condition of living, working or even voting in any of the fifty states or the United States. If I can believe my congressman’s written word, I have a list of many letters from congressman over the last thirty years who have so stated.

Secondly, even if you have one, you are not required to disclose it, even on a tax return. This is very clear in 26 CFR Part 301.6109-1(c) “Identifying Numbers”. It states that only someone paying you must ask for the number. How many times have you been asked for a social security number when you are paying the one requesting? Federal regulations apply to federal agencies, not people, but this regulation only requires an officer, employee or elected official of the federal agency to request the number. It does not require anyone to actually disclose a social security number, even you are asking for federal benefits (Privacy Act of 1974). If the employee is going to pay you and you refuse to give the number, the regulation requires the employee to lie to you and tell you that disclosure is required. If you still refuse, the employee is then required to submit an affidavit so stating along with whatever forms on which your social security number was going to be reported.

Third, the social security number applies to officers, employees and elected officials of the United States; however, some of the states’ legislatures passed laws requiring the disclosure of the number for state privileges such as getting a driver license. I’m not sure if the Supreme Court would have upheld this or if anyone has ever challenged it, but it is not embedded into our society. Its use has become so pervasive that to stop using it literally requires a series of lifestyle changes, the degree of which depends on how much you want to rid yourself and your life of this fraudulent scheme. Let me tell you a bit more, just to get the blood pressure up if it’s not already. The fact that you are using this government number and associating with what you do throughout your life, allows a handful of elite individuals and organizations to move billions of dollars in the form of securities through your social security account everyday, and enables bond holders to name you as the guarantor and collateral on debts and security they create for their own profit. Yes, you are a slave if you are associating this tax number with what you do throughout your lifetime and if you got your children a social security number and claim them as a deduction on your tax return, you’ve done the same to them before they were even of legal age. It’s a form of human trafficking.

The number itself is 9 digits; therefore, there are 10 combinations per digit, for a total of 10 to the 9th exponent of combinations, or 1,000,000,0000 (a billion) combinations. The program began in 1933 or 1934 and apparently, no number is permitted to be issued more than once. We now have one-third of a billion people living in the United States and easily that many social security numbers being used by everyone, except a few people like myself. Go back 40 years and that’s another one-third of a billion numbers being used. Then consider how many 9 digit tax numbers have been assigned to illegal aliens, trusts, corporations, estates, etc. We are well beyond over a billion numbers in use, not to mention that blocks of them cannot be used as they are reserved for government purposes.

The way the IRS and Social Security Administration avoid confusing files as they are indexed by social security or EIN or TINs, is to use the first four letters of a taxpayer’s last name and concatenate them onto the end of his SSN. For example, William B. Smith’s SSN is 666-00-1234, so his individual master file at the IRS would be 666-00-1234SMIT, a total number of combinations equal to 10 to the 9th power times 26 to the 4th power, problem solved.

I believe the best way to explain how to live well without a social security number is to give you actual case examples of how I’ve done it and how I’ve helped others do it. In my case, it’s plenary, including every aspect of my life. Like I said, it is a lifestyle change, and I can’t expect everyone to simply adopt all of it overnight, so I only focus on one immediate situation.

At Birth

The first example is how to bring your children into this world, with a traditional birth at a hospital, without a birth certificate and without any social security number. I did this five times for my family. I even brought my wife here from Europe, legally of course, and she was never forced to get a social security number. Here’s how you do it. We all know it’s an exciting time, having a child. We get over nine months to prepare and in that time we get to decide on a name. Remember that a name is what you call yourself, not necessary a series of letters on a birth certificate or government document. The last time I checked, we still have the right to freedom of expression, even without the Constitution. In any case, after that wonderful moment when you’ve given birth to your new baby, and all of the nurses and doctors congratulate you, a short time after, you will receive an uninvited visitor from the Department of Health. Let’s call her the tax collector.

The tax collector can only collect taxes on the new child with the help of an informant. Who is the informant? It’s your mother. But you don’t have to be an informant because your child is not a new taxpayer, and he is not collateral for the national debt, nor is he an article of commerce. But I prefer to be kind and courteous. So when the tax collector comes into the room, uninvited, with that fake smile and a clipboard, and asks the informant to inform by telling the name of the new baby, you simply respond by saying something like this, “You know, we just cannot agree on any name at this point, not sure when we will.” and just leave it at that, until that awkward feeling comes and then continue to hold, and watch the tax collector simply leave. Now the tax collector may try to get you to come up with a name right then, like I said, leave it at that, change the subject, ask her to leave because you’re tired, etc. And say it with a smile.

The trick here is to never use the baby’s name at any time during your stay. I would say it’s best not to use your legal name when you check into the hospital in the first place, but that would be very difficult for many people, especially with insurance, etc., and it’s not necessary. The tax collector will either not prepare any birth certificate, or will prepare one with the first name being “Baby” and if it’s a girl, middle initial will be “G.” and a boy “B.”, and then use the mother’s last name as the last name on the birth certificate. That’s okay, remember, it’s not yours or your baby’s, unless you claim it someday and use it for something. The reason we claim ours is to get passports but I have discovered that this was not necessary. We are just talking about the social security number though. Because you did not give a name, inform, the tax collector will not file an SS-4 in your child’s behalf. This is illegal, or it should be, but the trend over the last 20 years is for the tax collector who prepares the birth certificate to also submit an SSN application.

Whenever you’re asked for a social security number for your child, or given a form, use 000-00-0000 in place of any number. Do not use all nines or anything but these zeroes. If anyone asks, explain that he or she has no number and no law requires you to get a number for your child. You can also cite the regulation from earlier in this article, I’ve never had any problem with this and it usually makes for an interesting conversation.

Mobile Phone

Next I’m going to show you how you can get a credit file without a social security number, but keep in mind that you may want to do as many things as you can even without a credit file. On the mobile phone, apply for a two year contract with no credit file and no social security number. Use all zeroes on the application. There is a chance you will get the contract, or maybe you’ll have to make a large deposit, like 25% in order to establish a file with the carrier, but once you do, it’s good for as long as you pay the bill timely. If this is a problem, don’t get a two-year contract, use a month-to-month service and buy the phone, there are many options. Many people believe they can’t do this before they have even tried. Try getting a mobile phone contract or the service you want using the zeroes on your application, see if that works or if you need a larger deposit or to pay for the phone, the deal can be made, and don’t get frustrated in the process, it can be done. I’ve done it many different ways and many people I have helped always get what they want.

Renting a House

Renting a house is probably easier than renting an apartment and over the next few years it will become easier to find all kinds of rental deals and owner financing and lease options, without using a social security number, but more importantly, without using a credit score. Some markets are more difficult than others, but for the most part, you will be able to find a house you like and sign a lease agreement without a social security number. The difficult ones are usually property managers or corporate owners, they have strict policies that the employees will not be willing to dodge in order to get you into the lease. This becomes a numbers game, instead of looking at four deals and choosing one like most slaves with good credit, you might need to look at 20 deals before you choose one.

You want to talk with the owner, show him your bank statements or whatever will make him satisfied that you can pay and will pay the rent on time. Come with written references from previous landlords or employers or neighbors. Offer to pay two or three months’ rent at signing, plus deposit. We did this in a hot market, but my wife showed up the minute the first showing began and spoke with the owner. After a very nice conversation about nothing really important, the owner told my wife that she seemed like a nice person and that she wanted to offer her the lease, and that was with about four other prospects standing next to her. We discussed it over the phone for a few minutes and then accepted, and when it came to time to sign, the owner didn’t even care if I signed the lease. That was over a year ago and we’re still here on month-to-month terms. This is one example of fifty or sixty we’ve done over the years.

Buying A House

Would you believe that renting an apartment without a social security number or a credit check is more difficult than buying a house the same way?

You’re not going to get a traditional bank loan and I don’t recommend that as the best form of financing. Instead, you’ll want to seek financing from the seller using an owner financing deal or more specifically, a lease with an option to buy contract. I’ve done this many times and worked with people in many situations to do this. It does help to determine what the seller needs (not wants) before you make your offer. Maybe he just really needs $10,000 now and can live with that and give you short term financing. In the next few years, you will find this deal to be trending, but many investors have used it as a staple over the last thirty years, at least from what I’ve seen.

Agents and attorneys are usually the type of people that don’t know how to market themselves and rely on their professional status alone, as a substitution for competence, in other works, they usually screw up deals. Get around them, get them out of the way, or just minimize their involvement. You want to talk with the seller, find out what he needs. Maybe you will need to make a larger down payment, or ask for a short term owner financing deal, or include an options contract. Maybe you can find someone to match your funds with the down payment and then buy him out later. And you don’t do this because you have bad credit or no credit, or don’t want to use a social security number; you want to do this because it’s the way we are supposed to make deals, without interference from our government or other creditors or the corporate system. Set up the deal so that everyone’s interests are protected and you will get it. Yes, it will be more difficult in a popular market, where listing are short term, but the trend is a deflating market, so your time is coming.

Another really good reason to avoid putting your name on the title to real estate, and use an options contract for this purpose, is so you don’t “go down with the ship” when the market tanks. You can exercise your option for the fair market value when the seller is screaming for you to heal his pain as he watches the market dive down each week.

Credit

How do you get credit without a social security number? I decided to explain this to you now, it will become very useful, but I’m going to caution you not to replace your addiction to personal credit with this new understanding.

The social security number has a certain format and the manner in which the numbers were generated including groups being assigned by state, and then in sequence. The algorithm was developed by the Navy, but it’s not important that you understand the details here. Basically, because no law requires anyone to have a social security number, and establishing credit does not require a social security number, you simply need a nine digit number to be associated with your name and address and manage it in a way so that it will not be merged with your previous file that has a social security number, or anyone else’s for that matter. Sometimes this happens, so you just have to know how to correct it and manage that file just like you manage any other financial matter. You can do this because it’s legal and because you are not cheating or defrauding anyone. Keep in mind however that if you use this technique to cheat someone, or commit a crime, using this type of number for your credit may be considered an element of the crime.

You would not be using someone else’s number intentionally, as everyone’s number is already being used by someone or something else, at least once. So again, just be sure that the person who was issued the number you are using for your credit cannot have his credit file merged with yours, and this is easily fixed if it ever happens. It can simply be disputed for accuracy. You will never need to show a social security card to do this, and if anyone asks, you can show other records proving that your name is what you say it is and by implication, this is your correct credit file number.

Credit Cards

The most common way I’ve done this over the years is to simply create a new credit file without the assigned social security number, build the credit and then use it just like you did the first time. It’s then very easy to get unsecured credit cards, just like you did when you first started getting offers in the mail.

Bank Account

Once you have a credit file without a social security number, and have verified that the number has not been reported to the death index, you will be able to open a bank account with yourself as a signer. You just won’t be able to show a social security card with your name and that number, and don’t try to make a fake one. If this is a deal breaker for the bank, find another bank.

A more sophisticated, and slightly more costly, way of getting access to a bank account is to have an attorney on annual retainer where he signs for you as trustee for a trust he’s written for your banking purposes. Explain to the attorney you don’t use an SSN and are frequently out of the country and you need “someone you can trust” to sign on the account. Some attorneys will not be willing to do this, but some of them provide this as part of their service, you’ll have to shop around. And, no, you cannot trust any attorney; however, they are bonded and you can require additional bonding and avoid giving them access to much money at any one time and you should be fine.

Buying A Car

Most of the situations I’ve solved were for people who needed a car for practical reasons, driving to work, grocery shopping and school. In nearly every case I’ve recommended simply saving the cash and paying yourself regular payments until you have more than half of what you need for a car. Buy a reliable used car from a local dealership. See if you can pay for it with the cash you’ve saved and then a short term loan, say 24 months, and drive today. There are many variations of this, but we are heading into a time when there is an enormous glut, especially in the used car market, and many dealers will take this deal. Don’t be desperate, there is a deal somewhere, if you are not comfortable with one, just walk away. But you can buy a car without a social security number and without credit. My mother did something like this once time, she bought a Toyota Camry, and her credit was the worst, but because she made the payments on time, the dealer sold her one or two more of the newer models over the years.

Utilities

I like to open utility accounts in several different ways. I’ve had to figure this out over the years in order to solve specific problems, such as people needing to hide for fear of their lives, or who were the target of an unfair collection that precluded them from getting a utility account like most people.

If you are not going to give your credit file information, the utility company will try to coerce you into disclosing it, but ultimately, you will simply have to make a larger deposit. That’s the simple example. But let’s take this a step further, what if you wanted a utility account in a fictitious name? It’s about the same, larger deposit, and either avoid producing a copy of your government identification, or use an acceptable form of identification that you can create and will not be considered a “phony ID”, such as a “W-2 statement” or an International Driving Permit” (IDP). You’ll have to ask me about this because it’s not common to find a service that will provide those without a driver license from some government. Another legal way to make it appear as if your name is something other than what appears on your driver license, birth certificate or old credit file, is to set up a corporate (I prefer an LLC) bank account with a “dba” in that fictitious name, and then get a debt card with only that fictitious name on it, as the business name. For example, XYZ Company, LLC dba “Bill Smith”, and Bill Smith shows on your debit card for the account.

Car Insurance

The insurance company will act like a bank, so if you can open a bank account with no SSN, you can get car insurance in the same way; however, I like to take it a step further. It’s not for everyone though, as I’ve said before, you can have your privacy, if you have the stomach for it. I prefer to carry my own car insurance. I set up a company and created a balance sheet for it along with an annual insurance card that I print each year. This is known as “self insurance” and in Florida it has a code “11111”, so that appears on my card and both my wife and I are covered under it. Assuming that statutes apply to people for a moment (don’t want to get too far off topic), the law does not require you to have insurance and pay an insurance company regular premiums and then be liable for whatever someone can sue you for; not at all, the law only requires that you carry with you, “proof of financial responsibility”. And while you really should have the ability to pay if you are responsible for damage and injury, no police officer on the scene is going to audit your balance sheet. He’s just going to accept your insurance card at face value and do his job.

But this is very basic, only comes into play if one of us is found to have injured someone and has to pay. We have enough liquidity on the balance sheet that we could pay, but we would never pay $1,000,000 for example. We only have enough to pay up to the statutory requirement, $40,000. And if we did that, we’d have to replenish the balance sheet to be considered having “financial responsibility” once again. Additionally, if someone scratches your car, steals it and it’s never recovered, or you total it yourself, your company is liable, cash out of pocket. I’ve done this for twenty years without any problem, and I’m a careful driver and so is my wife. I’m betting that if I’m in a wreck, it’s going to be the other guy’s fault and his insurance will pay. You still have one more serious concern however.

What happens if you get into a crash, it’s clearly the other guy’s fault and either he doesn’t have insurance or his policy won’t cover your injuries and you are out of work and in the hospital for months? Getting an auto policy for this reason alone would defeat the purpose and what I call the benefits of being self-insured. You will want to research this for yourself as you might be able to get a homeowners policy or some other type of risk management to offset such a risk. You might also be able to get the type of automobile policy that someone who doesn’t own a car could get, someone who is in town only intermittently and rents a car. It’s one of the areas I haven’t explored very much, but worth the time because this is a serious matter, we’re not trying to trick the system, but only wanting to avoid being exploited by the social security number and banking system.

Doctor Visits

Whenever you visit the doctor, chiropractor, dentist, acupuncturist, hospital and these types of health car professionals, you are not only asked for a social security number, but proof of your identity using a “government photo ID”. This is just plain and simple surveillance, but the doctor does need to know your age, within a certain number of weeks at least. Remember that for most of you reading this, you will have used a social security number to get a driver license and you will use that for identification. If you are using a driver license for anything other than a traffic stop, you need an IDP or passport or something without any connection to your DMV, via your DL number. I’m saying it this way because it’s your DL number and/or the magnetic stripe on the back of the card that gives merchants access to your entire DMV file, trust me, you don’t want to know what’s there or you’ll really be angry (think Nazi surveillance state).

In any case, if you’re not yet using a passport, either a United States passport or one from another country, or an IDP, and the service insists on you providing a government issued photo ID, use a color photocopy of your DL. Make this copy before you go to the doctor or have a few copies handy in your car or a paper file in your home. Make a color copy, then use a black marker to redact the DL number and your date of birth. Then make a color photocopy of this redacted version and be sure this information is not visible. Use that as your ID.

If the office gives you a difficult time, use this explanation. I’ve been a victim of identify theft in the past and my attorney told me never to use my driver license for ID except at a traffic stop. He said if anyone insists on seeing my original DL, that I should ask for his data retention policy and a written explanation of what liabilities and insurance coverage the requesting party has for securing my records. Once I get this information, he said I should call him and come to his office to show him how my information is going to be protected by the service that’s requesting it.

You are actually saying, my attorney wants to know how you are going to indemnify my client against any misuse or unauthorized access to his information. Sometimes these people get smart and ask to speak to your attorney directly. Explain this, he said if you are asked to speak to me directly, explain that our retainer agreement doesn’t cover this type of involvement and that his hourly rate is $350 to answer questions and please make an appointment.

You should never have a problem. Sometimes I don’t even do these things. If someone asks for proof of my identity, I just explain that I am who I say I am, do you suspect I’m lying? I also pay for visits with cash, sometimes a credit card, but it should be no problem to use your insurance carrier as well, same scenario.

Remember, I said to redact your date of birth? But the doctor needs to know your age in order to give you medical advice or treat you in many cases. He doesn’t need to know your actual date of birth. So change your date of birth by a few weeks or months, and remember what date you did you with that physician’s office. In some cases, your social security number can be obtained simply with your full legal name and date of birth and some companies will get that information. Yeah, it’s probably illegal, but this system is so broken that even illegal things like surveillance of private citizens by anyone, government, companies, etc. has become an acceptable practice.

This is another reason I use an alias with these services, and I either get around showing ID, or I use an IDP, a debit card or other means to establish that the name I’m using is my name. Most of the time, when asked for a DL or ID, I explain that I didn’t bring it, or it’s in the car. Sometimes, whoever is asking for it, will ask me to go get it. Sometimes I say I don’t have it at all, even if it’s obvious that I drove, then explain I’ll be sure to bring it next time. Sometimes the office forgets to ask me again, and sometimes we have the same conversation, and then sometimes, I don’t need to continue visiting that office because I’m usually in good health. I didn’t give you all the answers here, just plenty of means and references to think through these situations.

Passport

If you already used an SSN to get a United States passport, you’re stuck with it, just like with the DMV records and the DL; however, if you have not, now is the time to get a U.S. Passport with no SSN. Just use 000-00-0000 on the application. Yes, there is a notice that you could be subject to a fine for not disclosing one. Keep this in mind, no one using an SSN actually “owns” or “has” an SSN. It’s a government number, that’s why it cannot be revoked or surrendered, it’s not yours, it’s the government’s. Also, the use of the number was never assigned to you, a human being. It was assigned to a security, or evidence of a security, known as a birth certificate and the common label on that certificate which looks just like your name, but it’s in all capital letters. This is not your name, anymore than someone who shares your name is not using your name, it’s his or hers because it’s being used to identify he or she but not you.

In any case, a new federal law was passed in the last days of Obama’s term that required employees of a federal agency known as the Surface Transportation Board to disclose a social security number with a passport application if the IRS had served notice on the agency of the employee’s tax liability that was in excess of $50,000. The Department of State is now trying to use this law to preclude anyone from renewing or getting a U.S. Passport who does not disclose a social security number. Assuming there is a legal mandate, which there is not, as I’ll explain, it only applies to employees of the Surface Transportation Board if their agency has received a notice of the assessment of an unpaid tax liability from the IRS in excess of $50,000.

I’m going to save you the legal research, just understand this. I have found no implementing regulation for this law, meaning even though there might be a statute for this, there is no agency regulation that makes it binding for the employees. And remember, it’s only for agency employees where their employer has been served notice of an assessed and unpaid federal income tax liability exceeding $50,000. Assuming it even applies to them, it certainly does not apply to people who are not employees of this agency. Additionally, this is a due process and right to travel issue. The government cannot restrain or impede your right to travel because “you don’t have” a tax number, or because you didn’t pay a certain tax. In fact, you can travel internationally without a passport, to and from the United States, but that is another subject. If you renew your passport via mail and are denied because of this issue, applying in person should resolve it, just explain that you don’t have a social security number and are not required to go get one. One that thing that is very important, DO NOT sign any additional documents, such as an affidavit stating that you don’t have a social security number. The passport application is already made under penalties of perjury and you are not required to sign additional affidavits, especially those you didn’t write in your own words, restating the same things you stated on your original application. If you sign such a document, after having already submitted a correct and complete passport application, the agency will impose whatever ad hoc rules it wants and you will have no legal defense or protections. Again, I’ll spare you the legal memorandum.

It’s important to remember that if you truly want to do things without a social security number, remember these basic principles, and that with some organizations or individuals, it’s enough to disclose your legal name and actual date of birth, and this can be used to obtain your SSN. Of course it’s not legal, but again, you’re dealing with people that usually thing anything the government does is okay and why should you care if you’re not doing anything illegal.

CONCENTRATED SOLAR POWER

Concentrated solar power (also called concentrating solar power, concentrated solar thermal, and CSP) systems generate solar power by using mirrors or lenses to concentrate a large area of sunlight, or solar thermal energy, onto a small area. This is a scalable technology, however, the larger production appears to be the most efficient use of the related technology.

Concentrating Solar Power (CSP) Basics

Many power plants today use fossil fuels as a heat source to boil water. The steam from the boiling water spins a large turbine, which drives a generator to produce electricity. However, a new generation of power plants with concentrating solar power systems uses the sun as a heat source. The three main types of concentrating solar power systems are: linear concentrator, dish/engine, and power tower systems.

Linear concentrator systems collect the sun’s energy using long rectangular, curved (U-shaped) mirrors. The mirrors are tilted toward the sun, focusing sunlight on tubes (or receivers) that run the length of the mirrors. The reflected sunlight heats a fluid flowing through the tubes. The hot fluid then is used to boil water in a conventional steam-turbine generator to produce electricity. There are two major types of linear concentrator systems: parabolic trough systems, where receiver tubes are positioned along the focal line of each parabolic mirror; and linear Fresnel reflector systems, where one receiver tube is positioned above several mirrors to allow the mirrors greater mobility in tracking the sun.

A dish/engine system uses a mirrored dish similar to a very large satellite dish, although to minimize costs, the mirrored dish is usually composed of many smaller flat mirrors formed into a dish shape. The dish-shaped surface directs and concentrates sunlight onto a thermal receiver, which absorbs and collects the heat and transfers it to the engine generator. The most common type of heat engine used today in dish/engine systems is the Stirling engine. This system uses the fluid heated by the receiver to move pistons and create mechanical power. The mechanical power is then used to run a generator or alternator to produce electricity.

A power tower system uses a large field of flat, sun-tracking mirrors known as heliostats to focus and concentrate sunlight onto a receiver on the top of a tower. A heat-transfer fluid heated in the receiver is used to generate steam, which, in turn, is used in a conventional turbine generator to produce electricity. Some power towers use water/steam as the heat-transfer fluid. Other advanced designs are experimenting with molten nitrate salt because of its superior heat-transfer and energy-storage capabilities. The energy-storage capability, or thermal storage, allows the system to continue to dispatch electricity during cloudy weather or at night.

There’s more than one way to make good use of the Stirling cycle. Just ask the engineers at Infinia, Kennewick, Wash. They use it in both their PowerDish, a device already on the market that turns sunshine into electricity, and StAC, an innovative air conditioner that has earned development grants from the government. Both exemplify energy efficiency and sustainability.

PowerDish

In the PowerDish, heat from the Sun drives a free-piston Stirling power generator, an external combustion engine. A 161.5-ft2 parabolic dish made of mirrors bonded to curved sheet-molding compound reflects incoming sunlight onto a concentrator at the dish’s focal point. The mirrors are currently made of un-coated high-reflectivity glass and Infinia engineers see no need to add costly coatings at this time. Sunlight gets concentrated in an 800-to-1 ratio, which would raise the temperature at the heat-resistant nickel-alloy concentrator to 2,000°C if the Stirling generator didn’t extract heat from it and keep it at about 650°C, says Tim Talda, Infinia’s director for system electronics and controls.

You can learn more about this technology at: http://machinedesign.com/energy/infinia-uses-stirling-cycle-solar-power-and-air-conditioning. The company was bankrupted but the technology is still viable.

Solar Trough

A parabolic trough is a type of solar thermal collector that is straight in one dimension and curved as a parabola in the other two, lined with a polished metal mirror

Concentrating Solar Power (CSP) technologies use mirrors to concentrate (focus) the sun’s light energy and convert it into heat to create steam to drive a turbine that generates electrical power.

CSP technology utilizes focused sunlight. CSP plants generate electric power by using mirrors to concentrate (focus) the sun’s energy and convert it into high-temperature heat. That heat is then channeled through a conventional generator. The plants consist of two parts: one that collects solar energy and converts it to heat, and another that converts the heat energy to electricity. A brief video showing how concentrating solar power works (using a parabolic trough system as an example) is available from the Department of Energy Solar Energy Technologies Web site.

Within the United States, CSP plants have been operating reliably for more than 15 years. All CSP technological approaches require large areas for solar radiation collection when used to produce electricity at commercial scale.

CSP technology utilizes three alternative technological approaches: trough systems, power tower systems, and dish/engine systems.

Trough Systems

Trough systems use large, U-shaped (parabolic) reflectors (focusing mirrors) that have oil-filled pipes running along their center, or focal point, as shown in Figure 1. The mirrored reflectors are tilted toward the sun, and focus sunlight on the pipes to heat the oil inside to as much as 750°F. The hot oil is then used to boil water, which makes steam to run conventional steam turbines and generators.

These are utility scale solar power systems. They require land, permitting, grid management, employees, taxes, insurance and all the usual conditions for a mid-level business structure. There are many of these projects underway and ready for new investment capital and expansion and it makes perfect sense to join with existing businesses in this area.

Another very promising species of this concept is the use of concentrated solar with photovoltaic power generation. The global market for concentrated photovoltaic (CPV) systems is on the verge of explosive growth, with worldwide installations set to skyrocket 750% between 2013 and 2020, according to a report published on Tuesday by market research group IHS.

IHS is a global information company with world-class experts in the pivotal areas shaping today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. It employs more than 8,000 people in more than 31 countries around the world.

In the new IHS Report, Concentrated PV (CPV) Report – 2013, IHS predicts CPV installations will rise to 1,362 MW in 2020, up from 160 MW in 2013. Indeed, installations are expected to expand at double-digit percentages every year through 2020.

CPV technology employs lenses or mirrors to focus sunlight onto solar cells. While this allows for more efficient PV energy generation, the use of additional optics for focusing sunlight has also driven up the cost of CPV compared to conventional PV installations, limiting the acceptance of concentrated solar solutions.

The situation is changing rapidly, however, as advancements in CPV technology are reducing costs.

“What is happening in today’s CPV market is very similar to that of the overall PV space in 2007, beset by high costs and an uncertain outlook,” said Karl Melkonyan, photovoltaic analyst at IHS. “However, the CPV market in 2013 is on the verge of a breakthrough in growth. Costs for CPV have dropped dramatically during 2013 and are expected to continue to fall in the coming years. Furthermore, when viewed from the perspective of lifetime cost, CPV becomes more competitive with conventional PV in large ground-mount systems in some regions.”

Prices for CPV are retreating as manufacturing processes progress down the learning curve.

Average installed pricing for high-concentration PV (HCPV) systems are estimated to have decreased to $2.62 per watt in 2013, down 25.8% from $3.54 per watt in 2012. Rising volumes and improved system efficiencies are driving the decline, according to the report, which adds that prices will slide further at an annual compound rate of 15% from 2012 to 2017, falling to $1.59 by the end of 2017.

Taking lifetime costs into account

In the conventional PV market, cost analysis predominantly focuses on the module price-per-watt and the total installed cost-per-watt, IHS points out. When comparing the installed cost-per-watt of conventional PV to CPV, the cost of conventional PV is significantly lower.

“This is mainly due to the higher panel cost of CPV, given that CPV suppliers have yet to achieve the economies of scale, as well as a better balance of system and installation cost, because of the required tracker system,” IHS says.

“To be sure, conventional PV has a lower upfront cost and appears to be a more attractive option based on upfront system costs. However, this does not take into account the overall cost of the system over its lifetime, nor does it consider the energy yield of the system.”

Instead, the report adds, it is important to compare the levelized cost of electricity (LCOE). The LCOE estimates the cost of generating electricity at the point of connection, dividing the total lifetime system costs by the total energy produced over the system’s lifetime.

“Such a calculation is also necessary in order to compare the competitiveness of PV and CPV with that of conventional power generation.”

Using the LCOE, IHS predicts that system costs for HCPV will remain low enough to compete with conventional PV for large commercial, ground-mount systems in target regions. These are the areas with hot, dry climates and high daily irradiation at more than 6 kilowatt-hours per square meter of direct normal irradiation.

Power generation with solar tracking systems : CSP vs CPV vs Flat PV

Manfred Armoureux Blog

The following is a comparison of CPV (concentrated photovoltaic) to CSP (concentrated solar power), more properly called concentrated thermo-electrical solar power to flat PV with solar tracking.

CSP (concentrated solar power), more properly called concentrated thermo-electrical solar power

 

and flat PV panels with solar tracking

First, I should make clear for you that each one of those categories actually encompasses different sub-technologies. Solar tracking may be along one or two-axis. In particular, the CSP technologies show a great deal of variety between Fresnel, parabolic trough, parabolas and central receivers (there is plenty of literature available around there). CPV systems are usually not as well known but there is also very different systems : inflatable parabolas (Cool Earth Solar), Fresnel lenses (Concentrix solar), parabolic trough (Exosun), panels of small parabolas (Solfocus) and I am probably missing many other companies.

Notwithstanding these differences, I chose to distinguish only the 3 categories  mentioned above.

Flat PV vs CPV

We start with the easiest comparison.

Cons of CPV compared to Flat PV:

  • you only capture the DNI (direct normal irradiation)

Pros :

  • Price per peak watt, given that your concentrating systems costs less per unit of surface than the PV cells.
  • If your do cogeneration of heat using the (absolutely required) residual heat of cooling system, it is much easier to achieve significant temperatures (i.e. 60ºC)

So choosing CPV instead of flat PV can be summarized in two short questions :

  • How much radiation do I loose because of diffuse radiation and how much cheaper per unit of surface is my CPV compared to flat PV ?”
  • Could I use most of the residual heat ? Does it have an economic value for me ?”

CPV vs CSP

CSP systems are great toys for engineers : they are complex and require a very multidisciplinary knowledge. However, that engineers enjoy working on them is not what will make them successful on the market.

The main advantage of CSP compared to CSP is its capacity to produce also during night time (using thermal storage). Unfortunately, as far as I know, there is no country giving any special incentive for this. Thus, to the investors, it is irrelevant.

The other advantage is that, at the present time, big CSP power plants are able to produce electricity at a cheaper cost than CPV. However, CPV systems are more recent and prices may go down in the future as experience is gained.

Cons of CSP compared to CPV :

  • Not very scalable (although some organizations are working on the smaller end of the power range)
  • More maintenance leading to more O&M costs for small plants.

Pros :

  • Lower costs if you can reach  a size big enough.
  • Capable of operations during night (but as stated earlier, it may not be valued economically).
  • Possibility to do co-generation with higher temperatures (above 100ºC). This has not been exploited much so far, but there has been enough research suggesting that industrial applications are possible.

PV generators are quite uninteresting for engineers : it is almost too easy. But that is exactly what makes the beauty of it. The cost PV also already decreased seriously these last years and will carry on. On the other hand, that cost decreases are possible in CSP is not yet a clearly established fact .. but many companies are betting their money on it.

You can see more images of these and related devices by searching google.com for the term “image of concentrated solar pv”.

Third attempt for Dish-Stirling, Infinia’s Tooele plant goes ahead

By CSP World on 12 June, 2013

Infinia Tooele Dish-Stirling plant

Infinia Corporation has announced it has begun commissioning the first of seven commercial-scale PowerDish™ installments currently underway at the Tooele Army Depot, a U.S. Army installation in Utah, USA.

This project is likely to be the third attempt to commercially deploy the Dish-Stirling technology. The 1.5 MW solar power plant that includes 429 PowerDish units will be the largest Concentrated Solar Power plant to use the Dish-Stirling technology, after the decommissioning of the Maricopa Solar Project, a 1.5 MW Dish-Stirling plant developed by a consortium made of Tessera Solar and Stirling Energy Systems.

The Dish-Stirling technology has always been seen as the most vulnerable of the Concentrated Solar Power technologies to falling prices of photovoltaic modules due to its similarity with it, in terms of intermittent generation and non availability of cost competitive energy storage system. Despite of this, Tessera Solar built the 1.5 MW Maricopa Solar Project as a demonstration project for further planned large-scale plants of nearly 700 MW. Unfortunately, Stirling Energy Systems filed for bankruptcy, the pilot project was decommissioned and auctioned and the planned projects were turned to photovoltaic plants or withdrawn.

Another attempt occurred in Spain, Renovalia tried to deploy this technology with a pilot plant and up to seven commercial plants announced. After the decision to change its technology provider, Infinia, to another company -a fact that was announced as ‘the 3rd generation CSP is here’-, and expected changes in the regulatory framework of Spanish CSP sector, the company withdraw the projects.

Infinia has deployed, in a small-scale so far, its PowerDish product at numerous locations around the globe and is currently involved in two NER300 projects awarded by the European Commission. The Cyprus/Helios project includes a 50 MWe transmission-scale PowerDish deployment near the city of Larnaca where each of the 16,920 dishes will supply electricity to the national grid. The Greece/MAXIMUS project in the Florina region will have a total installed capacity of 75.3 MWe. The plant includes 25,160 PowerDish units composing 37 distribution-scale power plants, each connected to the grid via a single connection point.

“We are excited to mark this milestone in providing the Tooele Army Depot with a long-term, dependable clean energy solution,” said Infinia President and CEO, Mike Ward. “Given their need for secure energy, high performance and reliability, our PowerDish is ideally suited to help them optimize their sustainable energy goals and provide them with 30% of their electricity requirements.”

PowerDish is a parabolic dish with a unique free-piston Stirling generator that converts the sun’s heat into grid-quality AC power at 34% efficiency. The PowerDish uses no water, and can be deployed faster than other concentrating solar thermal technologies.

“Infinia has been a leader in free-piston Stirling technology for more than 25 years,” said Jos van der Hyden, Infinia Chief Commercial Officer. “The maturity of this technology combined with our lean manufacturing expertise creates a compelling message that resounds with our customers and is setting the tone for our expansion in the European solar market.”

The European Commission’s strict eligibility criteria for awarding these projects is similar to the high standards Infinia is required to meet for the U.S. Army Corps of Engineers, and includes proven innovative technology, scalability, and on-time delivery. “We are confident our free-piston Stirling technology will help create a lasting impact as we move forward to help the EU meet its aggressive renewable energy goals,” added Van der Hyden.

STIRLING ENGINE AND RENEWABLE APPLICATIONS

Heat of Your Hand Stirling Engine

The elegant MM-7 is a beautiful conversation piece for your home or office. It will run indefinitely on your warm hands, or on top of any electronic device that generates sufficient heat. It will even run on the bright sunlight shining through your window. It only requires a 7.2°F (4°C) difference between the top and base plates. The MM-7 makes a unique gift for that special person who has everything. Amaze your friends, your family, your co-workers, or just yourself!

The Stirling engine

The Stirling Engine (from the name of the inventor of the first example built in 1816, Rev. Dr. Stirling) is an external combustion engine.

Its operational principle is extremely simple: a constant mass of gas is contained inside of the cylinders, which when heated expands and when cooled contracts, pushing the piston with alternating force or upwards or downwards. As a function of the cylinder displacement, the speed with which the thermal exchange takes place and the temperature differential between the maximum heat and the minimum cold the power produced varies (these are only some of the variables at play).

Stirling Engines may be divided into three main categories:

1 – ALFA: engine with two 90° opposed cylinders, one cold and the other hot;

2 – BETA: engine with one power piston and a displacer piston in the same cylinder;

3 – GAMMA: engine with a power piston and a displacer piston in two different cylinders.

The main features that make the use of Stirling Engine advantageous are:

Any heat source may be applied to it: gas (even if produced by biomass) coal, wood, waste heat (i.e., produced by cooling plants), concentrated solar heat, etc., and also any of these combined;

Emissions are easily controllable and far less toxic than those from an internal combustion engines;

The engine structure does not require complicated maintenance procedures;

Noise emissions are extremely contained;

Residual heat, which is not used for the production of power, may be recovered and reintroduced in the water heating cycle, in this manner, increasing the total efficiency of the system.

In short, the Stirling Engine is quiet, user friendly and practically needs no maintenance. It may be powered by a broad variety of energy sources whilst it produces easily controllable emissions if any at all.

All of these features make it usable in any location and by anyone. Nevertheless, at nearly 200 years from its invention, this technology has found application only in very specific circumstances: it has been used for example by the NASA space agency on occasion of the most recent United States space missions; the Norwegian Navy has installed Stirling Engines on three submarines due to their particularly quiet operation; and finally some American companies have applied Stirling Engine prototypes to solar concentration energy production plants. Naturally these prototypes are not usable in the normal consumer market due to their elevated realization costs.

Possible applications

Anyone who needs to produce heat has above all the need to produce it efficiently (economically). To be able to produce electrical energy at the same cost and without the need to increase the power of the furnace with which heat energy is produced, without a doubt increases the efficiency of the plant.

Our market is therefore represented by all of those small or medium concerns that need energy: energy that these firms, either totally or in part, produce on their own and which in and of itself represents a significant cost and a critical resource.

There are situations in which none of the technological alternatives currently available on the market may be advantageously applied to the work being carried out. Furthermore, even compared to other forms of renewable energy production, the advantages of a range of Stirling Engines are evident: from the environmental and landscape impact, being basically null, to the lack of any long bureaucratic authorization procedures for the facility, going on to the certain economic return for anyone who intends on making the initial investment, given the quantity of energy produced.

Today, alongside the large power stations and the traditional distribution lines, ever more small, localized systems are working. These, combining the production of heat energy with that of electrical power, represent in many situations an efficient solution both from the economic point of view as well as that of energy availability.

The Micro-Cogeneration market is being extended and established, favored also by the new regulations surrounding it regarding the liberalisation of electrical energy production and in favour of micro-generation plants, making this type of technology ever more desirable compared to the traditional furnaces able to produce only thermal energy.

There are very many settings in which micro-cogeneration finds optimal conditions for application: practically all of those situations in which there is a need to produce heat energy for a prolonged number of hours over the year, such as, for example:

Swimming pools and sports centres, private health care facilities and hospitals, community centres, restaurants and hotels, rest homes, schools and dormitories, supermarkets, mountain community water purification plants, farm holiday centres, nature parks and reserves, ecology oases, mountain pasture retreats, mountain refuge cottages, green house farms, agro-food industries, dairies, pasta factories, tanneries, chemical-pharmaceutical industries, textile industries, wineries, distilleries, dye houses. In addition there are all of those concerns that may be found in areas that are under-developed in regard to the traditional power lines service such as, for example, isolated houses.

Stirling Engines may be combined with existing technology, or in any event, with those technologies available on the market, to transform them from a mere heat sources to co-generation plants.

The best example of the most recent utility scale application was by Infinia, and it’s use of the Stirling Engine with concentrated solar in a parabolic dish. I’ve detailed this technology in the next chapter.