You will receive an "allocation notice" in September of each year stating the capital credits allocated to you for the previous year. The allocation amount presented in the letter is not the amount the members will receive. The allocation amount is discounted using the Net Present Value Discounting (NPVD) method.
CAPITAL CREDIT ALLOCATION NOTICE - SAMPLE
NO ACTION REQUIRED
PURPOSE OF NOTICE
This Capital Credit Allocation Notice is sent in accordance with Internal Revenue Service rulings and the GVTC bylaws. GVTC operates on a non-profit basis. All operating revenues received by GVTC exceeding its operating expenses are allocated to the members in a pro rata manner based upon the capital that has been contributed by the member in relation to the capital contributed by all other members. This amount is referred to as the “Capital Credit Allocation Amount”. This also notifies each member of the amount of capital assigned to permanent capital during the 2019 Capital Credit retirement.
ELIGIBILITY
Only GVTC members are eligible for Capital Credits. Capital Credits are based upon the dollar amount of GVTC communication services, such as telephone and internet services, purchased by the member during the year.
CAPITAL CREDIT INFORMATION
Member No. 123456 2018 Capital Credit Allocation Amount $100.00
2019 Retirement amount applied to permanent capital (*NPVD) $ 70.00
What is NPVD?
This stands for "Net Present Value Differential. This is the difference between the total amount of capital credits retired and the amount actually distributed by check at the annual meeting or applied to your GVTC account. It represents the net present value discount amount for the time value of money retired. In other words, this equates a dollar being retired today to the value of a dollar retire in the future, typically 20 to 25 years in the future.
CAPITAL CREDIT DISTRIBUTION
This is NOT the amount of your next Capital Credit retirement. The GVTC Board of Directors will determine the amount of future Capital Credit retirements at a later date.
For more information or questions concerning your allocation,
please visit gvtc.com
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