Blog
On June 14th, the IRS released proposed regulations and FAQs outlining the rules for clean energy transferability. In part two of our two-part series to synthesize key takeaways, we have included answers to frequently asked questions that are most relevant to buyers of tax credits. Check out part one where we did the same for sellers of tax credits.
We are busily updating our tax credit platform for the latest guidance. For more information on the latest IRS guidance and its implications, and to discuss how you can buy or sell tax credits on the Atheva platform please feel free to contact us.
Yes.
See Prop. Treas. Reg. § 1.6418-2(a)(2) which provides, “An eligible taxpayer may make multiple transfer elections to transfer one or more specified credit portion(s) to multiple transferee taxpayers, provided that the aggregate amount of specified credit portions transferred with respect to any single eligible credit property does not exceed the amount of the eligible credit determined with respect to the eligible credit property.”
No.
See Prop. Reg. § 1.6417-1(h) which provides, “A specified credit portion of an eligible credit must reflect a proportionate share of each bonus credit amount that is taken into account in calculating the entire amount of eligible credit determined with respect to a single eligible credit property.”
Yes.
The preamble to the proposed regulations provides that “A transferee taxpayer may also take into account a specified credit portion that it has purchased, or intends to purchase, when calculating its estimated tax payments.”
See Proposed Treas. Reg. § 1.6418-2(b)(5)(iv).
A buyer must retain the following documentation provided by the seller for as long as the contents thereof are material in the administration of the tax laws.
See Proposed Treas. Reg. § 1.6418-2(b)(5)(v).
The buyer takes the credit into account in the buyer’s tax year that includes the end of the seller’s tax year in which the credit was determined.
For example, if a credit of the seller is determined on September 15, 2023 and both buyer and seller have a tax year that ends on December 31, then the buyer will take the credit into account for its tax year ending December 31, 2023.
If, on the other hand, the buyer has a tax year that ends on June 30, then the buyer would take the credit into account for its tax year ending December 31, 2024.
If, instead, the buyer has a tax year that ends on June 30 and the seller has a tax year that ends on December 31, then the buyer will take the credit into account in its tax year ending on June 30, 2024.
See Proposed Treas. Reg. § 1.6418-2(f)(1).
No.
See Proposed Treas. Reg. § 1.6418-2(f)(2).
No. A buyer is not limited under the at-risk rules. However, a seller’s ability to transfer the credit can be limited under the at-risk rules.
See Proposed Treas. Reg. § 1.6418-2(f)(3)(i).
Yes.
See Proposed Treas. Reg. § 1.6418-2(f)(3)(ii).
See Proposed Treas. Reg. § 1.6418-2(f)(4).
See Proposed Treas. Reg. § 1.6418-2(b)(5)(ii).
A buyer can use a purchased credit in the three years prior to the year in which it purchased the credit. See Proposed Treas. Reg. § 1.6418-5(g).
The IRS guidance on clean energy tax credit transferability creates new opportunities in the clean energy space. We'll keep this blog post updated with new information as we learn more. If you have questions on the IRS guidance or want to discuss how you can buy or sell credits on the Atheva platform, please contact us.
Atheva does not provide tax or legal advice and you are encouraged to consult with your own tax or legal advisor regarding any legal or tax matter discussed herein.
