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Internal Revenue Code Section 6418 (added by the Inflation Control Act of 2022) allows taxpayers eligible for certain clean energy tax credits, such as the Investment Tax Credit and the Production Tax Credit, to transfer those credits to third parties. is permitted to be transferred to the purchaser. in exchange for cash. You will need your registration number to transfer these credits. In December 2023, the Internal Revenue Service launched an online registration tool to obtain these registration numbers.
A partnership may transfer or acquire credits under Section 6418. The proposed regulations published in June 2023 include rules specific to credit transfers where a partnership is the transferor or transferee. Generally, if the partner of the transferee partnership is not subject to the passive activity rules (i.e., a corporation or other institutional investor), that partner can make the most of the purchased credits. Credit purchasers may not sell earned credits, but the allocation of earned credits does not violate this restriction, and credits are allocated based on who pays for them.
Because the rules regarding transferee partnerships are flexible, we expect that many partnerships will be formed to obtain clean energy tax credits under section 6418, and institutional investors may provide credits to those managing these partnerships. You will be able to ask for acquisition and management efforts and negotiations. Post-acquisition requirements.
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