Timing of Transferable Tax Credit Purchases

Transferable tax credits are a useful tool for profitable companies looking to manage their tax position. When buying transferable tax credits, however, companies must consider their tax year-end in conjunction with that of the seller in order to claim the credits correctly and to the greatest extent possible.

• Overview on the timing of when transferable tax credit purchases can be recognized by buyers.
• The tax year in which a buyer can claim a transferred tax credit depends on the tax year of the seller that initially generated the credit.
• Example scenarios depicting how the timing of tax credit recognition differs for buyers and sellers depending on various factors.
• Explanation of IRC §6418(d) in relation to the timing of tax credit generation and and transferee recognition.