Timing of Transferable Tax Credit Purchases

Transferable tax credits are a powerful tool for profitable companies who want to manage their tax and cash positions. When buying transferable tax credits, companies must consider their tax year-end in conjunction with that of the seller  to claim the credits correctly and maximize their value.

This articles discusses:

• 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
• Scenarios depicting how the timing of tax credit recognition differs for buyers and sellers depending on various factors
• IRC §6418(d) in relation to the timing of tax credit generation and and transferee recognition