What each credit is, who earns it, whether it is subject to recapture, and what a buyer's counsel will ask for. Section references are to the Internal Revenue Code as amended through Pub. L. 119-21 (July 4, 2025). This page is general information, not advice.
An eligible taxpayer may elect to transfer all or a portion of an eligible credit to an unrelated taxpayer for cash. The election is made once per credit, per year, on a facility-by-facility or property-by-property basis, and must be made before the seller files its return for the year the credit was determined. The cash is excluded from the seller's income and is not deductible by the buyer. Transfers to specified foreign entities are prohibited. For investment credits, the transferee bears recapture.
A number of states allow certain credits to be sold outright or issue them as certificates that may be transferred: historic rehabilitation, film and entertainment production, brownfield remediation, low-income housing and others. Each program has its own transfer mechanics, registration requirements and, in some states, broker registration. Whether a particular state credit can be placed, and on what terms, is confirmed program by program before engagement.
Questions about a specific credit or a specific transaction: contact Bjorklund Consulting.