On June 14, 2023, the Internal Revenue Service and US Department of the Treasury released temporary regulations and proposed regulations (collectively, the Transferability Guidance) relating to the transfer of certain clean technology industry federal income tax credits pursuant to Section 6418 of the Internal Revenue Code of 1986, as amended, which was enacted under the Inflation Reduction Act of 2022.
The Transferability Guidance sets forth extensive rules addressing credit transfer eligibility and application, including through partnership structures, as well as required registration, filing, and documentation for transferors and transferees to elect and claim a credit transfer. The Transferability Guidance should be welcome by industry and potential investor stakeholders as taxpayer favorable as to certain key issues and as providing needed certainty to unlock the market for credit sale transactions, which had been largely awaiting guidance on credit transferability before transacting. The Transferability Guidance does, however, provide broad requests for stakeholder comments and, in certain respects, leaves some unanswered questions on administrative requirements and on application of certain rules that should be addressed in future guidance.