There is a strong market in the transferability of IRA credits. However, be careful as there could be some unexpected state tax implications.

To fuel the market for IRA credits, proposed Treasury regulations provide that the purchaser will not recognize gain on its use of the credit for federal income tax purposes (which is not the case for all credits). However, in the weeds of state tax there is a trap for the unwary: Not all states will follow this federal relief provision, and some states may try to tax gain on the use of a purchased IRA credit.

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