The IRS recently stated it would consider allowing individuals to purchase renewable energy tax credits from companies. Ordinarily, passive loss rules apply to buyers, preventing individuals from utilizing tax credits in areas in which they are not actively involved against the individual's active income. Even if the IRS promulgates rules allowing individuals to purchase the credits, individual buyers would still have the same issues facing current renewable energy tax credit purchasers.

Currently, the Inflation Reduction Act of 2022 (IRA) allows companies to sell tax credits to third parties for cash. The proceeds are not treated as income to the seller. Likewise, the purchase is not treated as a deduction for the buyer. The IRA allows different tax credits to be sold: Continue reading >