April 18, 2018 Comments Closed

Tax Credits 101

Posted by:Beth Peterson onApril 18, 2018

Tax Credits “101”

  • TAX PLANNING/TAX SAVINGS: Many Fortune 500 companies purchase certificated state tax credits regularly as a part of their long term tax planning.  These credits allow Buyers to maximize tax efficiencies and save money on the bottom line, with no risk.  Most of the tax credits awarded under these programs are sold to other taxpayers.  Because credits are purchased at a discount, typically 90-95% of face-value, Buyers realize instant savings.
  • STATE INCENTIVE PROGRAMS: Certificated tax credits are offered under various state programs designed to incentivize investment activity within a state.  Targeted industries include film production, tech/biotech, historic rehabilitation, environmental remediation and others.   Most of the tax credits awarded under these programs are sold to other taxpayers.
  • UNIFORM PROCESS: Tax credit purchases are governed by the issuing state; however there is a measure of uniformity among the various programs.  TCI facilitates the entire process–from the purchase and sale agreement, through closing–allowing your team to focus on your company.  Once purchased, the tax credits may be claimed on the Buyer’s tax return to offset state tax liability.
  • RISK FREE: Most states have rules protecting bona fide Buyers from recapture or clawback.  Thus, if the credit is later invalidated, due to fraud or even mistake, the state looks to the original awardee, not the Buyer. 
  • TAX CREDITS INTERNATIONAL, INC.: Since 1999, our Professionals have placed over $1.25 Billion in various state credits.  We have longstanding relationships with all the major film studios, as well as many other companies that generate state inventive tax credits.  The result?  Access to a significant volume of tax credits throughout the US.
  • OUR BUYERS: Our buyers are typically Fortune 500 companies with multi-state tax liability. However, many are smaller, with capacity in just a stat or two.   Either way, purchasing state incentive tax credits is a win-win:  The Seller is able to recoup a portion of its expenditures, further incentivizing additional projects, and the Buyer is able to reduce its tax liability, while participating in a state-run program designed to stimulate economic activity and grow jobs!
  • GET STARTED: The initial meeting/call consists of a quick analysis of your company’s tax liability (aka “capacity” or “appetite”) in the states that offer tradable state tax credits.  After a brief overview of the “basics” of your relevant states, our Professionals go to work to identify appropriate tax credit purchase opportunities.

For more information and references, contact: 

Lisa Nadal, Esq:

Christine Peluso Esq:

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