View all text of Subchapter B [§ 6411 - § 6433]
§ 6418. Transfer of certain credits
(a) In general
(b) Treatment of payments made in connection with transferWith respect to any amount paid by a transferee taxpayer to an eligible taxpayer as consideration for a transfer described in subsection (a), such consideration—
(1) shall be required to be paid in cash,
(2) shall not be includible in gross income of the eligible taxpayer, and
(3) with respect to the transferee taxpayer, shall not be deductible under this title.
(c) Application to partnerships and S corporations
(1) In generalIn the case of any eligible credit determined with respect to any facility or property held directly by a partnership or S corporation, if such partnership or S corporation makes an election under subsection (a) (in such manner as the Secretary may provide) with respect to such credit—
(A) any amount received as consideration for a transfer described in such subsection shall be treated as tax exempt income for purposes of sections 705 and 1366, and
(B) a partner’s distributive share of such tax exempt income shall be based on such partner’s distributive share of the otherwise eligible credit for each taxable year.
(2) Coordination with application at partner or shareholder level
(d) Taxable year in which credit taken into account
(e) Limitations on election
(1) Time for election
(2) No additional transfers
(f) DefinitionsFor purposes of this section—
(1) Eligible credit
(A) In generalThe term “eligible credit” means each of the following:
(i) So much of the credit for alternative fuel vehicle refueling property allowed under section 30C which, pursuant to subsection (d)(1) of such section, is treated as a credit listed in section 38(b).
(ii) The renewable electricity production credit determined under section 45(a).
(iii) The credit for carbon oxide sequestration determined under section 45Q(a).
(iv) The zero-emission nuclear power production credit determined under section 45U(a).
(v) The clean hydrogen production credit determined under section 45V(a).
(vi) The advanced manufacturing production credit determined under section 45X(a).
(vii) The clean electricity production credit determined under section 45Y(a).
(viii) The clean fuel production credit determined under section 45Z(a).
(ix) The energy credit determined under section 48.
(x) The qualifying advanced energy project credit determined under section 48C.
(xi) The clean electricity investment credit determined under section 48E.
(B) Election for certain creditsIn the case of any eligible credit described in clause (ii), (iii), (v), or (vii) of subparagraph (A), an election under subsection (a) shall be made—
(i) separately with respect to each facility for which such credit is determined, and
(ii) for each taxable year during the 10-year period beginning on the date such facility was originally placed in service (or, in the case of the credit described in clause (iii), for each year during the 12-year period beginning on the date the carbon capture equipment was originally placed in service at such facility).
(C) Exception for business credit carryforwards or carrybacks
(2) Eligible taxpayer
(g) Special rulesFor purposes of this section—
(1) Additional information
(2) Excessive credit transfer
(A) In generalIn the case of any portion of an eligible credit which is transferred to a transferee taxpayer pursuant to subsection (a) which the Secretary determines constitutes an excessive credit transfer, the tax imposed on the transferee taxpayer by chapter 1 (regardless of whether such entity would otherwise be subject to tax under such chapter) for the taxable year in which such determination is made shall be increased by an amount equal to the sum of—
(i) the amount of such excessive credit transfer, plus
(ii) an amount equal to 20 percent of such excessive credit transfer.
(B) Reasonable cause
(C) Excessive credit transfer definedFor purposes of this paragraph, the term “excessive credit transfer” means, with respect to a facility or property for which an election is made under subsection (a) for any taxable year, an amount equal to the excess of—
(i) the amount of the eligible credit claimed by the transferee taxpayer with respect to such facility or property for such taxable year, over
(ii) the amount of such credit which, without application of this section, would be otherwise allowable under this title with respect to such facility or property for such taxable year.
(3) Basis reduction; notification of recaptureIn the case of any election under subsection (a) with respect to any portion of an eligible credit described in clauses (ix) through (xi) of subsection (f)(1)(A)—
(A) subsection (c) of section 50 shall apply to the applicable investment credit property (as defined in subsection (a)(5) of such section) as if such eligible credit was allowed to the eligible taxpayer, and
(B) if, during any taxable year, the applicable investment credit property (as defined in subsection (a)(5) of section 50) is disposed of, or otherwise ceases to be investment credit property with respect to the eligible taxpayer, before the close of the recapture period (as described in subsection (a)(1) of such section)—
(i) such eligible taxpayer shall provide notice of such occurrence to the transferee taxpayer (in such form and manner as the Secretary shall prescribe), and
(ii) the transferee taxpayer shall provide notice of the recapture amount (as defined in subsection (c)(2) of such section), if any, to the eligible taxpayer (in such form and manner as the Secretary shall prescribe).
(4) Prohibition on election or transfer with respect to progress expenditures
(h) Regulations
(Added Pub. L. 117–169, title I, § 13801(b), Aug. 16, 2022, 136 Stat. 2009.)