Can You Transfer a Solar Tax Credit
Farmers who install a solar project can receive a tax credit and may transfer to another taxpayer and receive cash
Many farmers install solar or wind projects on their farms or ranches to help reduce their utility costs. In addition, the Tax Code allows an investment tax credit under Section 48 of up to 50% of the cost of the project (the normal tax credit is 30%).
Many farmers do not have enough income tax to offset the credit. In that case, the farmer may elect to try to “sell” the tax credit to another taxpayer. This sale of the credit is tax-free to the farmer.
However, the person who purchases the credit needs to be careful. Any individual, partnership or closely held entity that purchases this credit will be subject to the passive activity rules. This means they can only offset the tax credit against income tax associated with passive activity income.
