Watch Out for "Buying" Tax Credits
Many farmers will buy tax credits to save on taxes and may not be able to use it.
We have had some farmers reach out to us about purchasing certain energy tax credits from other businesses to help reduce their income taxes.
Under the Inflation Reduction Act, many tax credits can now be sold or transferred to others. Typically, these transaction prices are around 90-95 cents on the dollar. Therefore, the farmer assumes if they buy the credit, they can fully use it on their tax return to reduce income taxes.
However, the reality is that most farmers will not get an immediate deduction for the credit purchased and may never qualify if they pass away still holding the credit on their return.
