A case currently before the Supreme Court, Charles Moore, G. Moore et ux. v. United States , has the court looking at some of the fundamentals of the Constitution’s treatment of taxation. Advocates of various views are hoping for an earthshaking result. Also, many “tax protester” arguments base themselves on misreading of Supreme Court decisions from around the time of the 16th Amendment. Knowing a fuller version of what surrounds the snippets they feed you probably won’t help you bring them around if they have drunk deep of the tax protester Kool-Aid, but it will help you maintain your own sanity. Let’s start with what the Moore case is about.
What Happens If You Can’t Use All Your Clean Energy Tax Credits This Year?
Dominique Molina, CPA MST CTS
Clean energy tax credits have a lot going for them. Clients buy them at a discount, apply them dollar-for-dollar against federal tax liability, and walk away paying less to the IRS. That alone makes them worth a serious look. But here’s what often gets overlooked and what makes these investments genuinely remarkable compared to almost anything else in your tax planning toolkit: the flexibility built into how and when the credits can be used. Can’t absorb the full credit this year? Carry it back up to three years and trigger refunds on taxes your client already paid. Think about that for a second. There are very few places in the tax code where you can go back in time and rewrite last year’s tax bill. This is one of them. Still have excess after the carryback? Carry it forward for up to 22 years. That’s not a typo. Two decades of runway to put those credits to work as your client’s passive income grows. And if circumstances change and the credits simply aren’t needed? An emerging secondary market means there may even be an option to sell them. No other common tax planning strategy offers this combination a guaranteed discount on purchase, dollar-for-dollar offset of tax liability, the ability to look backward and forward, and a potential exit if plans change. Understanding how each of these features works is what separates a good credit investment from a great one.
