Frequently asked questions.
Educational answers about transferable federal tax credits, taxpayer fit, advisor review, and transaction diligence. This page is educational only — not tax, legal, accounting, investment, or securities advice. Every transaction should be reviewed by your independent professional advisors.
What is a transferable federal tax credit?
A federal tax credit that can be sold by the entity generating it to an unrelated taxpayer, under IRC §6418. The buyer applies it against their federal tax liability dollar-for-dollar, subject to applicable rules.
How do federal tax credits work?
Is this the same as buying carbon offsets?No. Carbon offsets are voluntary environmental instruments with no tax effect. Transferable federal tax credits are tax attributes defined by federal law and treated as general business credits under IRC §38.
Is this an ESG product?
No. The underlying projects may have environmental characteristics, but the credits are federal tax instruments. Buyers acquire them for tax planning, not ESG.
Who is typically a fit?Profitable taxpayers with meaningful federal tax liability. C-Corporations are often the cleanest profile. Family offices, high-net-worth individuals, and closely held businesses can also fit, depending on entity structure.
Why are C-Corps the cleanest profile?
Corporate taxpayers generally avoid several passive activity limitations under IRC §469 that complicate individual and pass-through analysis. The analysis is more straightforward.
Does Redirect Tax Partners give tax advice?No. We coordinate the review. Your independent CPA and tax counsel provide the advice.
What does this typically cost?Credits typically trade at a discount to face value, and that discount creates the economic spread for the buyer. Pricing depends on credit type, vintage, transaction size, and timing — we'll walk through specifics on the first call.
Is this risk-free?No transaction involving the federal tax code is risk-free. Recapture, documentation, and filing risks exist. They're managed through diligence, documentation, and insurance — not eliminated.
How do I begin?Request a confidential review. The first call is 30 minutes, no obligation, and designed to tell you whether a deeper review is warranted.
This page is educational only — not tax, legal, accounting, investment, or securities advice.