Cherrytree Group LLC Blog

The Cherrytree Group has developed a streamlined procedure for getting their clients Brownfields Tax Credits. What is the Brownfields Tax Credit? Massachusetts General Laws forces developers or owners of a site that has environmental contamination to clean up that site. The law holds the current owner responsible for the cleanup costs.

However, if the issues were caused previous to your ownership, Brownfields Act absolves you the owner of the property, of the liability for cleanup, and gives you a tax credit of up to 50% of the eligible costs of cleaning up the site. What you do with the credits is up to you, take the credits on next years taxes, or monetize those credits by selling them for cash to a buyer.

Why use The Cherrytree Group?

We are able to sift through the all of the information, determine which costs are eligible for the credit and prepare and file the application to the DOR. There are three functions to applying for these credits:

1. securing tax credits
2. brokering the sale of the tax credits
3. closing on a tax credit purchase

The Cherrytree Group can perform all 3 of these functions. The benefit here is that the costs to the client is significantly less when we provide those services than if separate professionals were retained for each service.

By using The Cherrytree Group, you employ an accounting professional to work on analyzing the eligible costs, a legal professional to close on the tax credit purchase, and a developer to assist with, and advise on the cost and development issues.

The Cherrytree Group acts as a consultant and a syndicator, applying for and obtaining the Brownfield Tax Credit for you. We can also sell that tax credit for cash.  Please contact us.

The sale of certain Massachusetts state tax credits from the original recipient to a third party creates a taxable event for both the Taxpayer and the Recipient. While the Memorandum only applies to Massachusetts state tax credits, the precedent that Chief Counsel relied upon could be applied to other state tax credit programs.
   
Massachusetts offers a number of state tax credits similar to those found throughout the United States, specifically, Brownfields Tax Credits, Motion Picture Tax Credits, Historic Rehabilitation Tax Credits, Low-Income Housing Tax Credits, and Medical Device Tax Credits.

In the Memorandum, the IRS found that the Taxpayer that qualifies for and receives the tax credit does not realize gross income.  Instead, for federal income tax purposes, the receipt of the tax credit itself should simply be treated as a reduction or potential reduction in the recipient’s state tax liability.  

However, in the event the tax credit is transferred to a third party for value, the Taxpayer must recognize a gain because the transaction is treated as a sale. The amount of the gain recognized by the Taxpayer is equal to the sale price of the tax credits, and because each of the nonrefundable Massachusetts tax credits qualifies as a “capital asset” the gain is deemed a capital gain.

For information and assistance on buying or selling Tax Credits, contact the Cherrytree Group.

Original article - Lexology