OAR 150-315-0170: Business Energy Tax Credit: Transfer of Facilities

(1)(a) When a facility is sold, the seller may claim a credit for the year of sale prorated to the portion of the tax year that the seller owned and operated the facility. The buyer also may claim a credit for the year of purchase prorated to the period of ownership and operation of the facility if the buyer applies for and receives a new certificate as required by ORS 315.354(5)(a) and 469.215. If the seller’s tax year is not the same as the purchaser’s, each taxpayer’s credit is based upon the portion of each taxpayer’s own tax year in which that taxpayer owned the facility. Example: Taxpayer A, a calendar year taxpayer, sold a certified facility to Taxpayer B on July 1. Taxpayer B is a fiscal year taxpayer with a tax year ending March 31. Taxpayer A’s credit would be limited to 50 percent of a full year’s credit (facility owned January 1 through June 30). Assuming Taxpayer B applied for and received a new certificate, Taxpayer B would be entitled to 75 percent of a full year’s credit (facility owned July 1 through March 31). (b) ORS 315.354(5)(a) provides that the tax credit available to the new owner is limited to the amount of credit not claimed by the former owner or, for a new lessor, the amount of credit not claimed by the lessor under all previous leases. Therefore, it is necessary for the seller to disclose to the buyer the amount of allowable credit not yet claimed based on the original certificate holder’s investment in the facility. (2) When the credit is available to co-owners of a facility and one owner purchases the interest of another, the credit must be prorated between purchaser and seller. The method of prorating partnership income when a partnership interest is sold that is provided in Internal Revenue Code Section 706(d) must be used to prorate the credit. (3) When a facility is sold, any credit carryforward from tax periods prior to the sale cannot be sold or otherwise transferred to the buyer. Such credit carry forwards may only be used by the seller.