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Partnerships Profiting Through Tax Credits Are Legitimate (1)

Aug. 5, 2022, 4:28 PMUpdated: Aug. 5, 2022, 6:44 PM

Partnerships that are formed to conduct activity that is made profitable through tax credits are engaging in legitimate business activity for tax purposes, an appeals court ruled.

The Friday decision from a three-judge panel of the US Court of Appeals for the District of Columbia Circuit rejected the IRS’s position that Cross Refined Coal LLC wasn’t a bona fide partnership for tax purposes. If the IRS had won, then only one of the partnership’s three members—AJG Coal Inc., but not Fidelity Investments or Schneider Electric—could have claimed the more than $25.8 million in refined-coal tax credits claimed by ...