Maximizing Tax Benefits through Renewable Energy Tax Credits

B•10 Energy Case Study: Maximizing Tax Benefits through Renewable Energy Tax Credits

Introduction

B•10 Energy is a leading provider of renewable energy tax credits (RETCs) dedicated to helping companies significantly reduce their tax liabilities. This case study highlights how their expertise in RETCs enabled a consumer products C-Corp with around ten employees to effectively manage and minimize their tax burden for the year ending May 2024.

Background

The client, a consumer products company, had a significant tax liability of approximately $1,000,000 for the fiscal year ending in May 2024. Referred by their tax attorney, the client sought B•10 Energy's assistance in February 2024 to explore the potential benefits of RETCs. Given the nature of General Business Credits, RETCs can offset up to 75% of an annual tax liability, presenting a substantial opportunity for tax savings.

Challenge

Despite recognizing the benefits of RETCs, the client faced several challenges:

• A high tax liability of $1,000,000 for 2024.
• Limited liquidity to maximize the purchase of tax credits.
• The need for a comprehensive analysis to determine the optimal amount of credits to purchase for both the current and prior three years.

Solution

B•10 Energy conducted a thorough benefit analysis, which included:

• Assessing the client's potential RETC utilization to offset the 2024 tax liability.
• Performing a look back analysis to evaluate the client's prior three years of tax liabilities.
• Determining the maximum amount of credits that could be utilized for tax savings over the current and past years.

Based on their analysis, the client had the potential to offset a total tax liability of $3,000,000 using RETCs for 2024 and the prior three years combined. Despite liquidity constraints, the client decided to purchase 675,000 tax credits in Q1 of 2024 when credits were priced at $0.80 per credit. This purchase allowed for a $540,000 investment, providing a substantial tax offset.

Results

The strategic purchase and application of RETCs resulted in significant financial benefits for the client:

• 2024 Tax Offset: $675,000.
• Tax Credit Purchase Price: $540,000.
• Net Benefit to Client: $135,000.
• 12-Month ROI: 25%.

By investing $540,000 in tax credits, the client achieved a net benefit of $135,000, equating to a 25% return on investment over twelve months. Additionally, the client began setting aside additional capital for future credit purchases to further maximize their tax-saving potential.

Conclusion

This case study demonstrates B•10 Energy's expertise in leveraging Renewable Energy Tax Credits to provide substantial tax savings for their clients. Through careful analysis and strategic planning, they enabled the client to effectively reduce their tax liabilities, resulting in significant financial benefits. B•10 Energy remains committed to helping companies navigate the complexities of tax credits to achieve optimal financial outcomes.

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