Securing Tax Savings for a Financial Services C Corp

B•10 Energy Case Study: Securing Tax Savings for a Financial Services C Corp

Introduction

B•10 Energy specializes in providing renewable energy tax credits (RETCs) to help companies minimize their tax liabilities. This case study details how B•10’s expertise and unique guarantees enabled a financial services C Corp with approximately thirty employees to effectively manage and reduce its tax burden.

Background

The client, operating in the financial services sector, faced an expected tax liability of $640,000 for the fiscal year ending in 2024. Referred to B•10 Energy by a commercial solar developer partner, the client sought to explore the potential of RETCs to offset their tax liabilities. RETCs, classified as General Business Credits, can offset up to 75% of an annual tax liability, presenting a significant opportunity for tax savings.

Challenge

The client faced several challenges:

1. An anticipated tax liability of $640,000 for 2024.
2. Limited liquidity to maximize the purchase of tax credits.
3. The need for a detailed benefit analysis to determine the optimal amount of credits to purchase for both the current year and the prior three years.

Solution

B10 Energy conducted an extensive 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 tax liabilities over the prior three years.
• Determining the maximum amount of credits that could be utilized for tax savings across the current and past years.

Based on their analysis, the client had the potential to offset a total tax liability of $2,000,000 using RETCs for 2024 and the prior three years combined. Despite liquidity constraints, the client decided to purchase 480,000 tax credits in Q1 of 2024, when credits were priced at $0.80 per credit. This purchase allowed for a $384,000 investment, providing a significant tax offset.

Results

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

• 2024 Tax Offset: $480,000.
• Tax Credit Purchase Price: $384,000.
• Net Benefit to Client: $96,000.
• 12-Month ROI: 25%.

By investing $384,000 in tax credits, the client achieved a net benefit of $96,000, equating to a 25% return on investment over twelve months. The client also began setting aside additional capital for future credit purchases to further maximize their tax-saving potential.

Risk Minimization through Unique Guarantees

B•10 Energy’s commitment to minimizing risks played a crucial role in the client’s decision to work with them. Their unique guarantees include:

• Availability Guarantee: Ensuring that credits will be available before the client's tax return filing date.
• Disallowance Guarantee: Protection against any disallowance of credits, including recapture.
• Transfer Guarantee: Assurance that the credits have not been transferred or sold previously.

As the provider, not a broker, B•10 Energy offers these guarantees to provide clients with confidence and security in their tax credit investments.

Conclusion

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

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