The Sale of State Tax Credits: A Tax Court Decision Isn’t a Tempel of Doom
Erik M. Jensen
Case Western Reserve University School of Law
June 1, 2011
Journal Taxation of Investments. Vol. 91, Summer 2011
Case Legal Studies Research Paper No. 2011-26
In Tempel v. Commissioner, decided in April 2011, the Tax Court came to a number of important conclusions about sales of state income tax credits that occurred shortly after the credits had been received. The gain was held to be capital gain (with the court implicitly concluding that the credits were property), but the holding period for the credits began at receipt and the taxpayers had no basis in the credits. The bottom line was that the gain was short-term capital gain, with no basis offset, a negative result for these taxpayers. But the Tax Court’s conclusion that the credits were capital assets creates planning opportunities for others.
Keywords: Tempel v. Commissioner, Tax Court decision, state income tax credits, capital gains
JEL Classification: K34Accepted Paper Series
Date posted: October 31, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.313 seconds