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A Framework for Family Offices, RIAs and Wealth Managers: Which Clients Can Use a Transferable Credit?
Published October 29, 2026. Advisers hear "buy a tax credit" from clients and from vendors. The useful question is not "is this a good deal?" It is "does this client have the right kind of tax liability?" This framework helps you screen first and spend diligence time second. Your client's CPA remains the tax decision-maker.
Step 1: Map the client to a tax category
| Client type | What can a credit offset? | Read next |
|---|---|---|
| C corporation (operating company or holding) | Regular federal income tax, within the §38(c) limit. | C corporation hub |
| Individual with passive income (rentals, LP interests, K-1 business income) | Only tax attributable to net passive income (§469(d)(2)). | Passive income hub |
| Individual with wages, dividends and market gains only | Generally nothing. | Why wages cannot be offset |
| S corporation or partnership owner | Depends on how the entity buys and allocates. | Pass-through buyers |
| Trust or estate | Passive rules apply unless grantor trust. | Trusts and estates |
| Recent seller of a rental or business | Gain may be passive income. | Sale gain and credits |
Step 2: Quantify capacity, not appetite
- Ask the CPA for a 2026 tax projection and, for individuals, the tax attributable to net passive income.
- Exclude wages, interest, dividends and investment gains from the passive base. The IRS says these do not count (Form 8582-CR and Publication 925).
- Check at-risk rules, the §38(c) limit and any NOL interaction (NOLs and the 80% limit).
Step 3: Diligence the credit
Registration number, credit calculation, project qualification, recapture exposure, indemnity and insurance terms, and foreign-entity exposure for 2026 credits. Use the CPA diligence guide and the agreement checklist.
Step 4: Handle the advisory and compensation questions
- Decide whether the recommendation fits your engagement scope, and consult your compliance team. Veritas does not provide tax, legal or investment advice, and we are not a registered investment adviser.
- If anyone is paid for an introduction, the rules differ by profession and state. Disclose it in writing and confirm it with your regulator or counsel. The checklist includes this as item 15.
- Agree on who prepares the transfer election statement and who files what (reporting guide).
Step 5: Time it
Use the 2026 transfer deadlines and the year-end conversation guide. The eligibility quiz gives a quick first screen for individuals. To discuss a client scenario with us, see the partner program.
Frequently asked questions
Which clients should an adviser screen for a purchased tax credit?
C corporations with federal tax liability and individuals, trusts or owners with documented passive income tax. Clients whose income is wages and investment gains generally cannot use one.
What is the first number to get from the CPA?
For corporations, projected federal income tax and §38(c) capacity. For individuals, the tax attributable to net passive income.
Does a family office need to buy through a special entity?
Not necessarily. The right entity depends on who has the tax liability. Pass-through and trust structures change how the credit is allocated and limited.
Is Veritas an investment adviser?
No. We source credits and coordinate diligence; tax advice comes from the client's CPA or counsel.
How should referral compensation be handled?
Disclose any compensation in writing and confirm it is permitted by your profession and state rules before accepting it.
- IRS: Elective pay and transferability FAQs, Transferability (Q4-Q15)
- 26 U.S.C. §469, Passive activity losses and credits limited (Cornell LII)
- IRS: About Form 8582-CR, Passive Activity Credit Limitations
- IRS Publication 925, Passive Activity and At-Risk Rules
- 26 U.S.C. §38, General business credit (Cornell LII)
- 26 CFR §1.6418-2, Rules for making transfer elections (Cornell LII)
- 26 CFR §1.6418-3, Additional rules for partnerships and S corporations
Owe $50k or more in federal tax?
Tell us your estimated liability and timing. We will show you what transferable credits are available and walk your CPA through the diligence.
Get a tax credit quote §48E buyer guide or call (888) 328-4718