Federal & State Tax Credits

The Strategic Group are specialists in transferable Federal and State tax credits such as film, low-income, historic rehabilitation, renewable energy, and mill building tax credits that can help greatly offset tax liabilities.

What are Transferable tax credits?

Transferable tax credits are tax incentives that cannot be used by the credit originator. These credits are allowed to be sold at a discount to taxpayers to lower their taxes.

What are the Benefits of tax credits?

Tax credits allow individuals or businesses to help support social good, such as helping restore historic buildings, while also lowering their taxes. However, credits also substitute the need to make estimated tax payments and in some instances, cover penalties and interest.

Who can participate?

Any individual, corporation or trust with a state or federal tax liability can buy tax credits at significant discounts.


Our Capabilities

  • We are one of the largest clearing houses of federal and state tax credits in the Southeast
  • We have expertise in low-income housing, historic rehabilitation, energy, and film, among others; to give you tax credit options.
  • We offer consulting services to navigate which tax credits are suited for a client's situation

Large theater


Entertainment & Film Credits

The Strategic Group is an experienced and trusted partner in Georgia entertainment tax credits with relationships with some of the largest productions groups in the state.

  • May offset 100% of a taxpayer's liability
  • Excess credits carry forward for five years

Tax Implications

  • Applicable against the Georgia income tax liability of any individual,
    corporation or trust
  • May offset 100% of a taxpayer's liability
  • From the year of generation of the credit purchased in one-year
    increments
  • Priced at around 89-91 cents per credit
  • Credits go through pre-audit with the state or are certified by a CPA firm and are guaranteed by the production company

Timing of Purchases

  • Credits can be used in the year they are purchased, the year they were
    created, or any year in between to the extent it doesn’t surpass the
    five-year carry-forward rule.

Process

  • The credits are sold directly by the production company to the end user.
    Credits may not be resold.

Federal Taxation

  • The investor is treated as acquiring an intangible asset upon buying the
    credits.
  • The investor is deemed to sell and credit and recognizes a capital gain
    on the difference between the face value of the credit and their basis in
    the credit when the taxpayer files their tax return and uses the credit to
    offset tax.
  • Taxpayer realizes a deduction for state income tax payment equal to the
    face value of the credit at that same point in time

Georgia Affordable Housing Credits

We offer several ways for investors to take advantage of these tax credits.

  • May offset 100% of a taxpayer's liability
  • Excess credits carry forward for three years

Tax Implications

  • Applicable against state income taxes on Individuals, trusts, and any insurance premiums taxes.
  • May offset 100% of the taxpayer’s liability.

Timing of Purchases

  • Credits can be purchased in one to five-year increments
    Excess credits carry forward for three years
  • One-year credit priced between 85 and 88 cents per credit depending
    upon the time of year

Process

  • The credits are allocated to buyers through a partnership in accordance with Federal rules
  • Our Georgia Housing credit fund invests in multiple developments yielding a diversified pool of credits
  • Taxpayers can buy into our tax credit fund on a one-year basis to receive an allocation for the current year.

Federal Taxation of Tax Credit Funds

  • The investor is treated as acquiring an intangible asset upon buying the credits.
  • The investor is deemed to sell when the taxpayer files their tax return and uses the credit to offset tax, and credit and recognizes a capital gain on the difference between the face value of the credit and their basis in the credits.
  • The taxpayer realizes a deduction for state income tax payment equal to
    the face value of the credit at that same point in time.

Historic Rehabilitation

The Strategic Group has partnered with some of the largest developers of historic rehabilitation programs across the country. We have helped restore some of America’s most cherished landmarks including hotels, theaters, and repurposed government buildings.

  • May offset 75% of a taxpayer's liability
  • Excess credits carry backward one year and forward for twenty years

Federal Historic Rehabilitation Tax Credits

Tax Implications

  • The Federal Historic Rehabilitation Tax Credit program (“Federal HTC”), was created by Congress in 1976. This incentive is available for the rehabilitation of qualified historic structures, also has many states with an additional state credit component for state taxes.
  • The Federal program can be used up to 75% of tax liability for corporate taxes or for individuals with “passive income.”

Timing of Purchases

  • The Federal HTC is a credit pro-rated over 5-years once the Historic project is placed in service.
  • The Federal HTC can generally offset up to 75% of current year tax liability.
  • Excess credits can be carried back one year and carried forward for 20 years.

Low Risk

  • The US Trust for Historic Preservation’s “Survey on Historic Credit Recapture; 2002-2012” quantified credit recapture risk at a mere 0.73% of tax credits claimed. This study takes into account the real estate recession of 2008 and demonstrates the strength of incentivized Developments.

Federal Taxation

  • Federal HTC’s are available to offset federal regular tax AND federal AMT.
  • Investors make capital contributions into our funds (LLC’s taxable as partnerships) at roughly $.90-.92 for every $1 of available federal HTC to be allocated to them.
  • Our funds may invest in one or multiple credit partnerships which receive federal historic credits and further lower an already negligible risk profile.

Contact us to learn more about how you can benefit from federal and state tax credits.

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