The Sale of Tax Credits Revisited : A CCA Consecrates (Most of) Tempel

In a 2011 decision, Tempel v. Commissioner, the Tax Court had held, among other things. that gain on sales of state income tax credits was capital gain. In a Chief Counsel Advice released later in the same year, the IRS accepted the result, and most of the analysis, of Tempel, and it also provided guidance about the tax consequences to a purchaser of credits. This article analyzes the CCA, discusses the remaining disagreements between the Service and the Tempel court, and stresses that the CCA's conclusions were explicitly limited to nonrefundable credits