GAAP Accounting for Allocated Tax Credit Investments:
Utilizing the Deferral Method to Recognize Renewable Energy Tax Credits
There are two ways a company can account for an allocated tax credit: Flow through/tax reduction method or Deferral/cost reduction method.
The deferral method presents some advantages that address perceived adverse accounting presentation inherent in renewable equity structures. Using the deferral method means that the recognition of tax credits is reflected as a reduction to the amortization expense of the tax equity investment in a company’s income statement.
Download the report for allocated tax credit basics, tax credit accounting best practices, benefits of using the deferral method of accounting for renewable energy investments, the impact of tax reform on RECT projects and more.