Glossary: This page defines the key terms you’ll see across transferability (IRC §6418), pre-filing registration, and credit transfers. Definitions are written in plain English, with links to the pages where the term is used in context. Educational only — see Disclaimer.

In short (60 seconds)

  • Transferability means selling certain eligible credits to an unrelated buyer for cash (high level).
  • Registration numbers are a practical “gate” — missing them can make an election ineffective for that property (high level).
  • Most deal risk comes from eligibility, amount computation, and filing/election mechanics (high level).
  • Use this glossary when a term feels unfamiliar, then click through to the page that explains it in context.

Where to go next

Quick jump

A–Z core terms | Deal & filing terms | Risk terms | Common confusions | Official sources

A–Z core terms (transferability basics)

Transferability (IRC §6418)

A rule framework that allows an eligible taxpayer to transfer (sell) all or a portion of an eligible credit to an unrelated transferee taxpayer for cash (high level). See How It Works.

Eligible credit

One of the limited set of credits that may be transferred under §6418. On this site, see the directory: Eligible Credits.

Eligible taxpayer

The taxpayer that is allowed to transfer eligible credits under §6418 (high level). In deal language, this is usually the seller or transferor. See How It Works.

Transferee taxpayer

The unrelated taxpayer that receives the transferred credit and claims it on its return (high level). In deal language, this is the buyer. See How It Works.

Transferor

The seller in a §6418 transaction (high level). The transferor is typically the entity that earned the credit and makes the transfer election on its return. See How It Works.

Unrelated (unrelated person / unrelated taxpayer)

Transferability is structured around transfers to an unrelated transferee taxpayer. “Unrelated” is defined under tax law concepts (high level), and it is a core eligibility condition for transfers. See How It Works.

Cash consideration (cash payment requirement)

Transferability is structured around cash consideration (high level). This is why deals typically emphasize “cash-only consideration” and avoid non-cash substitutes. See How It Works.

Eligible credit property

The facility/property/unit that an eligible credit is determined with respect to (property-level concept). This matters because registration numbers are generally issued per eligible credit property, and transfers are tracked at that level (high level). See Registration Filing.

Specified credit portion

The portion of an eligible credit that is transferred (all or part), as specified in the transfer election (high level). This is why partial transfers are possible in many cases but still must be handled cleanly in paperwork. See How It Works.

Transfer election

The election made to transfer a specified credit portion to a transferee taxpayer, generally made with the transferor’s return for the year the credit is determined (high level). If you want the operational sequence, see How It Works.

Elective pay (direct pay) — IRC §6417

A separate monetization mechanism (not transferability) where certain entities (and certain electing taxpayers for specific credits) treat the credit amount as a payment of tax (high level). This site focuses on transferability, but registration concepts overlap. See Registration Filing.

Applicable entity

A category of entities generally associated with elective pay rules (high level). Whether an entity is an “applicable entity” can affect whether it uses §6417 or §6418. See Start Here and Registration Filing.

Deal & filing terms (what shows up in practice)

Pre-filing registration

An IRS process completed before making a transfer election or elective pay election (high level). The IRS portal issues registration numbers after review. See Registration Filing.

Registration number

The IRS-issued identifier tied to a registered credit property (high level). Registration numbers generally must be included on the return and related forms/statements for the election to be effective for that property. See Registration Filing.

Energy Credits Online (ECO)

The IRS online portal used for pre-filing registration (high level). Most entities must register through ECO to obtain registration numbers. See Registration Filing.

Source credit form

The IRS form where the credit is calculated for a specific credit type (high level). Examples include Form 3468 for many ITC credits, Form 7210 for §45V, Form 7207 for §45X, Form 7211 for §45Y, and Form 7218 for §45Z (depending on credit). Each credit page on this site lists the relevant form(s).

Form 3800 (General Business Credit)

A common “aggregation” form for general business credits (high level). Many taxpayers report/limit credits through Form 3800 depending on how the credit is structured and how it flows. (Your credit pages note where this commonly comes up.)

Transfer election statement

The document(s) filed with the return to make the transfer election effective (high level). The seller and buyer typically coordinate this statement and ensure it matches registration numbers and the specified credit portion being transferred.

Placed in service

A core concept for many investment credits (ITCs): the date property is placed in service can determine eligibility and the year the credit is claimed (high level). See the relevant credit pages (for example Section 48 and Section 48E).

Beginning of construction

A timing concept used in multiple credits and bonus rules (high level). It often appears in PWA/bonus eligibility rules and tech-neutral credit transitions. See Section 45Y and Section 48E for examples.

Prevailing wage & apprenticeship (PWA)

A compliance requirement that often determines whether a credit is claimed at a base rate or an increased rate (high level). This shows up across multiple credits; each credit page notes the relevant filing/reporting pointers.

Bonus credit amounts / “adders”

In many IRA credits, bonus concepts (e.g., domestic content, energy community, low-income allocations) can increase the credit amount (high level). These are documentation-heavy and often drive diligence and pricing. See Risk & Compliance.

Risk terms (what can go wrong)

Excessive credit transfer

A regulatory concept where the transferred specified credit portion is later determined to exceed the allowable credit amount (high level). This can result in transferee-side tax consequences and potential add-ons unless reasonable cause applies (high level). See Risk & Compliance.

Reasonable cause

A regulatory concept that can reduce or eliminate certain add-ons in excessive transfer situations, based on facts and circumstances (high level). Practically, buyers document diligence to support reasonable-cause positions. See Risk & Compliance.

Recapture

A concept most common in investment credits (ITCs) where certain changes can require some portion of the credit to be paid back (high level). Deal documents often allocate recapture risk. See Risk & Compliance and Section 48.

Ineffective transfer election

A practical failure mode where the transfer election does not meet required conditions (high level) — for example, missing registration numbers or incorrect reporting. See Registration Filing.

Diligence

The documentation and verification work buyers (and serious sellers) perform to reduce the risk of disallowance, excessive transfer issues, or recapture exposure (high level). See Risk & Compliance.

Common confusions (quick fixes)

Confusion #1: “Registration number = IRS approval”

Not necessarily. Registration is an administrative prerequisite (high level). The IRS can still examine eligibility and credit amounts. Best practice: build an audit-ready “credit binder” for each facility/property.

Confusion #2: “My credit is transferable because it’s an energy credit”

Not necessarily. Transferability is limited to the 11 eligible credits. Use the directory: Eligible Credits.

Confusion #3: “45 vs 45Y” and “48 vs 48E”

These are commonly “pre‑2025 vs post‑2024” frameworks in many situations. If unsure, open both pages: Section 45 vs Section 45Y, and Section 48 vs Section 48E. Check placed-in-service timing and definitions.

Confusion #4: “Transferability = direct pay”

They are different mechanisms (§6418 vs §6417). Start with Start Here and Registration Filing.

Official sources (clickable)

This site is educational. For authoritative rules and definitions, use these official sources and the curated library at Sources.

Last updated: February 2026

Note: Educational content only — not tax or legal advice. See Disclaimer.