Can You Spin Garbage Into Gold?

I guess I’ll spoil the post: Rumpelstiltskin could spin straw into gold. Rumpelstiltskin, Inc. thought it could do the same for garbage, spinning it into tax credits. The Commissioner of the Internal Revenue Service disagreed. So did the Tax Court. So do we. So begins the Appeals Court decision of Green Gas Delaware Statutory Trust v. Commissioner, a decision of the US Court of Appeals for the District of Columbia. The case involves tax credits for production of landfill gas (the since repealed Section 45K credits). Three entities, all related, with the parent company having the wonderful name Rumpelstiltskin, Inc. (and no, we didn’t make this up) took these tax credits worth $11.7 million while having $4.5 million in income. The IRS audited these returns, and allowed only $586,000 of tax credits. The IRS also turned the entities’ business expenses from gold into straw, disallowing most of them, and threw in a 20% accuracy penalty. The Tax Court upheld…

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