Section 45Q — Carbon Oxide Sequestration Credits
A dollar of federal tax credit
acquired for eighty-five cents.
Welcome 123 1 LLC holds the exclusive contractual right to purchase
$35,000,000 face value of IRS-approved Section 45Q carbon
tax credits — 2025 vintage — and is assigning that right to qualified buyers.
Credits offset federal income tax dollar-for-dollar. Total buyer all-in cost:
$29,750,000 for $35,000,000 in credits.
$35M
Face Value
Section 45Q Credits
$0.85
Effective Cost Per
Dollar of Credit
$5.25M
Net Economic
Benefit to Buyer
2025
Credit Vintage
Tax Year Eligible
The Fundamental Proposition
A taxpayer with $35,000,000 in 2025 federal income tax liability
acquires $35M of Section 45Q credits for $29,750,000 all-in —
eliminating the entire liability and realizing a
net economic benefit of $5,250,000.
Fifteen percent savings on a dollar-for-dollar federal tax offset.
No equity. No K-1s. No project ownership. No basis risk.
2025 Vintage — Applicable to Your 2025 Federal Return
These are 2025 vintage credits applicable to tax year 2025, filed in 2026.
Under IRC §6418, the transfer election is made directly on the buyer’s federal income
tax return using Form 3800. No complex vehicle, no equity investment, no passive activity
concerns. The buyer’s CPA reports the transaction in a single line item with
the Credit Holder’s IRS pre-filing registration number.
Mechanics
How Section 45Q Credit Transfers Work
IRS Pre-Filing Registration Required
IRC §6418 Transfer Election
Active Credit — §38 General Business Credit
No Passive Activity Limits (§469 Does Not Apply)
Step 01 — Origin
Carbon is captured and permanently stored underground
Industrial facilities capture CO² emissions or agricultural operations convert biomass to biochar via pyrolysis, locking carbon in soil for centuries. Deep soil sampling to 60 feet with continuous monitoring verifies permanent storage.
Step 02 — Issuance
Federal government issues 45Q credits to the project owner
For every metric ton of CO² permanently sequestered, credits are issued to the project owner at a fixed dollar face value. The project owner must materially participate, generating an active — not passive — federal tax credit.
Step 03 — Transfer
Owner transfers credits to the buyer for cash under §6418
The Inflation Reduction Act of 2022 expressly permits project owners to elect to transfer federal tax credits to unrelated taxpayers for cash. Buyer receives credits and applies them dollar-for-dollar against federal income tax. No equity. No K-1.
This Transaction
How the Purchase Right Assignment Works
Party A
The Credit Holder
Owns $35M in IRS-registered Section 45Q credits. Holds IRS pre-filing registration. Handles all §6418 transfer election mechanics, IRS filings, and tax reporting directly with the buyer.
Party B
Welcome 123 1 LLC
Holds the exclusive contractual right to purchase the credits from the Credit Holder at $24.5M under the Master Purchase Agreement. Assigns that right to the buyer for an assignment fee.
Assignment Fee — $5,250,000
Party C
The Buyer (Assignee)
Pays $5.25M to Welcome 123 1 LLC for the purchase right, then pays $24.5M directly to the Credit Holder to acquire $35M face value of Section 45Q credits for use on the 2025 return.
All-In Cost — $29,750,000
Transaction Economics
Cost & Benefit Summary
| Line Item | Amount |
|---|
| Assignment Fee (paid to Welcome 123 1 LLC) | $5,250,000 |
| Credit Purchase Price (paid directly to Credit Holder) | $24,500,000 |
| Total Buyer All-In Cost | $29,750,000 |
| Face Value of Section 45Q Credits Received | $35,000,000 |
| Dollar-for-Dollar Federal Tax Offset | $35,000,000 |
| Net Economic Benefit to Buyer | +$5,250,000 |
| Effective Cost Per Dollar of Tax Credit | $0.85 |
| All-In Discount to Face Value | 15% |
Tax Savings Scenarios
What This Credit Is Worth at Your Tax Liability
These credits offset federal income tax dollar-for-dollar under IRC §38.
The table below shows net economic savings across common tax liability sizes,
all priced at $0.85 per dollar of credit. Partial amounts are available.
| Buyer Federal Tax Liability |
Credits Purchased |
All-In Cost |
Tax Offset |
Net Savings |
Instant Savings |
| $1,000,000 | $1,000,000 | $850,000 | $1,000,000 | +$150,000 | 17.6% |
| $2,500,000 | $2,500,000 | $2,125,000 | $2,500,000 | +$375,000 | 17.6% |
| $5,000,000 | $5,000,000 | $4,250,000 | $5,000,000 | +$750,000 | 17.6% |
| $10,000,000 | $10,000,000 | $8,500,000 | $10,000,000 | +$1,500,000 | 17.6% |
| $15,000,000 | $15,000,000 | $12,750,000 | $15,000,000 | +$2,250,000 | 17.6% |
| $20,000,000 | $20,000,000 | $17,000,000 | $20,000,000 | +$3,000,000 | 17.6% |
| $35,000,000 This Transaction | $35,000,000 | $29,750,000 | $35,000,000 | +$5,250,000 | 17.6% |
Instant Savings = net savings as a percentage of all-in cost, realized immediately upon filing. This is not an investment return — it is a permanent reduction in 2025 federal tax liability at the moment of transfer. Confirm §38(c) utilization capacity with your CPA before closing.
Interactive Calculator
Enter Your Tax Liability — See Your Exact Numbers
Credits Purchased
$5,000,000
Dollar-for-dollar tax offset
All-In Cost
$4,250,000
$0.85 per dollar
Tax Offset
$5,000,000
Federal liability eliminated
Instant Savings
$750,000
17.6% of all-in cost
Adjust your federal tax liability above to see your exact numbers. Buyer receives a dollar-for-dollar federal tax offset at $0.85 per dollar of credit.
Limited Availability — 2025 Tax Year Window Still Open
Ready to Run the Numbers on Your Client’s Liability?
20 minutes with Ben. Confirm eligibility, walk the mechanics, get the full CPA packet same day. No obligation.
Risk Mitigation
Buyer Protections & Contractual Safeguards
3× Redundancy Reserve
The Credit Holder maintains triple redundancy reserves exceeding the face value of credits transferred. Excess verified capacity covers any shortfall or challenge without impacting the buyer’s position.
100% Seller Indemnification
The Credit Holder bears full contractual responsibility for any pre-transfer recapture event or compliance failure. All indemnification obligations run directly to the buyer.
Replace or Refund Guarantee
If any transferred credits are invalidated for any reason attributable to the Credit Holder, the buyer receives replacement credits of equivalent type and vintage or a full refund.
Annual Third-Party Audit & IRS Cooperation
Annual independent audits validate the carbon capture operation and credit issuance process. The Credit Holder commits to full documentation production for any IRS examination.
Continuous MRV Monitoring
Every credit unit is backed by independently verified CO² removed. Lifecycle analysis, third-party validation, and continuous MRV protocols confirm permanent storage prior to credit issuance.
Structural Separation — Fixed Cash Only
The buyer acquires a standalone federal tax attribute for fixed cash consideration. No equity stake, no profit-sharing, no ongoing project exposure, no operational liability.
Legal & Tax Framework
Statutory & Structural Basis
IRC §45Q
Statutory Authority
Section 45Q is enacted federal law incentivizing carbon capture and permanent geological sequestration, enhanced by the Inflation Reduction Act of 2022. Credits carry direct Internal Revenue Code authority.
IRC §6418
Clean Transfer Election
The IRA expressly permits project owners to transfer credits to unrelated taxpayers for cash. No equity. No K-1. No project ownership. The buyer receives a standalone tax attribute reported on Form 3800.
IRC §38 / §469
Active Credit Treatment
45Q credits transferred via §6418 apply under the General Business Credit. Passive activity rules under §469 do not apply. Credits offset active federal income tax liability.
IRS Registration
Pre-Filing Registration
The Credit Holder has obtained IRS pre-filing registration via the IRS Energy Credits Online portal confirming the credits exist and are eligible for transfer. Registration number disclosed to buyer in due diligence.
§38(c)
Tax Capacity Consideration
The §38(c) limitation may cap General Business Credits in a single tax year. Buyers should confirm federal income tax liability and utilization capacity with their CPA prior to executing the Assignment Agreement.
Structure
What Welcome 123 1 LLC Is Not
Welcome 123 1 LLC assigns a contractual purchase right only. It is not a broker-dealer, does not transfer tax credits directly, and issues no Schedule K-1. All credit mechanics are handled solely by the Credit Holder.
IRS Compliance & Credit Integrity
Seven Layers of Protection Against IRS Scrutiny
The Credit Holder has constructed a multi-layered compliance architecture
designed to withstand IRS examination at every level. Each layer is independently sufficient.
This is not a tax strategy or opinion letter. It is a federally registered, independently
audited, IRS-acknowledged credit program built on physical and statutory foundations.
I
Federal Registration
IRS Pre-Filing Registration via Energy Credits Online
Before any credit transfer, the Credit Holder obtains an IRS pre-filing registration number through the IRS Energy Credits Online portal — the federal government’s own gatekeeping mechanism built into the Inflation Reduction Act. This registration is a formal acknowledgment that the project qualifies under §45Q, the credits exist in the stated quantity, and the transfer is eligible under §6418. The registration number is disclosed on the buyer’s tax return. No registration means no transfer.
II
Enacted Federal Law
Statutory Authority Under IRC §45Q and the Inflation Reduction Act
Section 45Q is not a regulation, a ruling, or a tax planning strategy. It is enacted federal law, passed by Congress and signed into law as part of the Inflation Reduction Act of 2022. The transfer mechanism under §6418 is equally a Congressional creation. These credits carry the same legal authority as any other provision of the Internal Revenue Code.
III
Physical Proof of Sequestration
Independent Measurement, Reporting & Verification (MRV)
Every credit unit is backed by independently verified physical sequestration. Carbon capture and permanent storage is measured, reported, and verified by a qualified third-party MRV provider. Deep soil sampling to 60 feet with continuous subsurface monitoring confirms that CO² is permanently in the ground before a single credit is issued. Credits are issued only for verified removals — not estimated, projected, or modeled.
IV
Independent Oversight
Annual Third-Party Audit of the Credit Issuance Process
The Credit Holder undergoes annual independent audits of the carbon capture operation, credit quantity calculation, MRV methodology, and compliance with §45Q requirements. Audit reports constitute formal contemporaneous documentation — the type the IRS specifically requires for examination of large credit programs. These reports are made available to buyers during the four-day due diligence period.
V
Active Credit Classification
Material Participation Ensures Active — Not Passive — Credit Generation
The credit originator materially participates in the carbon capture project. This is what causes the §45Q credits to arise as active federal tax credits under §38, not passive activity credits subject to §469 limitations. Active credits transferred via §6418 apply immediately and fully against any federal income tax liability in the year of transfer.
VI
Risk Allocation
Recapture Risk Remains With the Credit Holder by Statute and Contract
Under the §6418 transfer structure, recapture risk remains with the Credit Holder, not the buyer. If any transferred credit were determined by the IRS to have been miscalculated or ineligible, the recapture obligation falls on the transferor — not the buyer. This statutory allocation is reinforced contractually: the Credit Holder indemnifies the buyer against any pre-transfer compliance failures.
VII
Reserve Architecture
Triple Redundancy Reserve — Replace or Refund
The Credit Holder maintains triple redundancy reserves — verified credits held in excess of every transfer obligation. If any challenged credits cannot be replaced with equivalent type and vintage credits, the buyer receives a full refund. A successful IRS challenge does not result in buyer economic loss — it results in replacement or return of funds.
IRS Position
Not a Listed Transaction or Tax Shelter
§45Q credits transferred via §6418 are a direct federal tax credit transfer expressly authorized by Congress. They are not listed transactions, not abusive tax shelters, and not subject to the economic substance doctrine. The IRS has acknowledged §6418 transfers as valid in Treasury guidance.
CPA Reporting
Fully Transparent — Form 3800, No Opinion Required
The buyer’s CPA reports the §6418 transfer election on the federal income tax return using Form 3800 (General Business Credit). The IRS pre-filing registration number is disclosed directly on the return. No opinion letter. No basis disclosure statement. Fully transparent by design.
Audit Cooperation
Credit Holder Cooperates Fully With Any IRS Examination
If the IRS examines the buyer’s return and inquires about the §45Q credits, the Credit Holder provides full cooperation: MRV reports, audit results, IRS registration records, physical sampling data, expert declarations, and any other documentation required.
Process
Steps for Qualified Buyers
Step 01 — Qualification
Confirm federal tax capacity and execute NDA
Buyer confirms with their CPA that 2025 federal income tax liability is sufficient to utilize credits. NDA executed to receive full Credit Holder documentation, MPA summary, and IRS registration confirmation.
Step 02 — Due Diligence
Four-day review period with full back-up documentation
Buyer receives redacted MPA, Credit Holder identity, IRS pre-filing registration number, third-party MRV reports, and annual audit summaries. Full termination right with escrow return if buyer is unsatisfied.
Step 03 — Close
Fund, receive Purchase Right, apply credits to return
$5.25M assignment fee wired to Welcome 123 1 LLC. $24.5M wired directly to Credit Holder. Purchase Right assigned. §6418 transfer election processed between buyer and Credit Holder. Credits applied on the 2025 federal return.
