In recent months, North Carolina has shown that it may be ready again to lead the way in development, economic growth, and renewable energy innovation. Two pivotal court decisions, North Carolina Farm Bureau Mutual Insurance Co. v. N.C. Department of Revenue and McCabe v. N.C. Department of Revenue, highlight a critical shift in the state’s approach to tax credits and renewable energy. These rulings not only resolve longstanding legal disputes but also reposition North Carolina as a prime destination for development opportunities.
North Carolina’s journey toward embracing renewable energy began decades ago with the introduction of tax incentives aimed at spurring investment in wind, solar, and other sustainable energy sources. By 1999, the General Assembly had streamlined these initiatives, offering substantial credits for eligible projects. These were designed to attract private investment, ensure energy sustainability, and solidify the state’s leadership in green innovation.
Despite the promise of these credits, disputes arose regarding their implementation, particularly for investments channeled through partnerships. The Farm Bureau and McCabe cases underscored these challenges. Both involved questions about whether investors who utilized partnership structures to claim tax credits were entitled to their full share of benefits. The NC Department of Revenue argued that such arrangements lacked the entrepreneurial risk and business purpose required under federal tax principles, which it claimed should apply to state tax law as well. The courts, however, saw things differently.
These court decisions signify more than just the resolution of legal disputes—they represent a renewed optimism for businesses, investors, and developers alike. With a clearer legal framework now in place, the state is positioned as a premier destination for investment opportunities and transformative growth.
The future in North Carolina is brighter than ever for those who embrace the potential of tax credits. For businesses and investors, the message is clear: now is the time to seize the opportunities North Carolina has made possible, fueling not just your success but also the state’s future.
Please reach out to The Sherbert Group if you are interested in investing in North Carolina, or if you have questions on your project.