Comments on: Federal Bail-Out Bill Includes Beefy Tax Benefits for Solar http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/ 1bog negotiates discounts for solar power for your home buy organizing the community into a group Wed, 30 Dec 2009 05:32:21 -0600 http://wordpress.org/?v=2.8.4 hourly 1 By: george green http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1667 george green Wed, 30 Dec 2009 03:32:07 +0000 http://www.1bog.org/?p=257#comment-1667 One way is to create enough tax liability. I have about $5000 tax credit on my system, so what I did was withdraw enough from my IRA to create a $5000 tax liability, then rolled that amount into a Roth IRA. If you have appreciated stocks ( I don't) you could sell some for a capital gain. One way is to create enough tax liability. I have about $5000 tax credit on my system, so what I did was withdraw enough from my IRA to create a $5000 tax liability, then rolled that amount into a Roth IRA. If you have appreciated stocks ( I don’t) you could sell some for a capital gain.

]]> By: admin http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1548 admin Mon, 23 Nov 2009 20:11:18 +0000 http://www.1bog.org/?p=257#comment-1548 Remember, we're not tax professionals so don't act on any of this info without consulting one. If you have very low tax burdon you have two options. One is I believe you can roll it over and take it piecemeal if you can't get it all in teh first year. Second, you could use a third party financing option like a lease or a PPA (if you are in a location that allows it) in which case THEY claim the tax advantages and pass the savings to you, since they own the system. Remember, we’re not tax professionals so don’t act on any of this info without consulting one. If you have very low tax burdon you have two options. One is I believe you can roll it over and take it piecemeal if you can’t get it all in teh first year. Second, you could use a third party financing option like a lease or a PPA (if you are in a location that allows it) in which case THEY claim the tax advantages and pass the savings to you, since they own the system.

]]> By: Mark Horning http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1547 Mark Horning Mon, 23 Nov 2009 20:08:17 +0000 http://www.1bog.org/?p=257#comment-1547 So the credit is not monitizable then? With a $60K income and 3 kids, my federal taxes are pretty low as it is. With the tax credit a system might be afordable. Without it not so much. To clarify, you need to have enough tax liability to offset the credit? So the credit is not monitizable then?

With a $60K income and 3 kids, my federal taxes are pretty low as it is. With the tax credit a system might be afordable. Without it not so much. To clarify, you need to have enough tax liability to offset the credit?

]]> By: Kevin http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1275 Kevin Thu, 13 Aug 2009 20:16:16 +0000 http://www.1bog.org/?p=257#comment-1275 Dave, I agree with you that if it seems to good to be true, it probably isn't true. We are not tax professionals, and as everyone states, including the solar company installers, contact your tax professional. The problem is the law is unclear and guidance isn't expected until the end of the year when the IRS gets around to publishing its official tax forms. I have called the IRS twice (for two separate opinions)for guidance and they have confirmed (over the phone by help desk employees) that ITC basis does not have to be reduced by the energy company subsidy. Which leads us to your second point, that if the subsidy is assigned to the homeowner, it should be added as gross taxable income. I think the following tax code confirms this under the heading of denial of double benefit. Computation of Taxable Income. TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART III > § 136 Prev | Next § 136. Energy conservation subsidies provided by public utilities (a) Exclusion Gross income shall not include the value of any subsidy provided (directly or indirectly) by a public utility to a customer for the purchase or installation of any energy conservation measure. (b) Denial of double benefit Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed for, or by reason of, any expenditure to the extent of the amount excluded under subsection (a) for any subsidy which was provided with respect to such expenditure. The adjusted basis of any property shall be reduced by the amount excluded under subsection (a) which was provided with respect to such property. This tax code and the tax code I posted earlier seem to contradict each other. I guess the grey area is, at least here in Texas, if the installer is assigned the subsidy and pays the corporate income tax on it, does the homeowner have to pay income tax on it as well? Thanks. Dave,

I agree with you that if it seems to good to be true, it probably isn’t true. We are not tax professionals, and as everyone states, including the solar company installers, contact your tax professional. The problem is the law is unclear and guidance isn’t expected until the end of the year when the IRS gets around to publishing its official tax forms.
I have called the IRS twice (for two separate opinions)for guidance and they have confirmed (over the phone by help desk employees) that ITC basis does not have to be reduced by the energy company subsidy.

Which leads us to your second point, that if the subsidy is assigned to the homeowner, it should be added as gross taxable income. I think the following tax code confirms this under the heading of denial of double benefit.

Computation of Taxable Income.

TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART III > § 136
Prev | Next
§ 136. Energy conservation subsidies provided by public utilities

(a) Exclusion
Gross income shall not include the value of any subsidy provided (directly or indirectly) by a public utility to a customer for the purchase or installation of any energy conservation measure.

(b) Denial of double benefit
Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed for, or by reason of, any expenditure to the extent of the amount excluded under subsection (a) for any subsidy which was provided with respect to such expenditure. The adjusted basis of any property shall be reduced by the amount excluded under subsection (a) which was provided with respect to such property.

This tax code and the tax code I posted earlier seem to contradict each other. I guess the grey area is, at least here in Texas, if the installer is assigned the subsidy and pays the corporate income tax on it, does the homeowner have to pay income tax on it as well?

Thanks.

]]> By: admin http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1273 admin Wed, 12 Aug 2009 20:56:04 +0000 http://www.1bog.org/?p=257#comment-1273 Peter, we are not tax professionals so please consult yours before acting on this.... But I very much believe that NOT to be the case. Cash rebates should lower the basis price for the system and accordingly, the tax credit. The installation company can speak with you about this in detail, but someone always owes tax on cash subsidies. If you receive it, it wouldn't lower your basis price but you'd have to pay tax on the incentive, so it could be near a wash. If the installer receives the credit, you don't pay the tax on it but it would lower your basis price for the system and the tax credit along with it -Dave Peter, we are not tax professionals so please consult yours before acting on this…. But I very much believe that NOT to be the case. Cash rebates should lower the basis price for the system and accordingly, the tax credit. The installation company can speak with you about this in detail, but someone always owes tax on cash subsidies. If you receive it, it wouldn’t lower your basis price but you’d have to pay tax on the incentive, so it could be near a wash. If the installer receives the credit, you don’t pay the tax on it but it would lower your basis price for the system and the tax credit along with it

-Dave

]]> By: PETER http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1272 PETER Wed, 12 Aug 2009 20:46:20 +0000 http://www.1bog.org/?p=257#comment-1272 hi kevin, i seem to concur with that finding that the gross basis is now used for solar tax credits after 12/31/08, which means the CSI rebate will not reduce the basis for 30% reduction, is that correct? thx, peter hi kevin, i seem to concur with that finding that the gross basis is now used for solar tax credits after 12/31/08, which means the CSI rebate will not reduce the basis for 30% reduction, is that correct?

thx, peter

]]> By: Kevin http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1218 Kevin Mon, 20 Jul 2009 19:32:56 +0000 http://www.1bog.org/?p=257#comment-1218 why is my comment #13 still awaiting moderation? Thanks. why is my comment #13 still awaiting moderation?

Thanks.

]]> By: admin http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1174 admin Sun, 05 Jul 2009 19:41:44 +0000 http://www.1bog.org/?p=257#comment-1174 This is much of what SunRun's PPA and SolarCity's lease does. I've never heard of an agreement between friends, but I don't see why not. These third party ownership options only exist in select places right now but will exist most places soon, so depends on where you are -Dave This is much of what SunRun’s PPA and SolarCity’s lease does. I’ve never heard of an agreement between friends, but I don’t see why not. These third party ownership options only exist in select places right now but will exist most places soon, so depends on where you are

-Dave

]]> By: Lew Halpert http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1173 Lew Halpert Sun, 05 Jul 2009 19:20:09 +0000 http://www.1bog.org/?p=257#comment-1173 Have you a solution for tax payers who can't take advantage of the 30% federal tax credit because they don't enough or any taxable income? My thought was to find someone who could use the tax credit. Have them buy the system and lease it to me. They would pay an amount equal to the credit and I would pay the balance. They would get the tax credit and the tax depreciation deduction (100% in year 1 under sec 179) as their incentive. I would get the benefits of the reduced utlitiies cost and reduced energy use. Any thoughts? Lew Halpert 480.422.2111 Have you a solution for tax payers who can’t take advantage of the 30% federal tax credit because they don’t enough or any taxable income?

My thought was to find someone who could use the tax credit. Have them buy the system and lease it to me. They would pay an amount equal to the credit and I would pay the balance. They would get the tax credit and the tax depreciation deduction (100% in year 1 under sec 179) as their incentive. I would get the benefits of the reduced utlitiies cost and reduced energy use.

Any thoughts?

Lew Halpert
480.422.2111

]]> By: Kevin http://1bog.org/federal-bail-out-bill-includes-beefy-tax-benefits-for-solar/comment-page-1/#comment-1171 Kevin Thu, 02 Jul 2009 16:32:23 +0000 http://www.1bog.org/?p=257#comment-1171 Looks to me Obama's Recovery Act removed the "reduction of tax basis". See below: (D) was added as a result of the law. Anyone else read this as the Fed Tax Credit is now allowed on the GROSS amount? (4) Special rule for property financed by subsidized energy financing or industrial development bonds. (A) Reduction of basis. For purposes of applying the energy percentage to any property, if such property is financed in whole or in part by-- (i) subsidized energy financing, or (ii) the proceeds of a private activity bond (within the meaning of section 141 the interest on which is exempt from tax under section 103, the amount taken into account as the basis of such property shall not exceed the amount which (but for this subparagraph) would be so taken into account multiplied by the fraction determined under subparagraph (B). (B) Determination of fraction. For purposes of subparagraph (A), the fraction determined under this subparagraph is 1 reduced by a fraction-- (i) the numerator of which is that portion of the basis of the property which is allocable to such financing or proceeds, and (ii) the denominator of which is the basis of the property. (C) Subsidized energy financing. For purposes of subparagraph (A), the term 'subsidized energy financing' means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy. (D) Termination. This paragraph shall not apply to periods after December 31, 2008, under rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990). Reference: http://www.dsireusa.org/documents/Incentives/US02F.htm Looks to me Obama’s Recovery Act removed the “reduction of tax basis”. See below:
(D) was added as a result of the law.

Anyone else read this as the Fed Tax Credit is now allowed on the GROSS amount?

(4) Special rule for property financed by subsidized energy financing or industrial development bonds.
(A) Reduction of basis. For purposes of applying the energy percentage to any property, if such property is financed in whole or in part by–
(i) subsidized energy financing, or
(ii) the proceeds of a private activity bond (within the meaning of section 141 the interest on which is exempt from tax under section 103, the amount taken into account as the basis of such property shall not exceed the amount which (but for this subparagraph) would be so taken into account multiplied by the fraction determined under subparagraph (B).
(B) Determination of fraction. For purposes of subparagraph (A), the fraction determined under this subparagraph is 1 reduced by a fraction–
(i) the numerator of which is that portion of the basis of the property which is allocable to such financing or proceeds, and
(ii) the denominator of which is the basis of the property.
(C) Subsidized energy financing. For purposes of subparagraph (A), the term ’subsidized energy financing’ means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.
(D) Termination. This paragraph shall not apply to periods after December 31, 2008, under rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

Reference:
http://www.dsireusa.org/documents/Incentives/US02F.htm

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