Federal tax credit?

[J.P.M.]

Thanks rebury, your response was exactly what I meant. If i can't take full advantage of the credit, i do not know if it would be worth it for me to go forward. I haven't signed a contract yet so installation for 2015 is doubtful. And if i can't carry over the credit for 2017, i would be losing too much to move forward. My installer is telling me that i can carry it forward but he doesn't really know that.

I appreciate everyones response. I have asked friends that are CPA's and they all said that i can say anything on my return, but if I get audited, the burden is on me to prove that any system was operational in 2015.
I probably have waited too long to go with this but i am still hoping that i can benefit from solar.

As much as I believe in my mind and heart that leases suck, there is the option of a prepaid lease. In theory anyway, that might get some of the advantages of the ITC.

[icebox]

"(c) Carryforward of unused credit
If the credit allowable under subsection (a) exceeds the limitation imposed by section 26 (a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year."

[adamt12]

The question is whether un-used credits carryover PAST the authorization for placed in service date, ie. 2017 tax year filings. It clearly states they can be carried over into future tax-year filings.

For me, and for me only, I'd take the "risk", aka more generous interpretation and carry it over into 2017 tax year until I heard otherwise. Especially if it is a go no-go decision as in the case above. But everyone's risk tolerance is different and I don't hide anything else or generally play games with my tax filings -- I have receipt piles and hard copies galore going back 10 years.

Thanks rebury, your response was exactly what I meant. If i can't take full advantage of the credit, i do not know if it would be worth it for me to go forward. I haven't signed a contract yet so installation for 2015 is doubtful. And if i can't carry over the credit for 2017, i would be losing too much to move forward. My installer is telling me that i can carry it forward but he doesn't really know that.

I appreciate everyones response. I have asked friends that are CPA's and they all said that i can say anything on my return, but if I get audited, the burden is on me to prove that any system was operational in 2015.
I probably have waited too long to go with this but i am still hoping that i can benefit from solar.

[ndabunka]

Based on the responses here it's obvious that a number of posters here simply do not read what was in this thread. Therefore, I have decided to delete the majority of my posts and have removed my subscription.

Thanks for all the fish!

[foo1bar]

There ARE a number of ways to show that your system (all PV components including panels, optimizers, inverters, etc) are in fact "in service" including showing a number of things including...
[LIST][*]FULLY paid invoice for work (lease or payment agreements are NOT sufficient as the installation MUST be PAID IN FULL by the deadline).

"Fully paid for" and "placed in service" are not the same.
And the IRS clearly says they go by "placed in service". I don't believe that "paid for" is one of the criteria for being considered "placed in service." It might help convince a judge that you had finished installation and started using the system at that time. BUT it wouldn't really be proof I think.

If you have proof it was placed in service in Dec. 2014, I believe that you could pay for a system in Feb. 2015, and claim it on the 2014 taxes.

IMO the dates on the successful inspection signoffs from AHJ and POCO would be much more convincing than the date on the check used to pay the installer/supplier.

Not certain why others would think that anyone would have any problems with rolling un-used credits forward into 2016 tax fillings.

I haven't seen anyone concerned with rolling from 2015 to 2016.

There is a VERY long history of credits continuing forward as originally dictated in the present year policies for numerous tax credits. In order to prevent a roll over to be taken the IRS would actually have to formulate specific law to eliminate a prior policy. Hard to do

Last I knew the tax law already was specific and stopped in 2016. So rolling over into 2017 tax year is not an option.
(Congress MAY have changed that - but a few months ago that was the state of things)
And that's what I think the OP is asking about. For example, if he has only $1k of taxes each year, can he spread $2500 credit across 2015, 2016, and 2017. And the answer is - "Not as the tax law currently is written"
There's a possibility that Congress will extend it into 2017 and allow the credit to carry over into 2017 as well.

I'd probably look at how I might be able to pull taxes from future years into 2016.
* Push deductions into 2017 instead of 2016 so my taxes would be higher in 2016. (property taxes, state income taxes, etc)
* Move money from regular IRA to Roth IRA (extra income / income taxes in 2016, but not taxed in retirement)

Then if Congress doesn't extend the carry-over so that it can be used in 2017, I'd have other options to use up the credit.

[bcroe]

Interesting PERSONAL comment COMPLETELY unrelated to the discussion. Did you even READ what you are responding to and WHY someone WOULD need the internet or you your reading comprehension just ... that poor?

Thanks for your comprehensive analysis and welcome to solar panel talk. Bruce Roe

[bcroe]

The key terms here are "placed in service"
[*]Physical proof of power having been generated from your systems (many systems have features that will connect to the internet and send power generation reports to handheld devices and computers that have the ability to "time stamp" such a record)

I see no need for connection to the internet; the PoCo bill gives me a record of extra generation monthly.
Bruce Roe

[cebury]

Not certain why others would think that anyone would have any problems with rolling un-used credits forward into 2016 tax fillings.

The question is whether un-used credits carryover PAST the authorization for placed in service date, ie. 2017 tax year filings. It clearly states they can be carried over into future tax-year filings.

For me, and for me only, I'd take the "risk", aka more generous interpretation and carry it over into 2017 tax year until I heard otherwise. Especially if it is a go no-go decision as in the case above. But everyone's risk tolerance is different and I don't hide anything else or generally play games with my tax filings -- I have receipt piles and hard copies galore going back 10 years.

[cebury]

Also, similar to poster, if my system is paid for but not in service for 2015, will i still be able to claim it for my 2015 taxes?

No. This was specifically answered by the IRS in their "Q&A on Tax Credits for Sections 25C and 25D " provided in Notice 2013-70.


Q-5: May a taxpayer claim the credits in the year of purchase if installation of the qualifying property occurs in a later year?
A-5: No. A taxpayer may not claim the credits until the year the property is installed. The installation must be completed before the end of 2013 for the § 25C credit and before the end of 2016 for the § 25D credit.

25D is what we're discussing.

Does the IRS really check for full operation?

They wouldn't know unless 1) you get audited and 2)they challenge the specific credit. Sometimes audits are triggered programmatically based on "computational red flags" which are usually tax payers doing some wildly inappropriate things that are obvious. Some audits are targeted sweeps based on a specific/recent circumstance (some folks would point to tea party donations as an example).

But to answer your question, they wouldn't need to "check for full operation". You would have to prove it was placed in service within the tax year you are claiming the credit. They challenge, you prove it.... or not.

Off topic and not advice about this question: My CPAs always told me to leave a few small things for the auditor to find. Feeding him easy crumbs allows him to move on to the next case, albeit a little hungry, with his head held high and he didn't get full off you. Otherwise he'll dig and dig to find something somewhere, legit or not. You obviously shouldn't take that too far, you abuse it and you get tagged with fraudulent behavior and they can start digging back several more years.

[cebury]

Hi, New to this forum. If i install a system this year ( i am getting doubtful that that will happen ) and i need 3 years to roll over the tax credit, ( i know you are not accountants but figured i would ask in case someone already researched this )will i be able to roll over into 2017? Also, similar to poster, if my system is paid for but not in service for 2015, will i still be able to claim it for my 2015 taxes? Does the IRS really check for full operation? I am not looking to play any games but if i can't use 2015 for my first years credit, and i know i need at least 2 years to reap the benefits of the credit, i am doubtful i will pull the trigger on my system.
thanks

You will not get a firm answer from anyone on that point, unless something has changed recently where the IRS issued a specific letter ruling or determination but I've checked several free sites that do not list anything new.

According to IRS Code § 25D - Residential energy efficient property

(c) Carryforward of unused credit
If the credit allowable under subsection (a) exceeds the limitation imposed by section 26 (a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

It doesn't clearly designate carrying forward past the expiration date of the Investment Tax Credit that will expire if placed in service after Dec 31 2016. However, it also doesn't clearly disallow it -- it just says "shall be carried to the succeeding taxable year". Usually if no official determination is made, and an audit is performed and decides to challenge the credit, it is up to the taxpayer to make a case to the auditor for interpretation based on his tax return. Successful cases are usually based on precedents from other sections of code or rulings regarding similar credits for renewable energy or some other relevant code section or determination. Whether you're successful or not can depend on any number of things, including what the auditor "had for lunch" if you're of that view of IRS auditors. You can also spend the time/money to contest it further.

I would think this will become a more public issue once 2016 taxes are due, requiring a more general revenue ruling or what not.

Your question is very different from the above Placed in Service question which has some precedent in other IRS sections relating to renewables ("ready and available for its specific use"), and a private letter ruling (though non-binding to anyone other than the private letter ruling was issued to) wherein there were 5 stated consideration factors to determine placed in service.

[adamt12]

need to roll over credit

Hi, New to this forum. If i install a system this year ( i am getting doubtful that that will happen ) and i need 3 years to roll over the tax credit, ( i know you are not accountants but figured i would ask in case someone already researched this )will i be able to roll over into 2017? Also, similar to poster, if my system is paid for but not in service for 2015, will i still be able to claim it for my 2015 taxes? Does the IRS really check for full operation? I am not looking to play any games but if i can't use 2015 for my first years credit, and i know i need at least 2 years to reap the benefits of the credit, i am doubtful i will pull the trigger on my system.
thanks

[paul65k]

This one wasn't mods but rather was (likely) due to my edits. I removed all the "speculation" embedded in my individual posts and replaced those ruminations with actual hard copy documents.

Thanks for that comment...............I do stand by my statements though to moderation of forums in general. I remember the first time I had "Mod" power I was working hard to make that forum what I thought it should be and get rid of all the rif raf.....the reality hower is that the value of a forum is to be a place for many opinions and not just those of the mainstream..............that being said you got to manage it too and this is the fine line that many struggle with. I believe in giving them as much rope as possible without diminishing the overall value of the forum. The one thing I have learned over the years is that most if not all forums self moderate to a large extent as the true "Idiots" always seem to expose themselves over time....................even if one of those people turn out to be a "Mod"

Keep up the good work everyone this place is a cornucopia of knowledge that you can't find in may other places

[ndabunka]

It's called Solar Panel Talk's Idea of moderation......when certain moderators disagree with other peoples opinions they just delete.........it's a bit of a game trying to remember what WAS there but the good news is that this is a way to help improve your memory.............read this one fast cuz it will probably be gone soon as well

I am actually a moderator on a couple of different forums and while moderation CAN be an important tool, over moderation is a sure fire way of throwing a forum's credibility down the drain......especially when it is justified in someone's mind when it disagrees with their own personal beliefs.......on a scale of 1-10 10 being the worst, I give this forum a 6.....not too far past center but certain moderators have gusts to 8 from time to time

This one wasn't mods but rather was (likely) due to my edits. I removed all the "speculation" embedded in my individual posts and replaced those ruminations with actual hard copy documents.

[cebury]

It will not matter in our case as it appears that we WILL have ours connected to the power company prior to year end. However, based on the NC document I published "Operational" is the ability to show that the installed system can output power (e.g. voltage from inverter). This was input from my personal CPA as he agrees that the verbiage (in THAT particular document) indicated that connection to your provider is not needed to demonstrate that ability. Hope this helps others that may find themselves in that position at the end of the year who may be checking this thread.

I am not a CPA nor lawyer so this information is worth EXACTLY what you pay for it... $0.00. YMMV

Thanks for the update.

[ndabunka]

My understand is the system must be fully operational before the end of the year (12/31/2016). Without interconnection approval, it is not considered operation system. You can check with your tax consultant or accountant before doing so.

It will not matter in our case as it appears that we WILL have ours connected to the power company prior to year end. However, based on the NC document I published "Operational" is the ability to show that the installed system can output power (e.g. voltage from inverter). This was input from my personal CPA as he agrees that the verbiage (in THAT particular document) indicated that connection to your provider is not needed to demonstrate that ability. Hope this helps others that may find themselves in that position at the end of the year who may be checking this thread.

I am not a CPA nor lawyer so this information is worth EXACTLY what you pay for it... $0.00. YMMV

EXACT VERBIAGE...
"Placed in Service. The tax credit is allowable only to a person that places the renewable energy property in service. Renewable energy property is considered to be placed in service when it is installed and is producing usable energy. For renewable energy property used for a business purpose, the property must produce usable energy that is for sale or is used for another business purpose."