Interesting Tax Topic: Does the purchase of a Lightning Qualify for Federal Solar Tax Incentive

[yed19]

I would direct this at any tax professionals (looking maybe at you @TaxmanHog ) but after reading through a page on Federal Tax Incentives for Solar installs (which we are doing in conjunction with our LIghtning Purchase), would the LIghtning purchase itself qualify as a Energy Storage Device?

Per Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics | Department of Energy
What expenses are included?
The following expenses are included:

• Solar PV panels or PV cells used to power an attic fan (but not the fan itself)
• Contractor labor costs for onsite preparation, assembly, or original installation, including permitting fees, inspection costs, and developer fees
• Balance-of-system equipment, including wiring, inverters, and mounting equipment
• Energy storage devices that are charged exclusively by the associated solar PV panels, even if the storage is placed in service in a subsequent tax year to when the solar energy system is installed (however, the energy storage devices are still subject to the installation date requirements)
• Sales taxes on eligible expenses

I suppose that there is probably verbiage in the law that will prevent it, but not sure if anyone has considered trying to claim that 26% of the truck purchase with the installation of the HIS and solar this year.

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[VTbuckeye]

If you can charge exclusively from solar and only use it for a storage device, then it would likely be ok. However, I doubt that is how you will use it.

 

[TaxmanHog]

I don't think the law talks about this nuance, but if you want to test this, maybe your accountant could seek a private letter ruling on your use case and intention to claim the credit, covering his and your assets (GRIN) BTW, my IRS-TAX expertise relates to the collection process & related laws not accounting and auditing so if there are any accountants with this type of experience, I'd defer to their practice & knowledge.

That said, I don't think it's going to fly, the truck would need to be attached to you PV system during solar production time frame, are you going to drive only dusk to dawn?

 

[yed19]

I figure as much on this case, but I do think the intent of the law is being met as it checks the box for energy storage and it’s ability to store solar power for usage. It also allows for the ability to reduce grid issues. In future legislation, these aspects should be discussed for sure. Multi-use batteries for automotive and home backup use fall in line with federal administration directions so it makes sense.

 

[watchdoc]

This would be an audit waiting to happen.

 

[Amps]

Even with a 131 kWh battery, a truck isn’t an energy storage device, it’s still a truck.

 

[Yellow Buddy]

To quote a YouTube channel. Everything is deductible until you get caught…

Im not an accountant, but when folks ask tax questions I think it’s best to go to the source -IRS website. In this case the instructions for Form 5695.

“Costs allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage don't qualify for the residential energy efficient property credit”

Reference: (https://www.irs.gov/pub/irs-pdf/i5695.pdf), Page 2

Again, not an accountant. But I think a F150L might have a function other than such storage…

 

[yed19]

Even with a 131 kWh battery, a truck isn’t an energy storage device, it’s still a truck.

To be fair, its both. Especially if its usable. Thats the interesting aspect. The intent of the laws are to incentivize the move of folks to solar and or electric vehicles. I would assume that Ford and maybe others are potentially advocating (read as "lobbying", and if they are not they should be) for a special incentive when the vehicle can be attached to a solar system. This would allow them an additional selling point with competitors.

Truth is, if I buy a battery and install it in my solar system, I can then claim 26% on my taxes next year. We are doing the same thing with the truck. Just not exclusively. If the government were to amend the "exclusivity aspect of the law to be based upon usage, I could then claim a percentage of the 26% based upon the length of time the truck was connected to the solar equipment via the HIS. I could provide documentation as to how long it was actually connected, etc... Again, I am not going to claim it unless I hear it would qualify but... as we move forward into future legislation, I think the incentives should be amended to reward the type of installation and equipment as it may /will allow for level loading of the grid as well as reductions green-house gases by providing an alternative to non-renewable power sources.

Just sayin'...

 

[Yellow Buddy]

If the government were to amend the "exclusivity aspect of the law to be based upon usage, I could then claim a percentage of the 26% based upon the length of time the truck was connected to the solar equipment via the HIS. I could provide documentation as to how long it was actually connected, etc...

Being the POS scum that I am, here’s why I am hoping they do exactly as you propose.

Step 1: Work remotely from home.
Step 2: Buy F150L Pro for $40,000, target a Dec delivery for hopefully the next year model.
Step 3: Claim 26% credit based on a single month of connected 4 hours of day based on average full solar generation in my area for Dec.
Step 4: Claim $7500 tax credit for the vehicle.
Step 5: Order new F150L Pro, target for Dec delivery for hopefully the next year model.
Step 6: Sell previous F150L in a current model year, with minimal miles, at a $10,000 discount.

Net income of $8,000/year.
If the $7500 goes away, I can still do this but only discount it by $5,000.

Step 7: Save and digitize all my documents.
Step 8: Report net income to IRS.
Step 9: Respond to IRS audit letter.
Step 10: Complain on here when the law is amended again when they discover it is significantly benefitting those with higher tax liabilities, and incomes that can afford finding loopholes like this, resulting in the waste that is thousands of unused F150Ls. Further reinforcing that electric cars are a conspiracy for the wealthy and don’t actually help the environment at all since they aren’t driven.

The best part is there’s no limit on the 26%. So I can buy a fleet of F-150s. I just need enough capital and I can get a healthy cash flow going.

 

[Ken]

I think you could be justified in taking the deduction on the home integration system and solar purchase but probably not the vehicle. The HIS falls under the inverter/balance of system bullet. I already have solar but at one point was considering extra panels and wondered about how far you could take this also.

 

[personalt]

Being the POS scum that I am, here’s why I am hoping they do exactly as you propose.

Step 1: Work remotely from home.
Step 2: Buy F150L Pro for $40,000, target a Dec delivery for hopefully the next year model.
Step 3: Claim 26% credit based on a single month of connected 4 hours of day based on average full solar generation in my area for Dec.
Step 4: Claim $7500 tax credit for the vehicle.
Step 5: Order new F150L Pro, target for Dec delivery for hopefully the next year model.
Step 6: Sell previous F150L in a current model year, with minimal miles, at a $10,000 discount.

Net income of $8,000/year.
If the $7500 goes away, I can still do this but only discount it by $5,000.

Step 7: Save and digitize all my documents.
Step 8: Report net income to IRS.
Step 9: Respond to IRS audit letter.
Step 10: Complain on here when the law is amended again when they discover it is significantly benefitting those with higher tax liabilities, and incomes that can afford finding loopholes like this, resulting in the waste that is thousands of unused F150Ls. Further reinforcing that electric cars are a conspiracy for the wealthy and don’t actually help the environment at all since they aren’t driven.

The best part is there’s no limit on the 26%. So I can buy a fleet of F-150s. I just need enough capital and I can get a healthy cash flow going.

I think #3 and #4 conflict. It is not a storage device and a vehicle at the same time. But like others said, everything is deductable until you get caught.

 

[Yellow Buddy]

I think #3 and #4 conflict. It is not a storage device and a vehicle at the same time. But like others said, everything is deductable until you get caught.

Thats kind of the point based on what the OP was proposing

 

[yed19]

I mostly asked this question as the current laws and incentives do not account for dual devices. I do think that one could (I won’t be) argue that for the amount of time the truck is hooked up to the house with a HIS, you could proportionally adjust that amount of time as as a battery and associate the cost that way. I do think the way it is written prohibits a tax lawyer from arguing that but… it’s something for the lawmakers to think about next time. I would argue that a proportion should be incentivized due to the dual nature of the vehicle and the intent of the law. And given the direction of battery production in this country, lawmakers might just see it that way…

 

[TaxmanHog]

Technical Corrections & Miscellaneous Amendments, something constructive Congress could be doing rather than what they are doing these days......

[/off soap box]

 

[ChrisInJAX]

Being the POS scum that I am, here’s why I am hoping they do exactly as you propose.

Step 1: Work remotely from home.
Step 2: Buy F150L Pro for $40,000, target a Dec delivery for hopefully the next year model.
Step 3: Claim 26% credit based on a single month of connected 4 hours of day based on average full solar generation in my area for Dec.
Step 4: Claim $7500 tax credit for the vehicle.
Step 5: Order new F150L Pro, target for Dec delivery for hopefully the next year model.
Step 6: Sell previous F150L in a current model year, with minimal miles, at a $10,000 discount.

Net income of $8,000/year.
If the $7500 goes away, I can still do this but only discount it by $5,000.

Step 7: Save and digitize all my documents.
Step 8: Report net income to IRS.
Step 9: Respond to IRS audit letter.
Step 10: Complain on here when the law is amended again when they discover it is significantly benefitting those with higher tax liabilities, and incomes that can afford finding loopholes like this, resulting in the waste that is thousands of unused F150Ls. Further reinforcing that electric cars are a conspiracy for the wealthy and don’t actually help the environment at all since they aren’t driven.

The best part is there’s no limit on the 26%. So I can buy a fleet of F-150s. I just need enough capital and I can get a healthy cash flow going.

Don't forget to claim your MACR depreciation, while you are at it, since it's more than the GWRV to qualify for the "hummer rule."

Disclosure: This is not financial advice and you need to seek professional advice.

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