Solar Investment Tax Credit. Has anyone gotten the Tax Credit?

[Zulu]

While a consensus on a forum board will be meaningless to the IRS it does increase, at least my, comfort level.

 

Your long explanation sounds like you are really not very comfortable -- methinks thou dost protest too much.

[Daveh]

Ha, no Zulu I am comfortable as one can get without there being anything explicitly on point. I think the main areas of question are does it apply to an RV, If yes. Does that include a fifth wheel?

 

Second, if the panels are clearlydeductible under the provisions, to what extent are other items such as inverter wiring etcdeductible. Again, I think the inverter, wiring is a clear yes. As you get further into components and ther are time gaps with regard to installation you need to get more cautious.

 

I am comfortable at this point but, I have not yet filed, so I remain open to additional information. The reason I listed all of that was to give some insight into my process as there was discussion as to whether one could rely on the form or the instructions. The answer really is neither in a situation such as this. I have been practicing law over 30 years and although I was a real estate lawyer, there are few major commercial real estate that do not have significant tax issues. I went through the same process on this as I would on those issues except for looking at forums. Again, it has been about 8 months since I looked at things so I will once again check to see if any legislative modifications or case law before filing. I am comfortable at this point but remain cautious.

[hemsteadc]

I let Turbo Tax guide me. Don't need no stinkin' tax accountant.

[Jack Mayer]

I'm not sure why you guys are beating this to death. Dave did his due diligence and it looks like he qualifies. There is case law that supports his decision. I'm not sure what else he could do - other than directly ask the IRS which is a non-binding "opinion" anyway. Plus almost all tax accountants do not "know" this stuff off the top of their heads. I would guess that Dave actually knows more about it than most tax accountants at this point.

[Daveh]

Jim, I can only give you general guidelines but, if you have no business purpose to your LLC, then I think your credit analysis would be like anyone elses. An LLC is considered a flow through entity for tax purposes so even though technicaaly an entity, the individual rules apply. All of this depends on your use, state,etc, but when talking to a lawyer or accountant, I believe that is the issue they should focus on. Unless, there is a specific exception for LLCs, I think you are okay.

 

On audits, it is kind of luck of the draw, as to the agent etc. Many times they will let you square up with paying interest, small fine. Also, while it is no real defense to say, this is what my tax preparer told me to do, it does make a difference if you simply made an understandable error, were sloppy or clearly had an intent to defraud. The size of the discrepancy will also be an issue. Being able to show you filed your taxes in good faith can be an important factor and this means showing that you made a good faith effort to be as complete and honest as possible. In this case, I think it would be important to document that you considered the issues involved, any research you did and any consultations you did with experts. Obviously, the more the better but we all need to be able to assess and become comfortable with a certain level of risk when the answer is not crystal clear. Although, certainly not fool proof, I like to step back and ask: What is the purpose of this provision or credit and is my usage consistent with that provision. Here the intent of the credit clearly seems to be to encourage the installation and usage of alternative energy sources. If the intent clearly applies to mobile homes and boats, it seems logical that would extend to RVs. If the regs talk about a system and say it includes wiring and inverter, it seems logical that connectors and monitoring systems would be included.

[Daveh]

What Jack said............

 

The practical problem here is that unless you know an accountant or lawyer that specializes in tax issues for rv'ers, getting an opinion letter on a specific issue like this that requires going into the regs and case law would cost thousands. So short of that, you look for opinions from trade groups, and dealers in the solar industry. They can afford the cost of getting more analysis. Yes, they have a vested interest in the answer and no, we should not just rely on them, but in this situation you may need to look at acceptable risk. A group like the Escapees could seek an opnion from the IRS. At thispoint I am comfortable for my purposes and will post if that changes.

[Zulu]

I have been practicing law over 30 years and although I was a real estate lawyer, there are few major commercial real estate that do not have significant tax issues. I went through the same process on this as I would on those issues except for looking at forums. Again, it has been about 8 months since I looked at things so I will once again check to see if any legislative modifications or case law before filing. I am comfortable at this point but remain cautious.

 

My wife, also an attorney, finds it interesting that you feel comfortable giving legal advice online.

[Jack Mayer]

My wife, also an attorney, finds it interesting that you feel comfortable giving legal advice online.

I did not see any legal advice given. I DID see people saying what THEY are doing.

[Daveh]

Yes, I am comfortable sharing what I am doing under my specific circumstances and explaining why I made that decision. Honestly, I thought I made that clear so many times it was verging on obnoxious.

 

Zulu, if I some how offended you, I apologize. The fact is I would have none of thesesolar and electrical improvements if I had not relied heavily on others experiences including yours. We come from all walks of life to this community with different experiences. Just trying to provide input to the dialogue.

[Zulu]

Yes, I am comfortable sharing what I am doing under my specific circumstances and explaining why I made that decision. Honestly, I thought I made that clear so many times it was verging on obnoxious.

 

Zulu, if I some how offended you, I apologize. The fact is I would have none of thesesolar and electrical improvements if I had not relied heavily on others experiences including yours. We come from all walks of life to this community with different experiences. Just trying to provide input to the dialogue.

 

Offended me? Not hardly, Dave. I think others are getting more upset than me or you.

 

Yes, I went for the solar tax credit and did my homework like you. But I still made sure our tax preparer was fully in the loop. If I was unable to convince her, then I may not have taken the credit.

 

BTW, your suggestion that Escapees should get an IRS opinion on solar tax credits is spot on.

[Kirk W]

I've never been audited. What happens if the IRS audits my return and determines we should not have claimed the solar tax credit? How much could they fine me? Seems to me that it would just be considered an "honest" mistake and they should just make me pay back the credit.

It would be normal for it to go just as you think. In nearly all cases, the IRS only prosecutes taxpayers when they believe that fraud has occurred. Fraud means that you knew what you did was illegal and you were attempting to mislead them to cheat the system. If you take a deduction in error and get caught, the most I've ever heard of it costing the taxpayer is whatever tax should have been paid and possibly some interest on that extra tax. I doubt that you have anything to fear.

[Bill&Cindy]

It is my opinion that Kirk is correct. My experience, as a small business adviser, is that the IRS will go for back taxes and interest in cases involving mistakes with no fraudulent intent. They have given most tax payers the benefit of the doubt in the cases I have seen. I plan to file for the credit and document the reason I feel the credit is legitimate.

 

Bill

[Al F]

Many thanks to all who provided their opinions. All the info has been very helpful.

[Al F]

Dave,

Many thanks for the long detailed info about the research and thought you put into helping you to potentially take the tax credit.

Al, right, the components need to be installed and activated. I did the install and activate this year. I was going to put in the system in two different stages with the solar panel install coming next year but I did it all at once to take advantage of the credit and make clear I was indeed installing a system.

 

I don't think the instructions to the form are that helpful. They leave open a number of questions. I have my research somewhere in backup and I will look at it once again before I actually file the taxes but before I bought anything I looked at: the actual tax code provisions, the tax code regulations, IRS tax cases decided under those provisions, IRS pamphlet on home credits and deductions, the IRS form and instructions to form, articles on the issue and discussions on the forums. The way I listed these things, in my opinion, corresponds with the strength and trustworthiness of the source. Once I finished the review of the statute, regulations and case law, I did my own analysis of whether the credit would be valid in my situation. I concluded the credit applied. I then looked to articles, forums etc. to see if I could find anything that contradicted my conclusion. I have not found anything to this point but as I said, I intend to thoroughly review everything once again before I file.

 

In my case we purchased a new fifth wheel. I pulled the two 12 volt batteries that came with the unit and purchased 700 amp hours of Lifepo4 batteries. I purchased a magnum hybrid inverter/converter. Both the batteries and inverter/converter were purchased for the purpose of maximizing the fifth wheels ability to store and utilize solar energy either stand alone or as a supplement for when we are fully hooked up. I also added a battery monitoring system for the lithium batteries. The battery install and inverter install all required new heavy gauge wiring. I then proceeded to install a morningstar solar controller and three solar 300 w solar panels. As part of that portion of the install I also purchased and installed new wiring to replace the inadequate prewiring that came new with the unit. I intend to include all of these costs in the iRS credit form. We also sold our home and live in the fifth wheel full time. When I double check my research I am going to focus especially on the battery issue but I do recall concluding that the batteries are viewed as a component of the system necessary to store generated electricity. I did consider it important, although I am not sure of the degree, that the components are purchased as a system for the install. In other words simply buying new batteries when you already have had the panels is a reach.

 

Again, I welcome anyone to challenge these conclusions. In all of my research, I never came across any requirement of needing to be attached to the grid. Everyone needs to do their own research, and/or talk to your tax advisor, but I do think forum discussions are a helpful check on real world experience and for issue spotting. While a consensus on a forum board will be meaningless to the IRS it does increase, at least my, comfort level.

[Al F]

Zulu,

Thanks for sharing the info that you took the tax credit. That doesn't mean I can or should take the deduction, just that others have.

[Al F]

Yes, when I started this topic, I was about 60% decided to take the tax credit when I do my 2016 taxes in 2017. After reading the great replies to this topic I am about 90% convinced to take the credit. However I still have some 14-15 months to make up my mind.

 

Yes, there is the risk of an audit and a denial of the credit. And there would be some sort of penalty, and interest if the IRS denied the credit.

 

In the end it is up to each of us to decide what risk we are willing to live with.

 

But, hey, if I do get audited, I'll just point to the expert legal advice I get on this forum for my justification for taking the credit! LOL!

[chirakawa]

I very much agree with Kirk on this. I did look at this issue, as an attorney, to determine whether it was nonsense or whether the credit could be available to rv owners.

 

I thought you were a recently retired nurse, or am I confusing you with someone else? Of course, I guess you could be a recently retired nurse and an attorney both at which I would say I'm impressed. Both fields require great attention to detail and are ever changing.

[Jack Mayer]

I'll just make a parting comment and then leave this discussion.

 

The facts have been covered here pretty well.

 

Thousands of RVers have been taking this credit for a long time. I think I first took it in the mid 2000's, and have taken it in every coach we have built, assuming that the spacing (in years) met the qualifications. I have never heard of an RVer being denied the credit. Some may have taken it incorrectly and been denied, but if so I can find no evidence of that in a forum, or in the IRS examples - which if you search enough are extensive. I've also run it by a CPA and they said it qualified. Which means exactly NOTHING, as they told me. The only thing that matters to an INDIVIDUAL is being audited and having it approved, or winning it in a tax court. There are no court cases I could find - I searched last year.

 

If it makes someone nervous to take the credit then they should not.

[pinger]

Quick comment. Check the Solar Tax Credit form. I believe you MUST be connected to the grid to get the credit.

X2

[Daveh]

Pinger, that just is not true and I am not sure what is throwing people off. Could you post a link to the form you are looking at and cite the provision. This is an issue that is well settled.

[Zulu]

But, hey, if I do get audited, I'll just point to the expert legal advice I get on this forum for my justification for taking the credit! LOL!

 

If you got audited, that's exactly what you would do.

[Zulu]

The facts have been covered here pretty well.

 

Thousands of RVers have been taking this credit for a long time. I think I first took it in the mid 2000's, and have taken it in every coach we have built, assuming that the spacing (in years) met the qualifications. I have never heard of an RVer being denied the credit. Some may have taken it incorrectly and been denied, but if so I can find no evidence of that in a forum, or in the IRS examples - which if you search enough are extensive. I've also run it by a CPA and they said it qualified. Which means exactly NOTHING, as they told me. The only thing that matters to an INDIVIDUAL is being audited and having it approved, or winning it in a tax court. There are no court cases I could find - I searched last year.

 

If it makes someone nervous to take the credit then they should not.

 

You're probably right. But like Dave previously suggested, an Escapee-funded tax lawyer opinion would be the best.

[Daveh]

 

I thought you were a recently retired nurse, or am I confusing you with someone else?

You remember right, Chirakawa. I am both, although I self identify as a nurse. I have no desire to ever practice law again but I could easily return to nursing.

 

My wife and I are both 57. I practiced real estate law right up into the real estate recession and was left with the choice of retraining in another area of law or doing something completely different. So I started taking science classes and then applied to nursing school and was able to get in an expedited program. We never had kids so it was a luxury to be able to change careers. I was a neuroscience nurse working with stroke and epilepsy patients for only three and a half years when my wife decided she wanted out from working and we always had a traveling dream. I had seen enough in my short time nursing to know life can change overnight and, if you can do it now, then do it now. We agreed to try this for two years and have been fulltiming only since June. We both love it and now see it lasting well beyond two years. Still if something changes, including availability of health insurance for under 65s, I would have few regrets going back. Nursing is MUCH more personally rewarding for me than law. In the hospital setting you only work 3 days a week which felt a little like semi-retirement but with 12 hour shifts and and usually 13.5 to 14 on site it was very physically demanding foe me. I don't miss that part.

[chirakawa]

You remember right, Chirakawa. I am both, although I self identify as a nurse. I have no desire to ever practice law again but I could easily return to nursing.

 

My wife and I are both 57. I practiced real estate law right up into the real estate recession and was left with the choice of retraining in another area of law or doing something completely different. So I started taking science classes and then applied to nursing school and was able to get in an expedited program. We never had kids so it was a luxury to be able to change careers. I was a neuroscience nurse working with stroke and epilepsy patients for only three and a half years when my wife decided she wanted out from working and we always had a traveling dream. I had seen enough in my short time nursing to know life can change overnight and, if you can do it now, then do it now. We agreed to try this for two years and have been fulltiming only since June. We both love it and now see it lasting well beyond two years. Still if something changes, including availability of health insurance for under 65s, I would have few regrets going back. Nursing is MUCH more personally rewarding for me than law. In the hospital setting you only work 3 days a week which felt a little like semi-retirement but with 12 hour shifts and and usually 13.5 to 14 on site it was very physically demanding foe me. I don't miss that part.

 

Very admirable. I'm impressed. Thanks for your response.