Federal Tax Credit and Tesla buy-back

[patrick40363]

In 2016, I purchased a MX and claimed the Federal Tax Credit of $7500 for the purchase.

For various reasons, I ended up requesting a buy-back from Tesla, and they agreed (all on good terms.) Are there are requirements regarding the 2016 tax credit that I may need to consider? Looking at the tax code, the only requirement that’s questionable is “the vehicle should not have been purchase for sale”, which is true because selling back to Tesla is not really a sale. But wanted to get opinions here.

Post buy-back, I plan to purchase another MX and am considering applying for the credit again in 2017. This counts as a full new purchase, so I don’t see any problems, but do I need to worry about having the IRS flag two consecutive years of $100K car purchases? (It’s not really two, but the IRS won’t know about the buy back.)

Thanks!

If the car was titled in your name you are entitled to the credit. You will also be entitled to the tax credit on your next car.

 

[rallykeeper]

The whole tax credit needs to reworked or eventually run out so this kind of thing (small or large) cannot happen....
The problem with the letter of intent of the credit is that it allows some advantage to those who want to take advantage of it. Imagine the Model 3 buyers who get first cars, take the tax credit and then sell them at premium for others who just want one now? That's scalping with benefit.

The tax credit is capped. From the federal government's perspective, it will pay out credits on 200,000 Tesla's (plus some slack for the phaseout quarters).

The point of the credit is to get EVs sold and into circulation. In this particular case, that will be exactly the situation. Sure, this buyer will get 2 tax credits, but there are being paid for 2 Tesla's (the original will eventually get into circulation in some form or another).

More importantly, though, the credit also designed to create scale for the manufacturers so that they can lower prices for future EVs. That's why, to some extent, it doesn't matter if the credit is paid on a car that is bought back, resold, scrapped, scalped, garaged or driven 1 million miles. It's not about the car that's receiving the credit, it's about future cars.

....

Back to the original question. In this particular case, there's nothing wrong and xowner can claim the credit 2x. (And, in fact, his buyback offer will be adjusted to reflect that fact).