Master Thread: Energy products and Tax discussions

[sunwarriors]

I've noticed CPAs and tax people sometimes get things wrong too and give completely incorrect information. If audited, like you say, you can just claim it to 2022 instead and you wait an extra year. Maybe you'll get lucky and it's 30% in 2022 if BBB ever passes and they word BBB as full install/PTO date.

My own feeling is that it's PTO date, but with such long PTO delays, I could see final inspection as the completed install date since everything should technically work (it doesn't have to actually work to my surprise). A lot of installers demand full payment after final inspection from the ones I've researched.

 

[TexacoStar5]

We were able to get a couple of Powerwall 2s installed last year under Edison's 'Equity Resilience' program for homes that are in high fire zones and have been through the dreaded public safety power shutoffs during high wind/low humidity events.
After installation, Edison paid out $26,400 ($1,000/KWh of storage) towards the end of 2021.
I was expecting to get a 1099-G from SCE however our contractor indicated that we were 'exempt' under the Tax Status of the SGIP Incentive Claim Form, so no 1099-G.
I took a look at the IRS code and Section 136(a) of the IRS Code (which you can Google) which states that "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."
An 'energy conservation measure' is defined in Section 136 C(1) as "any installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand with respect to a dwelling unit"
So it seems that even though Edison won't be issuing a 1099-G for the rebate funds, the rebate is not considered part of our gross income as it came from the public utility for Powerwalls that we use to improve the management of energy demand by using them (at least in our case) to run the house load during peak TOU periods each day from 4-9pm.
How have other recipients of SGIP rebates handled reporting this on your tax returns when the utility company didn't issue a 1099-G?
And I use TurboTax, so its a little difficult to pose the question to my tax advisor!

 

[Zabe]

You have answered your own question. Your contractor, SCE and the IRS do not consider it income. Why do you seem to want to pay taxes on something that you do not have to pay taxes on?

 

[holeydonut]

There's a sticky thread about this... I suspect they'll just merge your new thread about it into the master thread.

Master Thread: Energy products and Tax discussions

The general consensus was "installed and functional" (so yes, when its put on your roof and able to be turned on). For what this is worth, the federal Office of Energy also agrees. Found this the other day when searching for an authoritative source to answer this question: Homeowner’s Guide...

teslamotorsclub.com

But to answer your question since that thread is very long... I don't think any TMC user has received a 1099 for their SGIP rebate. This includes people in NorCal and SoCal.

However, you are supposed to deduct the value of the SGIP from the price of your Solar+ESS system. So the amount of the federal tax savings will be decreased because of the SGIP value you have received. Taken to an extreme, if the SGIP pays for your entire ESS project (and you have no solar), then you should receive no federal tax credit for your project.

 

[meooem22]

Hello, I am currently trying to get a 9.6KW system with 1 powerwall and I am going to need to upgrade my main electrical panel. Has anyone done this and is it included in the tax credit because it was required to install the system?

 

[astrorob]

i don't know that anyone here can give you correct tax advice for your situation, but when i installed my PV system i had to re-roof and i did include that cost when claiming the federal credit at that time.

i am in the same boat as you with the powerwall. tesla subcontracted the panel upgrade and so the cost appears on my tesla invoice. ergo i'm going to take 26% of that number this year.

in short, i am not a lawyer or a CPA, so you might want to ask yours

 

[miimura]

There is a solid argument to be made that the main panel upgrade should be eligible for the tax credit if it is required for the solar install.

 

[Ampster]

I am going to need to upgrade my main electrical panel. Has anyone done this and is it included in the tax credit because it was required to install the system?

This is not tax advice, but I upgraded my main panel and added sub panels and plan on adding all those costs together with the solar system. I self installed and I just give the total to my CPA,

 

[TexacoStar5]

You have answered your own question. Your contractor, SCE and the IRS do not consider it income. Why do you seem to want to pay taxes on something that you do not have to pay taxes on?

I don't want to pay taxes on it, nor do I expect to due to the IRS code I dug up and quoted. I was just curious whether anyone had actually received a 1099-G for their Powerwalls from their local utility for the rebate/subsidy. It was more wanting to avoid a 'please explain' audit letter at some future date.

 

[Ampster]

The due date for 1099's is January 31st. By mid February if you do not get a 1099 you will have nothing to worry about.

 

[TexacoStar5]

The due date for 1099's is January 31st. By mid February if you do not get a 1099 you will have nothing to worry about.

Pretty sure I won't be getting a 1099 since when I looked at the Incentive Claim Form for the SCE SGIP rebate, the contractor had marked our tax status as Exempt.

 

[SaveOurPlanet]

Just curious how much I should claim for ITC on my solar roof so I went to Tesla solar roof site to put in a purchase of same size roof as what I have including 2 PWs, it appears Tesla now estimates your tax credit of 26% on the whole roof project less sales tax, not just the solar tiles portion.

 

[patrick40363]

Just curious how much I should claim for ITC on my solar roof so I went to Tesla solar roof site to put in a purchase of same size roof as what I have including 2 PWs, it appears Tesla now estimates your tax credit of 26% on the whole roof project less sales tax, not just the solar tiles portion.

I am planning on using the total amount.

 

[jrweiss98020]

As of Oct 2020, the instructions for form 5695 specifically allow it:

"Some solar roofing tiles
and solar roofing shingles serve the function of both traditional
roofing and solar electric collectors, and thus serve functions of
both solar electric generation and structural support. These solar
roofing tiles and solar roofing shingles can qualify for the credit."

 

[Zinc_Saucier]

As of Oct 2020, the instructions for form 5695 specifically allow it:

"Some solar roofing tiles
and solar roofing shingles serve the function of both traditional
roofing and solar electric collectors, and thus serve functions of
both solar electric generation and structural support. These solar
roofing tiles and solar roofing shingles can qualify for the credit."

To me that reads that the active tiles are fully eligible, but that doesn’t say anything about the non-active tiles. I’m not sure what argument could be made on the event of an audit that taking the credit on non-active sections/planes would be ok given the IRS guidance.

 

[ucmndd]

To me that reads that the active tiles are fully eligible, but that doesn’t say anything about the non-active tiles. I’m not sure what argument could be made on the event of an audit that taking the credit on non-active sections/planes would be ok given the IRS guidance.

Yeah, I agree with this. I don’t think the quoted section “specifically allows” claiming non-solar tiles - in the best case it’s still very ambiguous.

 

[Zinc_Saucier]

Yeah, I agree with this. I don’t think the quoted section “specifically allows” claiming non-solar tiles - in the best case it’s still very ambiguous.

I don’t think it is that ambiguous. The non-active tiles in a solar roof are just roofing materials, so I can’t think of any reason why they would be included. If someone had a 20 year old roof that was in ok shape but decide to re-roof before putting solar panels on, they don’t get to claim the credit for the roof. What makes a non-active portion of a solar roof any different than a portion of “normal” roof?

@jrweiss98020 @patrick40363 @SaveOurPlanet I’d run this question past a tax professional (unless you have an IRS publication to share?). I don’t think that “Tesla says it’s ok” is what people should be using as their justification. Especially since I bet if you asked Tesla directly they’d come back with some statement about asking a financial professional and that they are not offering tax guidance.

 

[jrweiss98020]

I already cited the IRS publication source - i5695, which is the instructions for the Residential Energy Credit claim form. It also states:

"No costs relating to a solar panel or other
property installed as a roof (or portion thereof) will fail to qualify
solely because the property constitutes a structural component
of the structure on which it is installed."

The "or other property installed as a roof" is the key.

There is also a FAQ at

Energy Incentives for Individuals: Residential Property Updated Questions and Answers | Internal Revenue Service

Updated questions and answers on the residential energy property credit.

www.irs.gov

 

[ucmndd]

The "or other property installed as a roof" is the key.

I actually think “solely” is the key word in that sentence, and maintain my (non tax professional) opinion that your interpretation of the instructions is not correct.

Can you claim it all? Yeah.

Will you probably get away with it? Yeah.

Will it stand up to an audit? I don’t think so.


The whole paragraph for context, which I think is helpful:

 

[Zinc_Saucier]

I already cited the IRS publication source - i5695, which is the instructions for the Residential Energy Credit claim form. It also states:

"No costs relating to a solar panel or other
property installed as a roof (or portion thereof) will fail to qualify
solely because the property constitutes a structural component
of the structure on which it is installed."

The "or other property installed as a roof" is the key.

There is also a FAQ at

Energy Incentives for Individuals: Residential Property Updated Questions and Answers | Internal Revenue Service

Updated questions and answers on the residential energy property credit.

www.irs.gov

From that link: “Components such as a roof's decking or rafters that serve only a roofing or structural function do not qualify for the credit.”

Non-active solar-roof tiles serve only as a roofing/structural function, no?