Tax Credit Clarification

[wdolson]

Using Elon's numbers for 2nd Qtr Model 3: 30, 100 and 1500, and most current Model S and X deliveries, is it possible that Tesla Motors will hit the 200,000th electric vehicle delivery before September 30?

I have a first day reservation, but want a dual, so I expect delivery in 2nd Qtr 2018. I get 100% of the tax credit in 2nd Qtr 2018 if the 200,000th car occurs after September 30, but only 50% of the credit if that number is before September 30. So, whoever is tracking this issue obsessively, thanks for posting that opinion.

They are way past 200,000 cars built now, but only cars sold in the US count against the incentive and I think Tesla is selling about 60% of their cars outside the US today. The earliest estimate for hitting the 200,000th car in the US I've seen is Q4-17 and more likely Q1-18 or Q2-18. It's highly unlikely they will hit that point before Q4 and they will probably shuffle sales around to push enough domestic deliveries off so they hit the level right at the beginning of a quarter giving almost 3 more months for the incentive to run.

 

[Thomas Edison]

They are way past 200,000 cars built now, but only cars sold in the US count against the incentive and I think Tesla is selling about 60% of their cars outside the US today. The earliest estimate for hitting the 200,000th car in the US I've seen is Q4-17 and more likely Q1-18 or Q2-18. It's highly unlikely they will hit that point before Q4 and they will probably shuffle sales around to push enough domestic deliveries off so they hit the level right at the beginning of a quarter giving almost 3 more months for the incentive to run.

I remember seeing a chart from the quarterly report last time that they were at like 115k US sales to date. If someone can find that and post it it woundnt be too difficult to guess on the US sales since then and then add all the model 3 projections to get a more accurate estimate now. No?

 

[Spidy]

Tesla Europe Registration Stats

 

[pangolina]

It's nice to not owe any federal income tax, but for those of us who don't have larger 7 digit (at least $150K a year) or more than 7 digit incomes, getting the whole $7500 might not be possible.

Unless you're single and standard deductions are more than itemized ones (if those are available at all) Then even 5 digit income can result in 5 digit taxes (when the income is above certain threshold). Or maybe I'm just a crazy one...

 

[wdolson]

Every tax situation is different. For two people making the same gross income, one could be paying a lot in taxes and the other person paying very little. A Model 3 buyer who is single, with no dependents, renting rather than paying a mortgage might have a high tax bill. But there will be plenty of Model 3 buyers who don't have huge tax bills too.

 

[ZAKEEUS]

Lots of Model 3 reservation holders will get the full $7500 tax credit.

 

[Mikeysb]

Yup, seems right to me. And seems like a big risk to take changing your deductions in 2017 with very little guarantee you'll get the car this year.

In NJ where I live, they are thinking of taking away the State tax incentive, they are saying they are too poor to continue. They also said that they are thinking of some way to tax the Supercharger's. There reason is that EV use the same roads. They had no problem of putting another .23/cents per gallon tax on gas. Saying it's for infrastructer.

 

[Mikeysb]

In NJ where I live, they are thinking of taking away the State tax incentive, they are saying they are too poor to continue. They also said that they are thinking of some way to tax the Supercharger's. There reason is that EV use the same roads. They had no problem of putting another .23/cents per gallon tax on gas. Saying it's for infrastructer.

Thank you for this info. More than I had. I can really live without AWD, never had a car with it. Hadn't had much snow in the East Coast in years. Mike feeling is tha car should only come in black. I'm saying that owning 2 Red cars. But black with black interior I don't like. If it came with a beige interior it would be awesome. One of cars now has 18" wheels, going to 19" not sure what the difference would be as far as performance. It will effect tire wear.

 

[Intl Professor]

I apologize for being a newbie to this thread. I know from other threads it is annoying to have questions asked that have already been well covered. I spent a few hours (maybe 2+) going through all posts and, of course, found some gold mine information. (The IRA to Roth conversion, for example. Bravo.)

At least half I skimmed but didn't see anyone address what the IRS considers a reasonable length of time before sale of something like the M3. IMO all of the first ones will become collector's items eventually, and the used car market will demand premium prices. We have two M3 reservations to order placed March 31, 2016. One is for us, or if I take a greater step and buy an MS, one for my brother and/or one son.

For health reasons I want to buy an MS for the added safety of autopilot immediately, but that is a stretch for us now. (Eighteen months ago I fainted just before stopping in my garage and now live in pacemaker country.) My relatives are presently uninterested, but that might change. A friend wants to buy an M3 from me but it occurred to me we should buy an M3 soonest, take a tax credit this year, and then buy an S next year when we may have even greater growth in our stock portfolio and another credit. Then my friend might buy the M3 if we don't decide to keep it. (My wife, for some reason, wants to keep our trusty, but not rusty, 2001 LS430. I think she'll change her mind after driving the M3 awhile.)

This must sound awful to someone in a less advantaged position than we, double-dipping into the tax credit well. I must also confess, I receive my social security pension on top of one from the state. Other income is a mouse nut.

 

[Trips]

I apologize for being a newbie to this thread. I know from other threads it is annoying to have questions asked that have already been well covered. I spent a few hours (maybe 2+) going through all posts and, of course, found some gold mine information. (The IRA to Roth conversion, for example. Bravo.)

At least half I skimmed but didn't see anyone address what the IRS considers a reasonable length of time before sale of something like the M3. IMO all of the first ones will become collector's items eventually, and the used car market will demand premium prices. We have two M3 reservations to order placed March 31, 2016. One is for us, or if I take a greater step and buy an MS, one for my brother and/or one son.

For health reasons I want to buy an MS for the added safety of autopilot immediately, but that is a stretch for us now. (Eighteen months ago I fainted just before stopping in my garage and now live in pacemaker country.) My relatives are presently uninterested, but that might change. A friend wants to buy an M3 from me but it occurred to me we should buy an M3 soonest, take a tax credit this year, and then buy an S next year when we may have even greater growth in our stock portfolio and another credit. Then my friend might buy the M3 if we don't decide to keep it. (My wife, for some reason, wants to keep our trusty, but not rusty, 2001 LS430. I think she'll change her mind after driving the M3 awhile.)

This must sound awful to someone in a less advantaged position than we, double-dipping into the tax credit well. I must also confess, I receive my social security pension on top of one from the state. Other income is a mouse nut.

With only about 30k vehicles being built this year you most likely get both next year. You would have to take both tax credits. While the IRD says the tax credit is for owners only they did not put a length of time on it.

There are multiple treads on reselling a M3 and the general consensus was that it would be a lot of work, costly and not really save any money. The only premium vehicle sales will be very early employee cars.

 

[Intl Professor]

Thanks for such a quick response. I've used the estimater and we have a 55% chance of getting an M3 75D within the rebate lifetime. Perhaps we should get an M3 and then trade it in on an S early next year.

 

[cpa]

There are global anti-churning rules out there in case anyone cares. There is also the tried-and-true, facts-and-circumstances test that must be considered as well.

Whether our good buddies at the Service even care is another matter.

 

[Garlan Garner]

Hey....the SN1 Model 3 was supposed to go to an Engineer at Tesla and then that Engineer gave it to Elon. I'm quite sure that Elon won't apply for any TAX benefits on SN1. So.......that car won't be included in the number of Model 3's that will be included in the tax benefit....right?

 

[cpa]

GG, utilization of the federal tax credit has no bearing on the 200,000 cars manufactured. The statute is written such that the threshold is cars sold domestically, not cars sold domestically and tax credit claimed.

If you were being sarcastic or cheeky, my humble apologies.

 

[Garlan Garner]

GG, utilization of the federal tax credit has no bearing on the 200,000 cars manufactured. The statute is written such that the threshold is cars sold domestically, not cars sold domestically and tax credit claimed.

If you were being sarcastic or cheeky, my humble apologies.

Thanks...

No, I was serious...I don't know the details of the tax credit. I think it would be a shame for a car owned by Elon to take up a spot on the tax credit benefit.....when it was designed for people who are.......lets say.......aren't in Elons financial district.

Its just weird that there are folks who won't even apply for the tax credit because they don't need it and at the same time...there are folks who really need it and won't get a chance to apply.

 

[Garlan Garner]

@MP3Mike

What in the world are you disagreeing with? I was only asking a question.

 

[Stolz25]

Thanks...

No, I was serious...I don't know the details of the tax credit. I think it would be a shame for a car owned by Elon to take up a spot on the tax credit benefit.....when it was designed for people who are.......lets say.......aren't in Elons financial district.

Its just weird that there are folks who won't even apply for the tax credit because they don't need it and at the same time...there are folks who really need it and won't get a chance to apply.

The way the tax credits work it is extremly unlikely to matter. Once the 200,000th domestic car is sold then they continue to get the benefit for the rest of the quarter and the next quarter. Whether Elon takes a credit or not they'll end at the same time.

 

[Garlan Garner]

The way the tax credits work it is extremly unlikely to matter. Once the 200,000th domestic car is sold then they continue to get the benefit for the rest of the quarter and the next quarter. Whether Elon takes a credit or not they'll end at the same time.

That doesn't seem true.

Isn't it based on a number of cars......not time? Then it gets scaled down over time....once the number is reached.

My point is this. Very few Model S and Model X owners "NEED" a tax credit in order to buy their Tesla. Many more Model 3 owners "NEED" the tax credit. Its a shame that the tax credit can't somehow be reversed to allow those who need it to access it.

 

[Stolz25]

That doesn't seem true.

Isn't it based on a number of cars......not time? Then it gets scaled down over time....once the number is reached.

I'm not sure what not "seeming" true means. You said you didn't know anything about the tax credits and I explained it. And what you said about time is exactly what I said in my post. The 200,000th car triggers the timer. It is highly unlikely that Elon taking a car would cause the tax credit to trigger a quarter early, so it won't matter.

 

[Garlan Garner]

I'm not sure what not "seeming" true means. You said you didn't know anything about the tax credits and I explained it. And what you said about time is exactly what I said in my post. The 200,000th car triggers the timer. It is highly unlikely that Elon taking a car would cause the tax credit to trigger a quarter early, so it won't matter.

But isn't Elons car part of the 200,000 that is triggering the timer?

And maybe 100,000 similar customers that are triggering the timer?

I'm not sure why you are saying that it won't matter.