Cybertruck Federal Solar Tax Credit!?

[nevetsyad]

Friend's mom is an IRS auditor, he asked her. She couldn't come up with an answer, she's asking specialists, I'll report back tomorrow with an almost official answer hopefully.

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[Cybrtr808]

Tax CPA here

I read the requirements that the battery storage is stationary - which I would interpret that a vehicle battery would not qualify.

I would say the PowerShare equipment and equipment installation should be items that qualifies. Now if the separately purchased battery extender was mounted somewhere to/on your house that should qualify.

 

[nevetsyad]

Tax CPA here

I read the requirements that the battery storage is stationary - which I would interpret that a vehicle battery would not qualify.

I would say the PowerShare equipment and equipment installation should be items that qualifies. Now if the separately purchased battery extender was mounted somewhere to/on your house that should qualify.

Can you link where it says stationary? I know a guy with 16kWh of house batteries on wheels (2kWh each) and his tax guy and the company, said it qualifies for the credit.

Only requirements are 3kWh storage, and installed in connection with primary or secondary residence in the USA. I've seen battery storage with quick disconnects, so, that's all a NACS cable is to me. Rest of the system for both setups is part of the house.

Friend's IRS Audit mother is stumped, she asked more specialists this morning and is waiting to hear back, but she couldn't find anything saying it wouldn't qualify. Feels like she thinks it's wrong, but they can't find why. lol

 

[Cybrtr808]

Can you link where it says stationary? I know a guy with 16kWh of house batteries on wheels (2kWh each) and his tax guy and the company, said it qualifies for the credit.

Only requirements are 3kWh storage, and installed in connection with primary or secondary residence in the USA. I've seen battery storage with quick disconnects, so, that's all a NACS cable is to me. Rest of the system for both setups is part of the house.

Friend's IRS Audit mother is stumped, she asked more specialists this morning and is waiting to hear back, but she couldn't find anything saying it wouldn't qualify. Feels like she thinks it's wrong, but they can't find why. lol

See the bold and underlined highlighted

US federal tax code section 48 (a)(5)(D):

believe the key is upon inspection / showing that the battery storage is an “integral part” of the electrical storage that feeds your house.

“integral part” is a tax technical term used by the tax code related to equipment qualifying for tax depreciation and similar

the CyberTruck’s battery is an integral and necessary part of the vehicle. The use to power your house is occasional.

Now if the CyberTruck’s battery were removed from the vehicle and mounted in your garage or to your solar/ V2H system you could claim some allocated amount as tax credit.

(D) Qualified property

For purposes of this paragraph, the term "qualified property" means property-

(i) which is-

(I) tangible personal property, or

(II) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility,



(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

(iii) which is constructed, reconstructed, erected, or acquired by the taxpayer, and

(iv) the original use of which commences with the taxpayer.





See link to tax code:

26 USC 48: Energy credit

 

[Wolfgram]

See the bold and underlined highlighted

US federal tax code section 48 (a)(5)(D):

believe the key is upon inspection / showing that the battery storage is an “integral part” of the electrical storage that feeds your house.

“integral part” is a tax technical term used by the tax code related to equipment qualifying for tax depreciation and similar

the CyberTruck’s battery is an integral and necessary part of the vehicle. The use to power your house is occasional.

Now if the CyberTruck’s battery were removed from the vehicle and mounted in your garage or to your solar/ V2H system you could claim some allocated amount as tax credit.

(D) Qualified property

For purposes of this paragraph, the term "qualified property" means property-

(i) which is-

(I) tangible personal property, or

(II) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility,



(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

(iii) which is constructed, reconstructed, erected, or acquired by the taxpayer, and

(iv) the original use of which commences with the taxpayer.





See link to tax code:

26 USC 48: Energy credit

Isn’t that an “or” condition? Meaning tangible personal property (eg Cybtertruck battery) would qualify… ?

 

[Crissa]

I ran this scenario thru perplexity.ai and it pointed to a 5 month old reddit thread regarding this scenario.

Also, here is its answers to my query:
Would a Cybertruck, which is designed to be a backup battery for V2H power, qualify under the Federal Solar Tax Credit?

Based on the information provided in the search results, it is highly unlikely that a Cybertruck would qualify for the federal solar tax credit (also known as the residential clean energy credit) for use as a backup battery or vehicle-to-home (V2H) power source. Here's why:

1. The tax credit requires the battery system to be "installed in connection with a dwelling unit...and used as a residence by the taxpayer." 3 A Cybertruck, being a vehicle, would likely not meet the "installed" requirement as interpreted by the IRS guidelines.

I would wonder if the installation of the Gateway, though, being equipment (but not the battery) would qualify, as it's the first step to having a battery backup system for your home.

-Crissa

 

[nevetsyad]

26 USC Section 48 is the commercial tax credit. You need 26 Section 25D for Residential Clean Energy Credit, no?

See the bold and underlined highlighted

US federal tax code section 48 (a)(5)(D):

believe the key is upon inspection / showing that the battery storage is an “integral part” of the electrical storage that feeds your house.

“integral part” is a tax technical term used by the tax code related to equipment qualifying for tax depreciation and similar

the CyberTruck’s battery is an integral and necessary part of the vehicle. The use to power your house is occasional.

Now if the CyberTruck’s battery were removed from the vehicle and mounted in your garage or to your solar/ V2H system you could claim some allocated amount as tax credit.

(D) Qualified property

For purposes of this paragraph, the term "qualified property" means property-

(i) which is-

(I) tangible personal property, or

(II) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified investment credit facility,



(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

(iii) which is constructed, reconstructed, erected, or acquired by the taxpayer, and

(iv) the original use of which commences with the taxpayer.





See link to tax code:

26 USC 48: Energy credit

 

[nevetsyad]

I would wonder if the installation of the Gateway, though, being equipment (but not the battery) would qualify, as it's the first step to having a battery backup system for your home.

-Crissa

Powerwalls are connected to the gateway. They're all 30% credits. EcoFlow sells transfer hub switches, with batteries on wheels for home backup. I don't see any difference between this and a Cybertruck with an Energy Gateway. Product web page for Cybertruck straight up talks about it being able to power your home for days as battery backup.

https://us.ecoflow.com/products/delta-pro-double-voltage-hub-transfer-switch?variant=40573938925641


EcoFlow goes into detail in their blog entry about the 30% tax credit with their batteries/solar setup. Only requirement is 3kWh or greater.
https://blog.ecoflow.com/us/what-is-the-federal-solar-tax-credit/

 

[nevetsyad]

Friend's auditor mom gave up. Can't find anything that says it wouldn't apply. Maintains it "feels wrong". lol. "The IRS is slow to adapt" she says, even though we all know the idea of V2G has been around for years, no one's ever tried claiming the vehicle as a residential clean energy system - and had it get brought up in an audit that she can find.

She says there's likely changes coming next year, don't know if that means they're tightening up 26 Section 25D, or just that she heard some vaguely related IRA type of changes to the texts are on the way.

Either way, I think I'm pulling the trigger on a 70K Founders Edition PowerShare system, 123kWh of home backup here I come!

 

[pricedm]

Interesting I can buy solar system and batteries, put them in a van, and get a 30% tax credit. But not so easy with a Cybertruck (or Ford or Chevy trucks when they get this functionality deployed).

Agree seems like IRS didn't think of it so would be inclined to disallow. None of that new-fangled stuff!

Maybe put Cybetruck on blocks and send in a picture with your tax protest! That would qualify as “integral part” of the electrical storage that feeds your house."

PS - want to give someone $90k tax-free in one year? Hypothetical situation: to help adult child with down payment on a house. Give the max gift amount (2024) $18k to five friends with the stipulation they give it to the intended giftee. In this way you can effectively gift $90k to your child, all tax free. Easy-peasy. Yes, I heard this from my tax lawyer/accountant. All legit.

 

[nevetsyad]

Your van would have to be a primary or vacation residence, with a kitchen and plumbed toilet. Otherwise it couldn't get the solar/battery tax credit. I bought an electric/solar catamaran last year and had the builder break out the solar and battery costs, including wiring, install, and all components. Got 30% off my fuel tanks basically, since it's also my house battery. Has a galley and plumbed head of course.

Not disallowed, technically it meets the requirements, boat, EV truck wired for home backup, etc. With a .1% annual chance of an audit, and good chance after that that they'd still have to allow your 123kWh home backup on wheels.

That's what my wife said, "install" the home backup at the end of the tax year. Take the wheels off and put it on blocks. 1 Jan 2025, IRS doesn't care what you do with the tax credit items, no requirement to keep them in service for 3 years or anything. Take pictures/video, show 12 miles on the truck total at 1 Jan, then put it into service as a vehicle. IRS doesn't care what you do in 2025 with it.

Man, I'm not sure I'd 100% trust my friends with a 18K gift that they have to pass on to someone specific. lol. If I put it in writing that they had to give it to someone, seems like that just proves I was moving 90K to a targeted person's account, and now it's felony conspiracy to defraud the government or something. I'd be worried about so many things there.

Interesting I can buy solar system and batteries, put them in a van, and get a 30% tax credit. But not so easy with a Cybertruck (or Ford or Chevy trucks when they get this functionality deployed).

Agree seems like IRS didn't think of it so would be inclined to disallow. None of that new-fangled stuff!

Maybe put Cybetruck on blocks and send in a picture with your tax protest! That would qualify as “integral part” of the electrical storage that feeds your house."

PS - want to give someone $90k tax-free in one year? Hypothetical situation: to help adult child with down payment on a house. Give the max gift amount (2024) $18k to five friends with the stipulation they give it to the intended giftee. In this way you can effectively gift $90k to your child, all tax free. Easy-peasy. Yes, I heard this from my tax lawyer/accountant. All legit.

 

[Nagilum]

Form 5695 explicitly states 'Costs allocable to a swimming pool, hot tub, or any other energy storage medium that has a function other than the function of such storage don't qualify for the residential clean energy credit. '

Whether you permanently parked a Cybertruck in your garage for energy storage, it still explicitly has a function other than storage by design. I considered whether Tesla built the vehicle portion for the purpose of delivering the battery storage system to homes as a means of convenient shipping, however, their marketing is almost exclusively on using this battery storage system as a mode of transportation, to the extent I was even required to register mine with my state Department of Transporation and pay auto insurance on it.

 

[nevetsyad]

That language in the instructions exists because of 26 USC Section 25D(e)(3).

To me, that language means you can't claim a tax credit for the solar panels that generate electricity to heat a pool.

As an example, if 10% of the energy generated by all the solar panels is used to heat a pool (store it's energy), then only 90% of the whole system's cost can be used to calculate the 30% tax credit. So $10,000 x 90% x 30% = $2,700 tax credit.

"Swimming pools, etc., used as storage medium
Expenditures which are properly allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage shall not be taken into account for purposes of this section."

Form 5695 explicitly states 'Costs allocable to a swimming pool, hot tub, or any other energy storage medium that has a function other than the function of such storage don't qualify for the residential clean energy credit. '

Whether you permanently parked a Cybertruck in your garage for energy storage, it still explicitly has a function other than storage by design. I considered whether Tesla built the vehicle portion for the purpose of delivering the battery storage system to homes as a means of convenient shipping, however, their marketing is almost exclusively on using this battery storage system as a mode of transportation, to the extent I was even required to register mine with my state Department of Transporation and pay auto insurance on it.

 

[Nagilum]

That language in the instructions exists because of 26 USC Section 25D(e)(3).

To me, that language means you can't claim a tax credit for the solar panels that generate electricity to heat a pool.

As an example, if 10% of the energy generated by all the solar panels is used to heat a pool (store it's energy), then only 90% of the whole system's cost can be used to calculate the 30% tax credit. So $10,000 x 90% x 30% = $2,700 tax credit.

"Swimming pools, etc., used as storage medium
Expenditures which are properly allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage shall not be taken into account for purposes of this section."

Like a dam, a pool of water can technically be considered a battery. They also explicitly and specifically mention storage mediums. It says a storage medium with a use other than storage, i.e., if your storage is a car or a hot tub, it would not be eligible. Without this language, someone could claim a 30% tax credit on a swimming pool, or an electric car with reverse charging.

I am not following the unrelated solar reference.

You can absolutely claim a tax credit on a solar system even if it is used 100% to heat your swimming pool, mine bitcoin, or whatever you desire.

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