[Discussion] Using a Cybertruck for an IRS battery backup tax credit

[ArizonaTea]

Reading an interesting post from reddit:

Motivation: Rebates up to 30% (car price, in theory): IRS section 25D: The clean energy tax credit is 30% of the cost of the product you installed/purchased.

Why there can be a rebate (from original thread):

"The IRS guidelines for what qualifies as a battery backup are very vague. Form 5695 says the battery has to be larger than 3kwh. There's no other language in the instructions for form 5695 regarding batteries.

The Cybertruck needs the powershare home backup hardware installed in the home to take advantage of the truck's battery backup function. Key word: Install.

PG&E is advertising the use of EVs as battery backups to homes and in their words "will help people power homes, which helps customers save more money by capturing low cost energy." This implies that the EV does the exact same function as a fixed energy storage system. See video below.

In addition, the IRS energy efficient FAQ FS 2022-40 implies that batteries are excluded from the 5-year in-use requirements that other installs (doors, windows..) have to meet. Therefore you can have a mobile backup battery. "

Risk?:

• Wait for the IRS or the EPA to issue a clear guidance on whether the Tesla Cybertruck qualifies for the tax credit or not. This may take a long time, or may never happen at all.
• Claim the tax credit for the Tesla Cybertruck, and be prepared to defend your position if the IRS questions or denies it. You may need to provide evidence that the Cybertruck meets the criteria for battery storage and that it is connected to your home solar system. You may also need to pay interest and penalties if the IRS rejects your claim.
• Do not claim the tax credit for the Tesla Cybertruck, and avoid any potential hassle or dispute with the IRS. You may miss out on a significant tax benefit, but you may also save yourself some trouble and uncertainty. (FS already not qualify for tax credit)

Resources:
https://www.irs.gov/credits-deductions/residential-clean-energy-credit

I believe we should have some professional CPA on the forums may provide us some recommendations? Is this even possible? Open discussion. If this works, ganna be a huge win for all of us.

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[Woodrick]

My understanding is that "installed" is indeed the critical word. I haven't looked at FAQ FS 2022-40, but I dare say that the exemption on batteries is that some chemistries will require replacing before 5 years.

Are your taxes squeaky clean to begin with? Could an audit uncover more in questionable items and cost you more than you save?
If you do go for it and get it, I'd highly suggest sitting on the money until they can no longer audit it. Not being able to pay it back after an audit could be painful.

 

[The Tumbler]

Reading an interesting post from reddit:

Motivation: Rebates up to 30% (car price, in theory): IRS section 25D: The clean energy tax credit is 30% of the cost of the product you installed/purchased.

Why there can be a rebate (from original thread):

"The IRS guidelines for what qualifies as a battery backup are very vague. Form 5695 says the battery has to be larger than 3kwh. There's no other language in the instructions for form 5695 regarding batteries.

The Cybertruck needs the powershare home backup hardware installed in the home to take advantage of the truck's battery backup function. Key word: Install.

PG&E is advertising the use of EVs as battery backups to homes and in their words "will help people power homes, which helps customers save more money by capturing low cost energy." This implies that the EV does the exact same function as a fixed energy storage system. See video below.

In addition, the IRS energy efficient FAQ FS 2022-40 implies that batteries are excluded from the 5-year in-use requirements that other installs (doors, windows..) have to meet. Therefore you can have a mobile backup battery. "

Risk?:

• Wait for the IRS or the EPA to issue a clear guidance on whether the Tesla Cybertruck qualifies for the tax credit or not. This may take a long time, or may never happen at all.
• Claim the tax credit for the Tesla Cybertruck, and be prepared to defend your position if the IRS questions or denies it. You may need to provide evidence that the Cybertruck meets the criteria for battery storage and that it is connected to your home solar system. You may also need to pay interest and penalties if the IRS rejects your claim.
• Do not claim the tax credit for the Tesla Cybertruck, and avoid any potential hassle or dispute with the IRS. You may miss out on a significant tax benefit, but you may also save yourself some trouble and uncertainty. (FS already not qualify for tax credit)

Resources:
https://www.irs.gov/credits-deductions/residential-clean-energy-credit

I believe we should have some professional CPA on the forums may provide us some recommendations? Is this even possible? Open discussion. If this works, ganna be a huge win for all of us.

I received the below email from my power share installer today. The links are really about the $7500 credit (which I am taking given the truck is in a business entity and therefore not limited by income or price caps) but I’ve been trying to determine if I can claim the truck as a home backup battery and this email got me thinking of it again.


Hi AJ,



I was just reading through the tax credit for battery storage systems this week, and I didn’t see any wording that said “fixed” or “permanent” or suggested that the battery couldn’t be mobile—live in an EV. This may just be legislation lagging the tech but could be worth looking into. Here are the links I started with, though you may have better:



A pair of ZETA blog posts highlighting the recent final Treasury guidance for the 30D New Clean Vehicle tax credit (including FEOC definitions) and the 25E Used Clean Vehicle tax credit.



The 30D/FEOC post is more matter-of-fact and straightforward: https://www.zeta2030.org/insights/overview-of-final-30d-new-clean-vehicle-tax-credit-requirements



The 25E post is more consumer-oriented with some limited analysis: https://www.zeta2030.org/insights/a...le-tax-credit-ensures-evs-are-more-accessible

 

[ArizonaTea]

I received the below email from my power share installer today. The links are really about the $7500 credit (which I am taking given the truck is in a business entity and therefore not limited by income or price caps) but I’ve been trying to determine if I can claim the truck as a home backup battery and this email got me thinking of it again.


Hi AJ,



I was just reading through the tax credit for battery storage systems this week, and I didn’t see any wording that said “fixed” or “permanent” or suggested that the battery couldn’t be mobile—live in an EV. This may just be legislation lagging the tech but could be worth looking into. Here are the links I started with, though you may have better:



A pair of ZETA blog posts highlighting the recent final Treasury guidance for the 30D New Clean Vehicle tax credit (including FEOC definitions) and the 25E Used Clean Vehicle tax credit.



The 30D/FEOC post is more matter-of-fact and straightforward: https://www.zeta2030.org/insights/overview-of-final-30d-new-clean-vehicle-tax-credit-requirements



The 25E post is more consumer-oriented with some limited analysis: https://www.zeta2030.org/insights/a...le-tax-credit-ensures-evs-are-more-accessible

Thanks very much for sharing. It seems CT not qualify for either 30D or 35E:

30D: Cost less than $55,000 for cars, or $80,000 for SUVs, pickups, and vans
25E: Can only be claimed for vehicles costing $25,000 or less and are purchased from a qualified dealer. Buyers are encouraged to check with their dealer to ensure qualification

Do you have any insight for 25D?

I hope some tax expert on the forum can help. This is a big deal.

 

[The Tumbler]

Thanks very much for sharing. It seems CT not qualify for either 30D or 35E:

30D: Cost less than $55,000 for cars, or $80,000 for SUVs, pickups, and vans
25E: Can only be claimed for vehicles costing $25,000 or less and are purchased from a qualified dealer. Buyers are encouraged to check with their dealer to ensure qualification

Do you have any insight for 25D?

I hope some tax expert on the forum can help. This is a big deal.

This has been discussed on here a few times. The FS being over $80k and thus not qualifying for the credit is one of the reasons folks are waiting for a non FS AWD at $80k. However, if you have a business entity and title the car in that entity there is no price cap or income cap.

https://www.tesla.com/support/incentives

I was suggesting the cost for the truck itself (and power share install) could potentially qualify for the 30% residential clean energy credit as it is in itself a mobile home battery.

 

[MoabChris]

I think the Cybertruck could qualify as home battery storage IF installed with the powershare hardware. It clearly has more than 3Kwh battery and a 30% tax credit on this would be amazing. It could also mean Foundation Series with the Powershare feature *permanent installation could reasonably meet the criteria. Non-FS ??? No powershare. How is this different than a powerwall... other than it's movable - for powering your home and saving energy...

Any TAX experts here think otherwise... for specifically the 25D Federal Tax Credit.

 

[Woodrick]

I think the Cybertruck could qualify as home battery storage IF installed with the powershare hardware. It clearly has more than 3Kwh battery and a 30% tax credit on this would be amazing. It could also mean Foundation Series with the Powershare feature *permanent installation could reasonably meet the criteria. Non-FS ??? No powershare. How is this different than a powerwall... other than it's movable - for powering your home and saving energy...

Any TAX experts here think otherwise... for specifically the 25D Federal Tax Credit.

I believe that there is a permanently installed clause.

 

[MoabChris]

Can you share the code requiring it be permanent? I didn't see that in my research. Also, the Powershare hardware and switching is permanently installed, even if the batteries are mobile....

 

[Woodrick]

Can you share the code requiring it be permanent? I didn't see that in my research. Also, the Powershare hardware and switching is permanently installed, even if the batteries are mobile....

I don't have it front of me. I'm not the one that is questioning it and should be reading it. That's evidently what you should be doing.

And you may get some credit for the permanently installed pieces.

You'll be the one making the application, why not just read it?

 

[MoabChris]

https://www.irs.gov/credits-deductions/residential-clean-energy-credit

Here is the tax code and the guidelines that I read, i dont see anything that says it has to be a permanently installed clause... that is why I was asking if you saw it somewhere else

 

[JGTESLA]

“Installed” is going to be the key here. The spirit of the credit is to promote home battery backup vs electric vehicle adoption where another credit is in place in our tax code to incentivize that behavior. Assuming you have PowerShare installed and set up, one has to then take the opinion that the predominant use of your cybertruck is for home battery backup vs being your transportation device. If the majority of the time you have your truck plugged in and ready to backup your home, it seems reasonable to see that this could fall under the spirit of this credit. The permanently installed piece needs to be reconciled. PowerShare is permanently installation but the battery (truck) can be mobile. If a home battery storage system had wheels, does that mean it is disqualified from this credit?

If you take the credit, I’d hold the funds to the side to make sure the IRS agrees with this approach until the statute of limitations runs.

This is a changing area of how vehicles can serve this home battery backup function. There won’t be firm guidance on this now or likely in the near term. Have to take a reasonable position and be ready to defend it if necessary.

 

[mongo]

It's not a battery backup credit, it's a battery storage credit. The normal usage does not time shift energy nor can it backfeed the grid. Tesla explicitly excludes such usage in the warranty so it may be difficult to convince the IRS that it is designed to be storage.
From a different section: https://www.law.cornell.edu/uscode/text/42/17232

Energy storage systemThe term “energy storage system” means any system, equipment, facility, or technology that—
(A) is capable of absorbing or converting energy, storing the energy for a period of time, and dispatching the energy; and
(B)
(i) uses mechanical, electrochemical, thermal, electrolysis, or other processes to convert and store electric energy that was generated at an earlier time for use at a later time;

 

[Woodrick]

https://www.irs.gov/credits-deductions/residential-clean-energy-credit

Here is the tax code and the guidelines that I read, i dont see anything that says it has to be a permanently installed clause... that is why I was asking if you saw it somewhere else

I believe that the very first sentence may cover it.

"The Residential Clean Energy Credit equals 30% of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032. "

The Cybertruck is not installed into your home.

 

[carsly]

The Cybertruck is not installed into your home.

I suppose if you put it up on blocks in your garage and keep it at zero miles driven a case could be made it's "installed".

At least you could still play games and watch movies inside of it.

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