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Mbostrider t1_jd1my93 wrote

To claim credit requires system is in service. If system service started in 2023, eligible credit should be claimed in 2023

https://www.irs.gov/instructions/i5695

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SirMontego t1_jd224q3 wrote

>If system service started in 2023, eligible credit should be claimed in 2023

The link doesn't actually say that.

Regarding solar, the IRS link says:

>Qualified solar electric property costs. Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States.

The link also says:

>Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed, or, in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins

Accordingly. if the original installation of the item is completed in 2023, the eligible credit should be claimed in 2023.

The "placed in service" date is for determining the tax credit percentage. The words of the link say:

>The credit rate for property placed in service in 2022 through 2032 is 30%.

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Mbostrider t1_jd2pyt1 wrote

Agreed, the language does not explicitly match “in service” requirement. I would modify the description of the requirement to “tested for in service “.

While publication isn’t explicit on the “in service” requirement, practically “in service” is necessary. How would one argue a system is complete without connecting it to a utility, which have building permit regulations for in service testing requirements?

Subsequently, a system could not be successfully argued as complete until it meets those standards.

You could attempt to argue a system is complete by pointing to a non-authoritative publication, provide unique proof it is complete without meeting building permit standards (which require connection testing) which would effectively be after “in service testing “.

Practically, it should be in service.

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SirMontego t1_jd2t1da wrote

From a legal standpoint, "placed in service" and "original installation of the item is completed" cannot mean the same thing.

The law for the tax credit is 26 USC Section 25D.

The term "placed in service" is found in subsection 25D(g) and the term "original installation of the item is completed" is found in subsection 25D(e)(8)(A). Since those two terms appear in the same statute, under standard statutory interpretation rules, those two terms do not and cannot have the same meaning because they use different words (source: A Guide to Reading, Interpreting and Applying Statutes, C.b.ii)

Exactly what those two terms mean hasn't been specified by the IRS, but logically, "original installation of the item is completed" sounds like it would occur before "placed in service." Accordingly, a situation could occur where the "original installation of the item is completed" in December 2022 and then later "placed in service" in January 2023. Under that scenario, the taxable year to claim the credit would be 2022, not 2023. However, to determine the correct percentage tax credit to claim under subsection 25D(g)(1) through (5), the taxpayer would need to know the "placed in service" date.

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Mbostrider t1_jd2xj3f wrote

Thank you for the additional comments. Genuinely appreciate the thorough approach. Language and the definitions do matter.

Congress doesn’t always look at every specific detail of how a statute is implemented when the statute is written.

The intent may have been to codify two sequential events. In practice, a system is only complete after it is connected to a utility, which is in service. The two events are concurrently occurring. I guess it would be possible for a taxpayer to pay for a system and have it connected for service and immediately disable the system and still claim the credit. Thus, it would not be in service and still qualify.

For OPs benefit, I propose tested for in service is a standard that makes sense to follow when claiming the credit.

Additional outside support might be seen in the installers contract for services, which likely define the installation complete when the system has been connected to the utility. Moreover, the 0% solar loan programs make payment to installers only after the system is connected to the utility. Both would require tested for in service.

Just not sure how the definitions and citations you provided better enable OP to determine when it is appropriate to claim the credit -

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SirMontego t1_jd4zc1s wrote

>Congress doesn’t always look at every specific detail of how a statute is implemented when the statute is written.
>
>The intent may have been to codify two sequential events. In practice, a system is only complete after it is connected to a utility, which is in service. The two events are concurrently occurring.

I would recommend that anyone do a considerable amount of research before adopting that tax position. I have not read the legislative history of 26 USC Section 25D, but I do know that it has been amended many times and there are plenty of corresponding committee reports. I also know that when Congress most recently amended section 25D in section 13302 of PL 117-169, it didn't fix the "mistake."

I honestly think that your advice borders on malpractice if you were a CPA or tax attorney; you're recommending that OP take a position that is contrary to the law. Moreover, there's no good reason to recommend that. Maybe if OP already filed his or her taxes, was under audit, and "Congress doesn't know" was the only argument left, then sure, but suggesting that now--before OP has filed his or her taxes--just makes no sense.

The safest and most sensible course of action is to follow the law as it is written. That course of action is easy to defend in an audit and I guarantee that the employee of the IRS will be following that same law.

I'm sorry if this sounds mean, but I disagree with just about everything you've written in your three comments here and you haven't provided a single citation that supports a word of what you've written. OP can't cite to your comment if audited.

Instead, I recommend that OP read the various IRS documents and the law I've cited. If someone comes to a different conclusion than me, I'd love to hear it, but I can't see how that's possible.

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Mbostrider t1_jd6hn65 wrote

Characterizing this conversation as borderline malpractice seems like a pretty extreme viewpoint. Since, we are not in the same room as OP, we fill in the blanks and provide reddit advice which is inherently risky. Consider the comments, and use your own best judgment on how to proceed (decide on your own, pay for advice, etc).

My goals are to consider my audience when communicating and to help point OP in the right direction. A bunch of accurate legal jargon typically muddies the waters for the average person. The rest of this back and forth is just noise.

Getting back to OP’s question … OP wants to better understand when the credit should be claimed.

Assuming… residential, not business, new system, not substantial home construction/reconstruction. Seems pretty straightforward a system should be in service (which is when it is complete) to claim the credit.

Abbreviated (i am on my phone) IRC code sections for my feisty friend:

Allowance of a credit for an individual, qualified solar electric property expenditures IRC 25D(a)1

Applicable percentage in the case of property placed in service after 12/31/21 and before 1/1/33 is 30% IRC 25D(g)(3)

An expenditure shall be treated as made when the original installation of the item is completed 25D(e)(8)

There isn’t any real controversy here.

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SirMontego t1_jd6lqb3 wrote

>Seems pretty straightforward a system should be in service (which is when it is complete) to claim the credit.

You are telling OP to take a position that is contrary to the law. Worse, you aren't even explaining why. That is malpractice.

The law and at least five IRS documents say something consistent with "when the original installation of the item is completed." The only controversy here is whether you understand the law.

You obviously didn't even read the IRS form 5695 instructions before your first comment, you obviously didn't read the law before I pointed it out to you, you obviously haven't read any IRS guidance on IRC section 25D, and you most certainly haven't read and IRS Private letter rulings on IRC Section 25D either.

Yet, for some reason, you think you are qualified to provide an answer on what the law says. You are not qualified. Not surprisingly, you are wrong.

Conversely, I have read all of those documents and I have provided numerous quotes for which for OP may rely upon: https://www.reddit.com/r/massachusetts/comments/11x00fg/comment/jd22ymk/?utm_source=share&utm_medium=web2x&context=3

You haven't cited a single thing to support your words.

You may also want to consider my clairvoyance: "whenever I tell people about the law, someone else inevitably comes along and is quite adamant that the test is when the system is "placed in service.""

Anyone who takes advice about the law from someone like you who hasn't even read the law before posting is a fool.

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Mbostrider t1_jd7muav wrote

This is noise. The condescending language clearly demonstrates your need to feel right.

I don’t see anything here that is a reasonable answer to OP’s question: when can OP claim the credit (2022 or 2023).

  • Nothing on how the project drug to this month.
  • Nothing on when a credit should be claimed for OP.
  • Nothing on how OP can decide “this point” is when it is appropriate to claim credit

How could any this be right?

This is just noise.

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SirMontego t1_jd8efh6 wrote

You are telling OP that the installation completion date and the in service date are the same thing. Yet, you have zero support for that. You haven't cited a single thing.

If OP follows your advice, gets audited, and the IRS says the installation date is different because the law says so, what do you expect OP to cite to prevent getting hit with a 20% penalty?

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