Tax Credit Question [RE-wrenches]

Wed Aug 17 15:19:36 PDT 2005

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Allan,
"Placed into service" to me means producing usable RE. I plan to install,
but not commission (ie turn-on) systems until 2006. If a person wants the
$2000 credit, its worth it to wait a few months until production starts.
Unless they really need the energy (off-grid), my customers are agreeable to
this. And, I don't believe off-grid is excluded. But get ready to ramp-up
your DHW side, at least there's no shortage of DHW collectors (now).

Vermont Solar Engineering
Kirk Herander
North American Board of Certified Energy Practitioners
Certified Solar PV Installer(TM)
Xantrex Certified Dealer Charter Member
NYSERDA-eligible installer
Vermont Solar and Wind Partner

PO Box 697
Burlington, VT. 05402
www.vermontsolar.com
www.backeastsolar.com
800.286.1252 - 802.863.1202
fax 802.863.7908

----- Original Message -----
From: "Allan Sindelar" <allan at positiveenergysolar.com>
To: "New wrenches posting" <RE-wrenches at topica.com>
Sent: Wednesday, August 17, 2005 3:19 PM
Subject: Tax Credit Question [RE-wrenches]

Wrenches,
Let me be the first to point out that the new federal tax credit for PV and
thermal, residential and commercial, is for systems that are first placed
into service after December 31 of this year. The general public will be
aware of this soon. How do you plan to address this in such a way as to keep
working between now and year's end?

Thanks,
Allan at Positive Energy

SEC. 1337. BUSINESS SOLAR INVESTMENT TAX CREDIT.
(a) Increase in Energy Percentage- Section 48(a)(2)(A) (relating to energy
percentage), as amended by this Act, is amended to read as follows:

`(A) IN GENERAL- The energy percentage is--

`(i) 30 percent in the case of--

`(I) qualified fuel cell property,

`(II) energy property described in paragraph (3)(A)(i) but only with respect
to periods ending before January 1, 2008, and

`(III) energy property described in paragraph (3)(A)(ii), and

`(ii) in the case of any energy property to which clause (i) does not apply,
10 percent.'.

(b) Hybrid Solar Lighting Systems- Subparagraph (A) of section 48(a)(3) is
amended by striking `or' at the end of clause (i), by redesignating clause
(ii) as clause (iii), and by inserting after clause (i) the following new
clause:

`(ii) equipment which uses solar energy to illuminate the inside of a
structure using fiber-optic distributed sunlight but only with respect to
periods ending before January 1, 2008, or'.

(c) Limitation on Use of Solar Energy to Heat Swimming Pools- Clause (i) of
section 48(a)(3)(A) is amended by inserting `excepting property used to
generate energy for the purposes of heating a swimming pool,' after `solar
process heat,'.

(d) Effective Date- The amendments made by this section shall apply to
periods after December 31, 2005, in taxable years ending after such date,
under rules similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990).

TITLE XIII

SEC. 25D. RESIDENTIAL ENERGY EFFICIENT PROPERTY.
`(a) Allowance of Credit- In the case of an individual, there shall be
allowed as a credit against the tax imposed by this chapter for the taxable
year an amount equal to the sum of--

`(1) 30 percent of the qualified photovoltaic property expenditures made by
the taxpayer during such year,

`(2) 30 percent of the qualified solar water heating property expenditures
made by the taxpayer during such year, and

`(3) 30 percent of the qualified fuel cell property expenditures made by the
taxpayer during such year.

`(b) Limitations-

`(1) MAXIMUM CREDIT- The credit allowed under subsection (a) for any taxable
year shall not exceed--

`(A) $2,000 with respect to any qualified photovoltaic property
expenditures,

`(B) $2,000 with respect to any qualified solar water heating property
expenditures, and

`(C) $500 with respect to each half kilowatt of capacity of qualified fuel
cell property (as defined in section 48(c)(1)) for which qualified fuel cell
property expenditures are made.

`(2) CERTIFICATION OF SOLAR WATER HEATING PROPERTY- No credit shall be
allowed under this section for an item of property described in subsection
(d)(1) unless such property is certified for performance by the non-profit
Solar Rating Certification Corporation or a comparable entity endorsed by
the government of the State in which such property is installed.

`(c) Carryforward of Unused Credit- If the credit allowable under subsection
(a) exceeds the limitation imposed by section 26(a) for such taxable year
reduced by the sum of the credits allowable under this subpart (other than
this section), such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a) for such succeeding
taxable year.

`(d) Definitions- For purposes of this section--

`(1) QUALIFIED SOLAR WATER HEATING PROPERTY EXPENDITURE- The term `qualified
solar water heating property expenditure' means an expenditure for property
to heat water for use in a dwelling unit located in the United States and
used as a residence by the taxpayer if at least half of the energy used by
such property for such purpose is derived from the sun.

`(2) QUALIFIED PHOTOVOLTAIC PROPERTY EXPENDITURE- The term `qualified
photovoltaic property expenditure' means an expenditure for property which
uses solar energy to generate electricity for use in a dwelling unit located
in the United States and used as a residence by the taxpayer.

`(3) QUALIFIED FUEL CELL PROPERTY EXPENDITURE- The term `qualified fuel cell
property expenditure' means an expenditure for qualified fuel cell property
(as defined in section 48(c)(1)) installed on or in connection with a
dwelling unit located in the United States and used as a principal residence
(within the meaning of section 121) by the taxpayer.

`(e) Special Rules- For purposes of this section--

`(1) LABOR COSTS- Expenditures for labor costs properly allocable to the
onsite preparation, assembly, or original installation of the property
described in subsection (d) and for piping or wiring to interconnect such
property to the dwelling unit shall be taken into account for purposes of
this section.

`(2) SOLAR PANELS- No expenditure relating to a solar panel or other
property installed as a roof (or portion thereof) shall fail to be treated
as property described in paragraph (1) or (2) of subsection (d) solely
because it constitutes a structural component of the structure on which it
is installed.

`(3) 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.

`(4) DOLLAR AMOUNTS IN CASE OF JOINT OCCUPANCY- In the case of any dwelling
unit which is jointly occupied and used during any calendar year as a
residence by two or more individuals the following rules shall apply:

`(A) The amount of the credit allowable, under subsection (a) by reason of
expenditures (as the case may be) made during such calendar year by any of
such individuals with respect to such dwelling unit shall be determined by
treating all of such individuals as 1 taxpayer whose taxable year is such
calendar year.

`(B) There shall be allowable, with respect to such expenditures to each of
such individuals, a credit under subsection (a) for the taxable year in
which such calendar year ends in an amount which bears the same ratio to the
amount determined under subparagraph (A) as the amount of such expenditures
made by such individual during such calendar year bears to the aggregate of
such expenditures made by all of such individuals during such calendar year.

`(C) Subparagraphs (A) and (B) shall be applied separately with respect to
expenditures described in paragraphs (1), (2), and (3) of subsection (d).

`(5) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- In the case of
an individual who is a tenant-stockholder (as defined in section 216) in a
cooperative housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-stockholder's
proportionate share (as defined in section 216(b)(3)) of any expenditures of
such corporation.

`(6) CONDOMINIUMS-

`(A) IN GENERAL- In the case of an individual who is a member of a
condominium management association with respect to a condominium which the
individual owns, such individual shall be treated as having made the
individual's proportionate share of any expenditures of such association.

`(B) CONDOMINIUM MANAGEMENT ASSOCIATION- For purposes of this paragraph, the
term `condominium management association' means an organization which meets
the requirements of paragraph (1) of section 528(c) (other than subparagraph
(E) thereof) with respect to a condominium project substantially all of the
units of which are used as residences.

`(7) ALLOCATION IN CERTAIN CASES- If less than 80 percent of the use of an
item is for nonbusiness purposes, only that portion of the expenditures for
such item which is properly allocable to use for nonbusiness purposes shall
be taken into account.

`(8) WHEN EXPENDITURE MADE; AMOUNT OF EXPENDITURE-

`(A) IN GENERAL- Except as provided in subparagraph (B), an expenditure with
respect to an item shall be treated as made when the original installation
of the item is completed.

`(B) EXPENDITURES PART OF BUILDING CONSTRUCTION- In the case of an
expenditure in connection with the construction or reconstruction of a
structure, such expenditure shall be treated as made when the original use
of the constructed or reconstructed structure by the taxpayer begins.

`(9) PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING- For purposes of
determining the amount of expenditures made by any individual with respect
to any dwelling unit, there shall not be taken into account expenditures
which are made from subsidized energy financing (as defined in section
48(a)(4)(C)).

`(f) Basis Adjustments- For purposes of this subtitle, if a credit is
allowed under this section for any expenditure with respect to any property,
the increase in the basis of such property which would (but for this
subsection) result from such expenditure shall be reduced by the amount of
the credit so allowed.

`(g) Termination- The credit allowed under this section shall not apply to
property placed in service after December 31, 2007.'.

(b) Conforming Amendments-

(1) Section 23(c) is amended by striking `this section and section 1400C'
and inserting `this section, section 25D, and section 1400C'.

(2) Section 25(e)(1)(C) is amended by striking `this section and sections 23
and 1400C' and inserting `other than this section, section 23, section 25D,
and section 1400C'.

(3) Section 1400C(d) is amended by striking `this section' and inserting
`this section and section 25D'.

(4) Section 1016(a), as amended by this Act, is amended by striking `and' at
the end of paragraph (33), by striking the period at the end of paragraph
(34) and inserting `, and', and by adding at the end the following new
paragraph:

`(35) to the extent provided in section 25D(f), in the case of amounts with
respect to which a credit has been allowed under section 25D.'.

(5) The table of sections for subpart A of part IV of subchapter A of
chapter 1, as amended by this Act, is amended by inserting after the item
relating to section 25C the following new item:

`Sec. 25D. Residential energy efficient property.'.

(c) Effective Dates- The amendments made by this section shall apply to
property placed in service after December 31, 2005, in taxable years ending
after such date.

[Non-text portions of this message have been removed]

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