Tax Credit Question [RE-wrenches]

Joel Davidson joeldavidson at earthlink.net
Wed Aug 17 19:09:36 PDT 2005


<x-flowed>
Allan,

With module lead times they way they are, now is a good time to tell 
prospects and fence-sitters to order their PV modules now and get in the 
queue. If you think there's a module shortage now, try buying modules next 
Spring when people start their construction projects.  It's hard for 
impatient Americans to have to wait (German homeowners wait up to 10 months 
to get their PV system installed), but that's the way it's gonna be for a 
while. Also, expect more price increases. The good news is - it's about time 
PV became popular!

If any fence-sitters need a push, refer them to today's Forbes article at 
http://www.forbes.com/business/2005/08/17/energy-solar-taxes-cz_ae_0817beltway.html

Joel Davidson


----- Original Message ----- 
From: "Allan Sindelar" <allan at positiveenergysolar.com>
To: "New wrenches posting" <RE-wrenches at topica.com>
Sent: Wednesday, August 17, 2005 12:19 PM
Subject: Tax Credit Question [RE-wrenches]


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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.



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