Tax Credit Question [RE-wrenches]

Thu Aug 18 07:29:21 PDT 2005

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Tell them that they can get panels now, and maybe not later, and that
there is certainly going to be a price increase come January 1. All
true. All not related to the new tax credit. (Just so no one starts
saying "See, as soon as there is a tax credit the prices go up.")

Jeff Wolfe
Global Resource Options 

-----Original Message-----
From: Allan Sindelar [mailto:allan at positiveenergysolar.com] 
Sent: Wednesday, August 17, 2005 3:19 PM
To: New wrenches posting
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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