[RE-wrenches] Hotel Exclusion?

Mon Dec 21 09:15:55 PST 2009

Thanks to Matt and all who contacted me directly and for their input on the listserv. After researching this issue, I received the same rhetoric from the IRS. I am meeting with my tax advisor tomorrow before I enter into contracts later in the week. Thanks again.

Mike
Michael Gullo
Solar Solutions LLC
Marlton, NJ
  ----- Original Message ----- 
  From: Matt Lafferty 
  To: SOLARPRO at aol.com ; re-markets at lists.re-wrenches.org ; 'RE-wrenches' 
  Sent: Tuesday, December 15, 2009 10:28 PM
  Subject: Re: [RE-wrenches] Hotel Exclusion?

  Pat, Kurt, et al,

  With the exception of changing my email address to "youaregonnahavetoguess" in the body of my previous post, the text is exactly as I received it. I had EXACTLY the same gut response as Pat did to their phrase, "would seem to fit". Ergo my use of the phrase, "It appears". Caveat emptor, and all that.

  As we all (hopefully) know, this is an IRS administered "program". Everything, and I really do mean EVERYTHING, related to the IRS is subject to interpretation... Not unlike our dearly beloved "Codes" which are administered by our not-so-dearly-beloved AHJs. SUBJECT TO INTERPRETATION. CONSULT YOUR TAX ADVISOR. RETAIN AN ATTORNEY. Yada yada yada. 

  I think it is prudent to point out that the subject is related to the grant, as opposed to the ITC. I don't believe there is any question whether or not hotels and motels are eligible for the ITC. Personally, I was very surprised to see the original inquiry from Michael G. 

  I wasn't able to find any proof of this, but here's one theory: Since the grant is not available to "residential" property, my instinct tells me there might be some IRS classification for hotels/motels that might classify them as "residential" property. Instinct again tells me that, if this is the case, it is quite likely that it is an "either/or" classification (residential or commercial) which must be chosen when the property is originally placed in service. Not unlike the choice to claim "mileage or actual cost" for business vehicles. If this is the case, then eligibility would be determined on a case by case basis and would be (I hope) easily answered by the owner of the hotel/motel. Please note that everything in this paragraph is merely SPECULATION on my part and should NOT be relied upon for anything other than fodder for conversation... 

  I didn't find any language in the guidance document (http://www.treas.gov/recovery/docs/guidance.pdf) that indicated for-profit hotels and motels would not be eligible for the grant. Quite the contrary. By my own reading, a privately held, for-profit hotel or motel run as a business should be eligible on all counts, with the possible exception of whether or not it is [somehow] classified as a residential property??? It is not a 501(C), it is not a governmental entity, it is not an electric coop or the like, it is not a tribal entity, etc. I did verify that hotels and motels where "more than half of the units are used on a transient basis" are NOT classified as residential rental property as far as the IRS is concerned for depreciation (Page 9, http://www.irs.gov/pub/irs-pdf/p527.pdf ). As far as I can tell, for IRS depreciation purposes, the real-property should be classified as "non-residential real property" (http://www.irs.gov/publications/p946/ch04.html & http://www.irs.gov/publications/p946/ar02.html#en_US_publink1000107773). (Side note: I want to know why in the hell there are 4 different Asset Classes for horses! WTF!) The "business" would be treated according to its registration class... vis a vis Corporation, LLC, Partnership, Sole-Proprietor, etc. I'm coming up with ELIGIBLE in the case of the family-owned corporation model. Please note that everything in this paragraph is merely SPECULATION on my part and should NOT be relied upon for anything other than fodder for conversation... 

  I did find that many local governments classify hotels/motels as residential rental properties for the purposes of business taxation and/or property taxes. (Hello Santa Monica, et al). Perhaps there is some overlap or confusion in interpretation related to this??? 

  Apartments might be a different story since the real property is classified as residential rental property, but that's still business activity, so... ??? 

  Calling Jeff Oldham: I did not understand your post on this topic. Can you elaborate, please?

  Pray for Sun!

  Matt Lafferty

  PS - ynnart po-tsop a si renoissimmoC SRI ehT

------------------------------------------------------------------------------
  From: SOLARPRO at aol.com [mailto:SOLARPRO at aol.com] 
  Sent: Tuesday, December 15, 2009 3:49 PM
  To: gilligan06 at gmail.com; re-markets at lists.re-wrenches.org
  Subject: Re: [RE-wrenches] Hotel Exclusion?

  Matt:

  "WOULD SEEM TO FIT..."  is that a qualifier contained in the email sent to you... or a modifier inserted at the end of the message? 

  Wouldn't that be the same as 

  "PROBABLY"   ???

  If you write back, ask ..... "And then???"   
  You "most likely" know the answer.

  Pat Redgate
  Ameco Solar

  In a message dated 12/15/2009 2:01:14 P.M. Pacific Standard Time,   @gmail.com writes:
    For anyone who might be interested...

    It appears that hotels and motels run as busninesses are eligible for the 1603 grant. Below is the response from Treasury to my inquiry on the matter.

    Cheers,

    Matt Lafferty

    From: 1603Questions at do.treas.gov [mailto:1603Questions at do.treas.gov] 
    Sent: Tuesday, December 15, 2009 10:38 AM

    To: youaregonnahavetoguess at gmail.com

    Subject: RE: Eligibility Question

    Matt Lafferty-- Thank you for your email question. Page 2 of the Program Guidance at www.treas.gov/recovery/1603.shtml indicates that qualified renewable energy property is eligible to be placed in service at locations used in a trade or business or held for the production of income. Hotels and motels would seem to fit as a business.

    **** The response contained in this email is for informational purposes only. It does not necessarily represent the final views of the US Department of Treasury or the Section 1603 program and is therefore not binding. ****

    -----Original Message-----

    From: Matt Lafferty [mailto:youaregonnahavetoguess at gmail.com]

    Sent: Monday, December 14, 2009 10:50 AM

    To: 1603 Questions

    Subject: Eligibility Question

    Hi,

    Are hotels and motels eligible for the 1603 Grant? The business is a privately held corporation.

    Thanks!

    Matt Lafferty

----------------------------------------------------------------------------
    From: Matt Lafferty [mailto: youaregonnahavetoguess at gmail.com] 
    Sent: Tuesday, December 15, 2009 6:38 AM
    To: RE Markets List
    Subject: Hotel Exclusion?

    Marketeers,

    A question was raised yesterday on the RE-Wrenches list about whether or not hotels are eligible for the Federal Grant for the installation of solar. As it turns out, my wife is currently working with a family-owned, non-tribal, motel to design PV and Solar Thermal systems. Neither she nor I were aware of any exclusions which would apply to this type of business. 

    Can anyone here shed any light on this? If they are not eligible, a pointer to the applicable section would be greatly appreciated.

    Thanks in advance!

    Matt Lafferty 

    From: re-wrenches-bounces at lists.re-wrenches.org [mailto:re-wrenches-bounces at lists.re-wrenches.org] On Behalf Of Michael Gullo
    Sent: Sunday, December 13, 2009 10:53 PM
    To: RE-wrenches
    Subject: [RE-wrenches] Hotel exclusion

    Hi All,

    I was bidding a job for a hotel down the shore here in South Jersey and when the owner called a competitor for a second bid, he was told that hotels were excluded from the Federal tax grant. Has anyone heard of this or better yet has anyone completed a hotel this year? Thanks.

    Mike
    Michael Gullo
    Solar Solutions LLC
    Marlton, NJ

    NABCEP Certified PV Installer

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