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<DIV><FONT face=Arial size=2>Hi Randy,</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>Here is the response from my accountant in New
Mexico:</FONT></DIV>
<DIV> </DIV>
<DIV>
<DIV><FONT face=Arial>Cary,</FONT></DIV>
<DIV><FONT face=Arial>I would agree that some portion of the PV system should be
depreciable if the income it generates is taxable. First, it might be that
the credits are not taxable, since they are given to encourage energy
efficiency. You'll need to wait and see how IRS rules on it. Second,
if the credits are taxable, I haven't figured out what % of the PV system would
be depreciable, since this whole arrangement is somewhat
convoluted.</FONT></DIV>
<DIV><FONT face=Arial>Ray</FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV></DIV>
<BLOCKQUOTE dir=ltr
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=randy@positiveenergysolar.com
href="mailto:randy@positiveenergysolar.com">Randy</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
title=re-wrenches@lists.re-wrenches.org
href="mailto:re-wrenches@lists.re-wrenches.org">re-wrenches@lists.re-wrenches.org</A>
</DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, February 25, 2009 12:13
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [RE-wrenches] Taxability of REC
payments to homeowners in New Mexico??</DIV>
<DIV><BR></DIV>
<DIV><FONT face=Arial size=2><SPAN class=031035218-25022009>Hi
Wrenches,</SPAN></FONT></DIV>
<DIV><FONT face=Arial size=2><SPAN class=031035218-25022009>I have what i feel
is a serious tax issue in New Mexico that just recently came to my attention.
Any help on this would be appreciated. Here are the
facts.</SPAN></FONT></DIV>
<DIV><FONT face=Arial size=2><SPAN
class=031035218-25022009></SPAN></FONT> </DIV>
<DIV><FONT face=Arial size=2><SPAN class=031035218-25022009>The major
utilities in New Mexico have instituted programs that buy the Solar REC
(Renewable Energy Certificates) from the system owner at a fixed rate over a
fixed term. THis is in addition to net metering. In our region the REC is
13 cents per kWh for all of the solar production. A separate
utility grade meter tracks the system production and once a month your
normal utility bill is offset by this credit and if the balance is less than
zero then you get a check. </SPAN></FONT></DIV>
<DIV><FONT face=Arial size=2><SPAN
class=031035218-25022009></SPAN></FONT> </DIV>
<DIV><FONT face=Arial size=2><SPAN class=031035218-25022009>The
major utility has decided that for homeowners or businesses
that generate REC credits totalling $600 or more, a 1099
tax form is issue reporting the earnings to the IRS as miscellaneous
income. The utility is asking for a IRS ruling on
this.</SPAN></FONT></DIV>
<DIV><FONT face=Arial size=2><SPAN
class=031035218-25022009></SPAN></FONT> </DIV>
<DIV><FONT face=Arial size=2><SPAN class=031035218-25022009>In my opinion, any
income producing property that generates income that is taxed should
correspondingly allow that asset to be treated as a business
asset that can be depreciated. For businesses, this is not an issue
because the asset is normally depreciated, but for homeowners, it is unfair to
tax the income without allowing depreciation on the asset. Implicitly, the way
the federal tax credit form works, it is not treated as a business asset since
the form is different that the form used for businesses claiming the tax
credit. </SPAN></FONT></DIV>
<DIV><FONT face=Arial size=2><SPAN
class=031035218-25022009></SPAN></FONT> </DIV>
<DIV><FONT face=Arial size=2><SPAN class=031035218-25022009>I would expect
this to become a bigger issue as more utilties offer this program to meet
their RPS requirement. </SPAN></FONT><FONT face=Arial size=2><SPAN
class=031035218-25022009>Can anyone shed light on this
issue?</SPAN></FONT></DIV>
<DIV><SPAN class=031035218-25022009><FONT face=Arial
size=2>THanks,</FONT></SPAN></DIV>
<DIV><SPAN class=031035218-25022009><FONT face=Arial
size=2>Randy</FONT></SPAN></DIV>
<DIV class=Section1>
<P class=MsoNormal dir=ltr align=left>Randy Sadewic<o:p></o:p></P>
<P class=MsoNormal>randy@positiveenergysolar.com<o:p></o:p></P>
<P class=MsoNormal>NABCEP Certified PV Installer</P>
<P class=MsoNormal>Positive Energy, Inc.<o:p></o:p></P>
<P class=MsoNormal>Phone 505 424-1112<o:p></o:p></P>
<P class=MsoNormal>Cell 505 570-0137</P>
<P class=MsoNormal>Fax<SPAN style="mso-spacerun: yes">
</SPAN>505 424-1113<o:p></o:p></P>
<P class=MsoNormal><o:p> </o:p></P>
<P class=MsoNormal><SPAN style="COLOR: red">Enjoy the
Sun!<o:p></o:p></SPAN></P>
<P class=MsoNormal><o:p> </o:p></P></DIV>
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