Forums

Recapture of Tax Credit

Recapture of Tax Credit

I was planning on trading in my 2018 Model S 75D for a longer range model.

I discovered that I will need to write a check to the IRS for a portion of the tax credit, i.e. in addition to all the taxes I pay, I would need to write a check for an additional $5,000 (recapture of the initial $7,500 credit).

The regs refer to section 30D(f)(5) as in "If the vehicle no longer qualifies for the credit, you may have to recapture part or all of the credit. For details, see section 30D(f)(5).". However, nowhere can I find an explanation of the amount of the recapture.

Does anyone have any ideas?

reed_lewis | 23 januar 2020

Check this website out.
www.law.cornell.edu/cfr/text/26/1.30-1

It says that even if you dispose of the vehicle by selling it, yet it still is an EV, the you keep the credit. The only recapture is if you were to modify it to a gasoline vehicle (which I doubt anyone except for a few few stupid people would do) then you have to recapture.

EVRider | 23 januar 2020

The full credit is yours as long as you put the car into service, which you did. The IRS doesn’t care if you dispose of the car, because you’re the only buyer who can claim the federal tax credit.

zoomerdog | 23 januar 2020

Per my accountant

IRC 30D deals with the electric vehicle credit. 30D(5)(f) mentions the recapture, as do the instructions to the IRS form for the credit. Unfortunately, we do not have the IRS regulations yet.

Most commentators, I have read, believe the IRS will follow the same recapture rules as under the one ITC credit, which is found under IRC 50, which generally states that you recapture the credit over the depreciable life of the asset. Since the vehicle is a 5yr asset, the credit recapture would be 20% x the remaining depreciable life. While we cannot be sure until the regs are issued, we gave you the worst case scenario.

zoomerdog | 23 januar 2020

Per my accountant

IRC 30D deals with the electric vehicle credit. 30D(5)(f) mentions the recapture, as do the instructions to the IRS form for the credit. Unfortunately, we do not have the IRS regulations yet.

Most commentators, I have read, believe the IRS will follow the same recapture rules as under the one ITC credit, which is found under IRC 50, which generally states that you recapture the credit over the depreciable life of the asset. Since the vehicle is a 5yr asset, the credit recapture would be 20% x the remaining depreciable life. While we cannot be sure until the regs are issued, we gave you the worst case scenario.

reed_lewis | 23 januar 2020

Again, the tax credit for an EV is only 'recaptureable' if the vehicle is converted to a non EV.

There may be different rules if a business gets the credit, but I am talking about personal returns.

zoomerdog | 23 januar 2020

Reed -
Thanks for your input.

The recapture rules you refer to were "repealed" by PL 113-295 and the IRS has not re-issued new regulations..

EVRider | 23 januar 2020

You might want to find a new accountant. :-)

rxlawdude | 23 januar 2020

Plain language, guys: "If the VEHICLE no longer qualifies for the credit" has nothing to do with disposing of the asset.

Unless that's markedly changed in the pending regs, which is nice of them to think about after the end of the tax year. SMH.

kozakor | 24 januar 2020

If the benefit was originally calculated, you will need to return when reissuing. Loans can be difficult to deal with. This question still depends on what state you live in. After all, the laws can be different. I live in wisconsin. I had problems with my credit obligations. I was assisted by the advice of the lawyers of Debt zuest USA. I used their advice on debt relief in wisconsin https://debtquest.com/debt-relief-in-wisconsin/. It helped me gain financial independence