7500 EV tax credit update with new bill

[joec]

What Is a Written Binding Contract?​

In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

is it just me, or doesn't it Cleary state "if a customer has made a non-refundable deposit" someone please help me understand the confusion the thread seems to be having.
I have a touring that should be coming in 2023 that was confirmed before August 16th with a non-refundable deposit

It‘s a deposit or a down payment. Either has to be 5 percent of the price.

 

[maazymaaz]

IRS asks for comments on upcoming energy guidance | Internal Revenue Service

IR-2022-172, October 5, 2022 — The Internal Revenue Service today issued six notices asking for comments on different aspects of extensions and enhancements of energy tax benefits in the Inflation Reduction Act.

www.irs.gov

above website was updated on 10/05/2022

Section 13401(l) of the IRA provides a transition rule for a taxpayer who purchased or entered into a written binding contract to purchase a new qualified plug-in electric drive motor vehicle (as defined in § 30D(d)(1) of the Code, as in effect on the day before the date of enactment of the IRA (August 15, 2022)) after December 31, 2021 and before the date of enactment of the IRA (August 16, 2022), and placed such vehicle in service on or after the date of enactment of the IRA. The transition rule provides that such a taxpayer may elect (at such time, and in such form and manner as the Secretary may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of the IRA.

 

[maazymaaz]

It‘s a deposit or a down payment. Either has to be 5 percent of the price.

but it says OR not AND

 

[Babyrocko1908]

It‘s a deposit or a down payment. Either has to be 5 percent of the price.

NO IT DOES NOT!! The 5% applies to the limitations on damages!!!!

 

[Babyrocko1908]

What Is a Written Binding Contract?​

In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

is it just me, or doesn't it Cleary state "if a customer has made a non-refundable deposit" someone please help me understand the confusion the thread seems to be having.
I have a touring that should be coming in 2023 that was confirmed before August 16th with a non-refundable deposit

What Is a Written Binding Contract?​

In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

is it just me, or doesn't it Cleary state "if a customer has made a non-refundable deposit" someone please help me understand the confusion the thread seems to be having.
I have a touring that should be coming in 2023 that was confirmed before August 16th with a non-refundable deposit

The 5% down payment is an example as it applies to a customers recovery of damages meaning if a customer only put down 5%, it doesn't mean their damages are limited to 5%. As long as you converted your reservation to a non-refundable deposit by the date of the bill was passed, you'll fall under the transition rule.

 

[joec]

As I’ve stated on other threads, this is the very definition of an un-winnable argument. Folks choose to believe what they want to believe. The only thing that matters is how the IRS interprets it. Which we won’t know until later when they clarify.

Until then, we’re just talking in circles.

 

[idiot900]

The language quoted above from the IRS website is written in a way where they could change their mind later (“it is an indication” does not exclude the possibility that $1k is actually sufficient). Plus, if it were this clear cut, why didn’t Lucid ask for the difference between deposit and 5% for August confirmations? I would have gladly paid it and they could have booked some revenue.

So I see some reason for optimism - they have latitude to interpret - but I’m not banking on being able to claim the tax credit. I think @joec is correct: the proof is in the tasting of the pudding.

 

[HariK]

Assuming I will get my lucid in 23, I will file and claim 7.5k tax credit on the basis of the binding contract and if they deny it, I will live just fine.

 

[noobzilla]

Anyone know if I can put someone as a co-owner of the car but not have them involved in the loan? I want them to claim the EV credit and I dont mind them co-owning the car under their name

 

[Ksa23]

Anyone know if I can put someone as a co-owner of the car but not have them involved in the loan? I want them to claim the EV credit and I dont mind them co-owning the car under their name

Depending on your state you may be able to have two people registered to the vehicle, but if you take out a loan, the bank will hold the title and "own it" until it's paid off.

If you're "single" for tax purposes, only the person on the loan can claim the credit. If its a joint loan, only one person can claim it.

 

[Bobby]

Anyone know if I can put someone as a co-owner of the car but not have them involved in the loan? I want them to claim the EV credit and I dont mind them co-owning the car under their name

If you don’t mind the question, why?

 

[noobzilla]

If you don’t mind the question, why?

I'm estimating my 2022 taxes and it looks like I wont pay Federal taxes as my carryover losses from 2021 will be higher than my income in 2022.

I'm glad the policy will be switched to instant EV rebate in 2024 I believe, but currently sucks for my case. If I can have the EV credit hit 2023 then no problem I'll hit the $7500 easily.

 

[Halodde]

I'm in the camp of glass is half full here. Agree with pretty much everything that has been said above. But, I'm looking at it as the statement referring to the 5% clearly says it is an example. It definitely does not say that 5% is a minimum. That means that 5% is an example and nothing else. They could have used 20% as the example but also accepted 5% or $1000. We have to wait and see. Also, and this is important to a lot of us, nowhere in the transition rule section does it say WHEN the car has to be delivered. All it says is the order and non-refundable deposit have to be before the change in the law. Based on the wording, the car could come in 2025, right?

 

[DJL]

I'm in the camp of glass is half full here. Agree with pretty much everything that has been said above. But, I'm looking at it as the statement referring to the 5% clearly says it is an example. It definitely does not say that 5% is a minimum. That means that 5% is an example and nothing else. They could have used 20% as the example but also accepted 5% or $1000. We have to wait and see. Also, and this is important to a lot of us, nowhere in the transition rule section does it say WHEN the car has to be delivered. All it says is the order and non-refundable deposit have to be before the change in the law. Based on the wording, the car could come in 2025, right?

According to my CPA, I needed to take possession of the car by the end of the year to qualify. Furthernore, while the 5% is an example, it established what the IRA and tax experts call a "safe harbor" position. Meaning, if you meet that example, you are safe in the eyes of the IRS. If you are under that value, you are no longer in the "safe harbor" and expose yourself to an audit, a contrary ruling, and the resulting fines and penalties. That does not mean you will be audited, it just means that if you are, you are in an exposed position and best be ready for the worst.

 

[Ksa23]

I'm estimating my 2022 taxes and it looks like I wont pay Federal taxes as my carryover losses from 2021 will be higher than my income in 2022.

I'm glad the policy will be switched to instant EV rebate in 2024 I believe, but currently sucks for my case. If I can have the EV credit hit 2023 then no problem I'll hit the $7500 easily.

You may be able to claim the EV tax credit in a later tax year, not sure. Worth looking into though.

Worst case, carry over your capital losses into a later year.

 

[noobzilla]

You may be able to claim the EV tax credit in a later tax year, not sure. Worth looking into though.

Worst case, carry over your capital losses into a later year.

Nope, only applicable for that tax year and also can't choose which year to use capital losses.

 

[Halodde]

According to my CPA, I needed to take possession of the car by the end of the year to qualify. Furthernore, while the 5% is an example, it established what the IRA and tax experts call a "safe harbor" position. Meaning, if you meet that example, you are safe in the eyes of the IRS. If you are under that value, you are no longer in the "safe harbor" and expose yourself to an audit, a contrary ruling, and the resulting fines and penalties. That does not mean you will be audited, it just means that if you are, you are in an exposed position and best be ready for the worst.

The 5% part makes sense but that still doesn't mean that the $1k is a knockout- just means it's not a guarantee. But, on what is he basing that delivery date limitation? It's not in any information I have seen

 

[DJL]

The 5% part makes sense but that still doesn't mean that the $1k is a knockout- just means it's not a guarantee. But, on what is he basing that delivery date limitation? It's not in any information I have seen

I explained all of this way back in July/August time frame, shortly after the bill came out. I am not interested in reresearching this again. If you are really interested, you can go back and search through the tons of post on this subject. Or not and find out the hard way if you are correct or not. Sorry, but its Friday evening, I worked this week in my county's election center processing votes and I am bushed.... PS, I am not trying to be rude, just very tired.

 

[Ksa23]

I explained all of this way back in July/August time frame, shortly after the bill came out. I am not interested in reresearching this again. If you are really interested, you can go back and search through the tons of post on this subject. Or not and find out the hard way if you are correct or not. Sorry, but its Friday evening, I worked this week in my county's election center processing votes and I am bushed.... PS, I am not trying to be rude, just very tired.

I would second this. There's been tons and tons of discussion on this topic already

 

[Halodde]

A simple 'it's answered above' would have been sufficient. I didn't realize that you or anyone else had already addressed the question of the delivery date and lack of an end date in the guidelines previously. I'll refrain from asking for additional information. I'll just look through every post on the forum to try to find the answers