It's officially tax time are people going to claim the tax credit from the expired version of the tax code?

[Electrified]

It's not the "purchase date" that's relevant here. It is the date the customer converted their order to a written and binding contract that controls. The Transition Rule grandfathers these contracts. Scroll back through this entire thread for the accurate information.

Well let's look at some legal precedent here in regards to "the purchase date" of an EV, placed in service seems to be recurring language in
Podraza, Troy S., et ux. v. Comm.

UNITED STATES TAX COURT
Filed November 19, 2015

Petitioners argue they remitted payment and acquired title to a qualified electric vehicle on December 21, 2009. Petitioners assert that legal title passed to them on the date of purchase and therefore they are entitled to a PEVC for 2009 because the vehicle was acquired before December 31, 2009. However, the statute effective on the date of purchase also required a qualified motor vehicle to be placed in service on or before December 31, 2009. Thus, the statutory requirements are twofold: (1) petitioners had to acquire title to the vehicle after December 31, 2008, and (2) place it in service on or before December 31, 2009. Petitioners are entitled to a PEVC for 2009 if they met these requirements.

Section 30D(a)(1) allows a credit against tax for qualified property for the taxable year in which such property is placed in service. "Neither the [C]ode nor the regulations provide a general definition for a term that each uses many times regarding property: 'placed in service'". Jasper L. Cummings, "When Is Property Placed in Service?", 149 Tax Notes 409 (2015). "The de facto general definition is the earlier of readiness for use for its intended purpose or actual regular use for that intended purpose. But piecing together the de facto definition is far harder than it ought to be". Id.; e.g., Rev. Proc. 2007-65, 2007-2 C.B. 967 ("placed in service" not defined for section 45, but the depreciation and investment credit definition is adopted without question); see IRS Publication 946, How to Depreciate Property 7 (Feb. 27, 2015).

Although "placed in service" is not explicitly defined for purposes of section 30D, other sections of the Code provide guidance. Section 38(a) provides a business credit against tax with respect to property in the first taxable year in which qualified property is placed in service by the taxpayer. See also sec. 1.46-3(d)(4)(i), Income Tax Regs. Property will be considered placed in service when it is in a condition or state of readiness and availability for a specifically assigned function. Id. subpara. (1)(ii); see also Consumers Power Co. v. Commissioner, 89 T.C. 710 (1987) (referring to investment credit for purposes of section 38(a)).

There are other tests in the regulations which have been used to determine when a vehicle has been placed in service. Section 1.150-2(c), Income Tax Regs., for purposes of tax-exempt bonds defines placed in service as "the date on which, based on all the facts and circumstances -- (1) The facility has reached a degree of completion which would permit its operation at substantially its design level; and (2) The facility is, in fact, in operation at such level." Section 1.1250-4(b)(2), Income Tax Regs., provides that property is placed in service on the date of first use, regardless of when depreciation starts. Finally, section 145.4051-1(c)(2), Excise Tax Regs., states that the placed-in-service date for the tax on heavy trucks and trailers is the date when the owner takes possession of the vehicle.

The Court will look at whether the vehicle was "in a condition or state of readiness and availability" for the "specifically assigned function" for which petitioners purchased it to determine when petitioners placed the Spark NEV-48 EX in service. See sec. 1.46-3(d)(1)(ii), Income Tax Regs.

Vehicle Purchased But Not Delivered in Tax Year Ineligible for Credit | Tax Notes

The Tax Court, in a summary opinion, held that a couple wasn't entitled in the 2009 tax year to claim a plug-in electric motor vehicle tax credit under section 30D

www.taxnotes.com

 

[EVSRCali]

Well let's look at some legal precedent here in regards to "the purchase date" of an EV, placed in service seems to be recurring language in
Podraza, Troy S., et ux. v. Comm.

UNITED STATES TAX COURT
Filed November 19, 2015

Petitioners argue they remitted payment and acquired title to a qualified electric vehicle on December 21, 2009. Petitioners assert that legal title passed to them on the date of purchase and therefore they are entitled to a PEVC for 2009 because the vehicle was acquired before December 31, 2009. However, the statute effective on the date of purchase also required a qualified motor vehicle to be placed in service on or before December 31, 2009. Thus, the statutory requirements are twofold: (1) petitioners had to acquire title to the vehicle after December 31, 2008, and (2) place it in service on or before December 31, 2009. Petitioners are entitled to a PEVC for 2009 if they met these requirements.

Section 30D(a)(1) allows a credit against tax for qualified property for the taxable year in which such property is placed in service. "Neither the [C]ode nor the regulations provide a general definition for a term that each uses many times regarding property: 'placed in service'". Jasper L. Cummings, "When Is Property Placed in Service?", 149 Tax Notes 409 (2015). "The de facto general definition is the earlier of readiness for use for its intended purpose or actual regular use for that intended purpose. But piecing together the de facto definition is far harder than it ought to be". Id.; e.g., Rev. Proc. 2007-65, 2007-2 C.B. 967 ("placed in service" not defined for section 45, but the depreciation and investment credit definition is adopted without question); see IRS Publication 946, How to Depreciate Property 7 (Feb. 27, 2015).

Although "placed in service" is not explicitly defined for purposes of section 30D, other sections of the Code provide guidance. Section 38(a) provides a business credit against tax with respect to property in the first taxable year in which qualified property is placed in service by the taxpayer. See also sec. 1.46-3(d)(4)(i), Income Tax Regs. Property will be considered placed in service when it is in a condition or state of readiness and availability for a specifically assigned function. Id. subpara. (1)(ii); see also Consumers Power Co. v. Commissioner, 89 T.C. 710 (1987) (referring to investment credit for purposes of section 38(a)).

There are other tests in the regulations which have been used to determine when a vehicle has been placed in service. Section 1.150-2(c), Income Tax Regs., for purposes of tax-exempt bonds defines placed in service as "the date on which, based on all the facts and circumstances -- (1) The facility has reached a degree of completion which would permit its operation at substantially its design level; and (2) The facility is, in fact, in operation at such level." Section 1.1250-4(b)(2), Income Tax Regs., provides that property is placed in service on the date of first use, regardless of when depreciation starts. Finally, section 145.4051-1(c)(2), Excise Tax Regs., states that the placed-in-service date for the tax on heavy trucks and trailers is the date when the owner takes possession of the vehicle.

The Court will look at whether the vehicle was "in a condition or state of readiness and availability" for the "specifically assigned function" for which petitioners purchased it to determine when petitioners placed the Spark NEV-48 EX in service. See sec. 1.46-3(d)(1)(ii), Income Tax Regs.

Vehicle Purchased But Not Delivered in Tax Year Ineligible for Credit | Tax Notes

The Tax Court, in a summary opinion, held that a couple wasn't entitled in the 2009 tax year to claim a plug-in electric motor vehicle tax credit under section 30D

www.taxnotes.com

Does the COVID induced supply chain issues, and all sorts of exceptions during the time count as different circumstances and times, than the parallel in history above?

 

[Electrified]

Does the COVID induced supply chain issues, and all sorts of exceptions during the time count as different circumstances and times, than the parallel in history above?

I don't know the answer to your question.

What I do know based on what I read in TROY S. PODRAZA AND JILL A. PODRAZA, PETITIONERS V. COMMISSIONER OF INTERNAL REVENUE is that the court referred back to previous cases and that a decision was entered for the respondent:

Caselaw requires that the Court determine more specifically whether the asset in question was ready and available for full operation on a regular basis for its specifically assigned function. See Consumers Power Co. v. Commissioner, 89 T.C. 710; Brown v. Commissioner, T.C. Memo. 2013-275. The Court determined the placed-in-service date for a hydroelectric utility plant was deferred until the plant was available for full operation on a regular basis. Consumers Power Co. v. Commissioner, 89 T.C. 710. The Court determined a depreciation deduction for the hydroelectric plant was not allowed for the year it first generated electric power during preoperational testing because the plant was not available for full operation on a regular basis until the following year. Id. at 724. The Court noted that responsibility and control of the plant remained with the contractor during the preoperational testing and the taxpayer did not formally accept the plant until the following year. Id. Ultimately, the placed-in-service date of property is when it is in a state of readiness and availability for full service of its specifically assigned function. Id.

The issue in this case closely resembles the issue in Brown. In response to growing concern for the economy, Congress enacted section 168(k), which granted a "special allowance" for qualified property acquired after September 10, 2001, and before January 1, 2005. See Job Creation and Worker Assistance Act of 2002, Pub. L. No. 107-147, sec. 101, 116 Stat. at 22. Section 167(a) offered a depreciation deduction for qualified property "for the taxable year in which such property is placed in service" which included an allowance equal to 30% of the adjusted basis of the qualified property in addition to depreciation otherwise allowable. Sec. 168(k)(1)(A). This additional allowance, also known as bonus depreciation, was temporarily increased from 30% to 50% for qualified property placed in service after May 5, 2003, and before January 1, 2005. See sec. 168(k)(4)(B). Similarly, a PEVC was applicable to low-speed electric vehicles during a limited time. In order to qualify for a PEVC, the taxpayer must comply with the provisions set forth by section 30D before its expiration.

The taxpayer in Brown v. Commissioner, T.C. Memo. 2013-275, sought to take advantage of the increased bonus depreciation for the purchase of a plane to serve the air transportation needs of his insurance business. In Brown, the taxpayer took delivery of a plane in December 2003 and claimed the credit for that year. Before purchasing the plane, the taxpayer insisted the plane undergo various modifications so that it could serve his business needs. The additional modifications were completed over a month later in the following tax year. The Commissioner disallowed the credit on the grounds that the plane, while fully functional, was not available for its intended function of serving the taxpayer's air transportation needs in his insurance business until the following year. Id.

Much as in Brown, the dispute in this case is over timing. Petitioners entered into the transaction for purchase of the vehicle just before the close of the year. As previously discussed, they received a bill of sale, which contained a VIN, and a certificate of origin shortly after they remitted full payment. However, a bill of sale containing a description of the vehicle and a VIN is not sufficient to show the vehicle was ready and available for full operation for its intended use. Petitioners have not offered evidence to show the vehicle was available for their use, much less fully manufactured. In fact, the vehicle was not delivered until June 8, 2010, making it impossible for the vehicle to be available for use until that date. Even if the Court were to assume the vehicle was fully manufactured and operational while awaiting shipment to petitioners, Brown and Noell tell us that the vehicle could not be considered placed in service unless and until the vehicle was readily available to serve its assigned function for petitioners' personal use on a regular basis. The Court finds that the low-speed electric vehicle was not available for its intended use on a regular basis until it was delivered on June 8, 2010. Consequently, petitioners did not place the vehicle in service in 2009 and are not eligible for a PEVC for that year.5

The Court has considered all of the arguments made by the parties and to the extent they are not addressed herein, they are considered unnecessary, moot, irrelevant, or without merit.

To reflect the foregoing,

Decision will be entered for respondent.

Vehicle Purchased But Not Delivered in Tax Year Ineligible for Credit | Tax Notes

The Tax Court, in a summary opinion, held that a couple wasn't entitled in the 2009 tax year to claim a plug-in electric motor vehicle tax credit under section 30D

www.taxnotes.com

 

[SM_NCarolina]

That'll be hack of a deal on total price.

so if i did the "confirmation" or "binding contract" thing on August 10, 2022 for my pure, with an estimated Q3 2023 delivery date, and i've already submitted my 2023 tax return, i assume i do an amendment on my 2023 tax return to claim the 7500 tax credit right?

if that's the case, it seems like we'll be able to get the 7500 lucid discount and the 7500 tax credit. thanks for the clarifications.