Federal Credits/Accelerated Capital
Depreciation for Businesses Installing Solar
The 10% investment Tax Credit for Businesses is permanently
extended as part of EPAct 1992. Any commercial entity which invests
in or purchases qualified solar energy property can take credit.
Only commercial entities are eligible. The main applicable paperwork
is IRS Form 3468. We also have Instructions for Form 3468.
Since the IRS may alter the forms without notifying us, these are
posted for your edification only; please refer to the official forms
site (www.irs.gov) for current
versions.] All you have to know about your renewable energy
equipment is its cost, which is entered on line 2.
For a sole proprietorship the tax credit comes back into Form 1040
on line 50; for corporations it goes onto Form 1120, Schedule J,
line 6d; Form 1120-A, Part I, line 4a; Form 1041, Schedule G, line
2c; or the applicable line of your return.
The Federal definition of energy property
is:
Equipment that uses solar energy to generate electricity, to heat
or cool (or provide hot water for use in) a structure, or to provide
solar process heat or equipment used to produce, distribute, or use
energy derived from a geothermal deposit (within the meaning of
(Schedule section 613(e)(2)). Use IRS Form 3468.
Available to: Any commercial entity in all 50
states is eligible.
Eligible Technology:
Photovoltaics, Solar Hot Water, and Energy Storage equipment
Investment Tax Credit (courtesy SEIA):
In any one year you may not take any tax credit that exceeds the
total tax owed. The allowable tax credit for any one year is
also limited to $25,000, plus 25% of the total tax remaining
after the credit is taken. For example, if you are allowed the
full 10% credit for an investment of $500,000, which is $50,000,
and you owe $100,000 in taxes, you may take $25,000 plus 25% of
the remaining $75,000 ($18,750), which equals $43,750. Credit
not allowable in one year may be taken in other tax years
Do I have to use the credit in the year the purchase or
investment is made?
No. If you cannot use part or all of the credit because of tax
liability limitations, you may carry any excess back to each of the
three preceding years, beginning with the earliest. If you have an
unused credit after carryback, it may be carried forward to each of
the 15 years after the year of the credit.
Are there special tax forms needed to take the credit?
Yes. You will need form 3486 (Investment Credit), and you may need
form 3800 (General Business Credit) and their corresponding
instruction forms.
Additional Info: Contact your accountant or tax professional.
Accelerated Capital Depreciation for Solar Energy Property
The US Government offers a 5 year Accelerated Capital Depreciation
for any commercial entity which invests in or purchases qualified
solar energy property. Only commercial entities are eligible. This
is part of the US Code Citation: 26 USC Section 168.
Available to: Any commercial entity in all 50 states is
eligible
Eligible Technology: Photovoltaics, Solar Hot Water, and Energy
Storage equipment
Additional Info: The United States Government Internal Revenue
Service, or contact your accountant or tax professional.
Clean Energy Initiative
