2020 SOLAR CREDIT

My client installed photovoltaic solar in the fall of 2020. The county signed off on it October 7, 2020 but the utility company didn't authorize its use until February, 2021. What would be the start date for the credit?

No, it's when it was installed not when finally hooked up to the utility. Credit 2020 for your client. I did solar in Dec. 2019 and looked it up very carefully then.

It cannot be legally placed in service till 2021, so the only year in which he could claim the credit is 2021.

Joanmcq is right.

My client installed photovoltaic solar in the fall of 2020. The county signed off on it October 7, 2020 but the utility company didn't authorize its use until February, 2021. What would be the start date for the credit?

For the residential solar credits under section 25D, all costs are deemed paid when the project is completed. The credit is also claimed in the year it is completed. The project is not completed until it has been inspected and hooked up to the energy grid, so 2021 would be the start date for the credit.

No, it's when it was installed not when finally hooked up to the utility.
The project is not completed until it has been inspected and hooked up to the energy grid, so 2021 would be the start date for the credit.
Hmmm.....
Reg? Ruling? What?

From PLR 201809003:

Under § 25D(e)(8)(A) of the Code, generally, for purposes of determining the tax year when the credit is allowed, an expenditure with respect to an item shall be treated as made when the original installation of the item is completed. Under § 25D(e)(8)(B), in the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.

. Same in 201035003.

From the Code:

(8) When expenditure made; amount of expenditure
(A) In general
Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.

(B) Expenditures part of building construction
In the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.

Is there something somewhere about "hooked up"?

Seems to me "the original use of the constructed or reconstructed structure by the taxpayer begins" means that it needs to be "hooked up". Until it is hooked up you are not using it unless you have back up batteries in addition to a grid tie.

At least that is always how I understood it. But seems like I learn something new every day these days!

That relates to (B). We are dealing with (A) (unless OP omitted facts.

Touche. Told you I learn something new every day!

Ah yes, Touche, who once partnered with Ross, Bailey and Smart, then later with Deloitte.

The project is not completed until it has been inspected and hooked up to the energy grid, so 2021 would be the start date for the credit Hmmm..... Reg? Ruling? What?

PLR 201809003 The Solar Energy System was interconnected into the electrical grid of the local utility and installation was considered to be complete for purposes of § 25D(e)(8)(A) of the Code

Yes it says that, but that was part of the "facts" given by the requestor of the PLR, not something that was asked to be ruled upon. I interpret it to mean that both installation and hookup happened in the same taxable year (year 1), so OP's concern here did not exist in the Rev Rul. It was moot. In essence, the statement was dictum and not specifically addressed by IRS. Requestor's concern was the battery that was installed in the following year (year 2), and they ruled favorably.

Earlier installations of qualifying property do not affect the availability of the credit for qualifying property in later years.

Similar to OP, we are not told specifically whether or not construction/reconstruction was involved, but it is reasonable to infer that it was not.

I still think the utility's approval, at least in (A), is not relevant. Else why would the law make the distinction (which it only fdoes indirectly because one would need that approval before

... the original use of the constructed or reconstructed structure by the taxpayer begins.

OP's facts not clear as to wether he is generating electricity for his home. See https://www.energy.gov/sites/prod/files ... r%20PV.pdf

1. The system must be placed in service during the tax year and generate electricity for a home located in the
United States. There is no bright-line test from the IRS on what constitutes “placed in service,” but the IRS has
equated it with completed installation.Ref: IRS private letter ruling 201809003

2. FAQ I am not connected to the electric grid?
Yes. A solar PV system does not necessarily have to be connected to the electric grid for you to claim the
residential federal solar tax credit, as long as it is generating electricity for use at your residence

Slightly off topic, but close enough to hijack a thread, I think:

PLR 201809003 makes it clear that to claim a the credit for the battery, "100% of the energy used (sic) by the Battery must be derived from the sun." (I would have said "stored by the battery")

The Tesla battery has a "storm watch" function. If this function is enabled, then Tesla can tell the battery to store energy as quickly as possible in preparation for the storm. The battery draws from the grid. The homeowner can turn off this function so that Tesla cannot trigger this energy movement from the grid to the battery, but the homeowner cannot by himself cause the battery to draw from the grid.

Has anyone seen any discussion regarding whether this (hopefully) rare event impacts the ability to claim the credit for the cost of the battery?

Direct answer to your question, no, have not seen such discussion.

The law's wording is ambiguous. Sure, the PLR's interpretation is one way to read it, and maybe even the right way. But the exact opposite interpretation is also possible, namely that (d)(1) is stricter than (d)(2) because (1) requires at least half the energy to be derived from the sun, while (2) has no such requirement, so it means that any amount derived from the sun is all that's needed.

Then there's your implied suggestion, that effectively the use of the storm watch function is a remote contingency that should not cause the equipment to fail even the strict interpretation.

Aren't we told in our training and education (and caselaw) that the plain wording of the law controls and there is no need to look to Congressional intent in such cases? In order to get to the ruling's interpretation, they had to compare (1) and (2) and then assume that Congress must have meant all/100%. Howabout just looking at (d)(2)'s plain language? I did not look at committee reports but I'd bet IRS did and found nothing to support their interpretation; else they'd have cited it. You might want to take a look.

And do note that if Tesla certified the product, Notice 2009-41 allows that to be relied on by taxpayers unless and until it is found erroneous, which requires a process. Did Tesla provide a certification?

Yes, someone will raise that a really small percentage could enable the credit if my interpretation is right. I'd counter with "OK, then view the omission of the 'half' requirement as an inadvertent drafting error andf use that as the test."

It's hardly worth a mention, but a review of the product says

Not only can you take advantage of the 26% federal tax credit, some states and utilities offer additional rebates and incentives, as well. In some cases, rebates like California’s SGIP incentive and Green Mountain Power’s Bring Your Own Device Program in Vermont, can cover almost 90% of the total cost of installing a Powerwall.

. https://www.solarreviews.com/blog/is-th ... -available

Whoa, wait a minute. That same site has this:

Are solar batteries covered by the federal tax credit?
The Internal Revenue Service (IRS) specifies that battery installations for which “all energy that is used to charge the Battery can be effectively assured to come from the Solar Energy System” are eligible for the full solar tax credit.
In other words, yes, solar batteries like the Tesla Powerwall and the LG Chem are eligible for the solar tax credit if they are charged by solar energy more than 75% of the time.
This means that if you install a battery with a new solar system, you will save 26% on the total combined cost.

. Where the heck did that come from?

Excellent points, as always.
I have no idea where the 75% that you quoted comes from. As a Powerwall owner, I can assure you that the battery is charged only from the sun almost always. The storm watch feature is very, very rarely available for use.
Thank you for the responses.