SOLAR TAX CREDIT carryforward

Technical topics regarding tax preparation.
#1
jacobj6  
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Does anyone know if there’s a limitation on the number of years any unused credit can carryforward?
I hear 5 years and I also hear indefinite (no limit).

My research doesn’t discuss any limitation, but it also does not specify that it’s indefinite.


I believe it’s just a “Residential Energy Efficient Property” credit (form 5695).
The instructions to this form, the form itself, and “TheTaxBook web library” do not discuss carryforward timeframe.
Code Section 25D discusses this credit, but doesn’t really specify carryforward length. It just says carryforward to succeeding taxable year.
Last edited by jacobj6 on 1-Jul-2022 1:32pm, edited 2 times in total.
 

#2
HowardS  
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25D(c) does not specify a limit so I would say indefinite.
Retired, no salvage value.
 

#3
jacobj6  
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Thanks Howard, that’s what I assumed too. But those in solar industry always mention 5 years. Just wanted to confirm.


What about BUSINESS solar credit. Does anyone know where I could find more info for BUSINESSES (as opposed to residential)? Is it still 26% of cost, carried forward indefinitely?
 

#4
HowardS  
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Just quick research found this:
Unused Tax Credits
Carryback and Carryforward Rules
Unused tax credits related to the
commercial ITC may be carried back
1 year and forward 20 years. After 20
years, one- half of any unused credit can
be deducted, with the remaining amount
expiring
Retired, no salvage value.
 

#5
jacobj6  
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Thanks again Howard.
Which business credit would solar fall under? Just general business credits (i.e., section 38)?
 

#6
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Section 48 for business. I think it is 30% for business.
 

#7
jacobj6  
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Thanks Seaside.
Further down, it discusses phaseout. It’s down to 26% in 2022 (goes down to 22% for 2023).
This mirrors the residential credit.
 


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