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Thread: Form 8936 and Instructions for 2011 Tax Credit

  1. #1

    Form 8936 and Instructions for 2011 Tax Credit

    Hi folks,

    I've seen many threads discussing whether Tesla Motors actually filed for certification, along with a few links to IRS pages. However, I've not seen any mention of which Form we must attach to our tax return in order to take the $7,500 credit for purchasing a Roadster 2.5 (in 2011, for me).

    A quick search at the IRS shows a 2010 Form 8936, so I assume it would be the same form number for 2011.

    Does anyone have experience filing this form? Any suggestions or warnings?


    While I'm here, I have a couple of related questions:

    One of the IRS pages says that the person taking the credit must have title under state law. How is this affected when the car is purchased with a loan? Does the bank hold the title until the loan is paid in full?

    When filing 2011 taxes, does the purchaser have the responsibility to provide a copy of the certification? I assume that we can all just trust that Tesla Motors has proper certifications on file and up to date with the IRS for the 2011 year for all Roadster 2.5 sales.

  2. #2
    Happy Model S Owner
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    Quote Originally Posted by S-2000 Roadster View Post
    One of the IRS pages says that the person taking the credit must have title under state law. How is this affected when the car is purchased with a loan? Does the bank hold the title until the loan is paid in full?
    No, the title will be in the name of the purchaser, at least in all states I know about. The lender usually has to make court filings in order to transfer the title if you don't pay the loan.

    With a leased car, on the other hand, the leasing company holds title.

  3. #3
    Quote Originally Posted by S-2000 Roadster View Post
    When filing 2011 taxes, does the purchaser have the responsibility to provide a copy of the certification? I assume that we can all just trust that Tesla Motors has proper certifications on file and up to date with the IRS for the 2011 year for all Roadster 2.5 sales.
    When I filed mine (in 2009), I just filled out the form and didn't deal with Tesla's part. I never heard back from the IRS, so either it was OK or they never looked at it.

  4. #4
    Senior Member hcsharp's Avatar
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    The rules are slightly different than they were in '09. Form 8936 the credit is $7500 (line 3, 4 for '11). In 2009 the IRS was not paying much attention to this credit. Now they are due to increased abuse. In many cases they are asking for a copy of the invoice. I recommend filing a paper return (as opposed to electronic) and attach a copy of your invoice to the return. You don't have to worry about the certification by Tesla until they sell 200,000 cars.

    If your tax liability is less than 7,500 (unlikely if you could afford it in the first place), you can't carry any unused credit forward unless your Roadster is used at least partly for business. In that case you need to fill in Part II and also fill out form 3800. Page 2 of form 4562 is where you determine the business use % based on miles.

    I write tax compliance software for a living and talk to hundreds of accountants every year.
    Last edited by hcsharp; 2012-04-03 at 06:40 PM.

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    Senior Member strider's Avatar
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    I filed mine in 2010. Tesla gave me an extra copy of my invoice to include which I kept for my files (I filed electronically). It was simple. This year I'll be filing for the EVSE credit (in my last house there was already a spare 220V outlet so I just used that).
    Twilight Blue Roadster 2.5 - #1098 / Grey Model S Performance - #1459

  6. #6
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    I presume the tax credit would only apply to new cars and not used?

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    Senior Member Lloyd's Avatar
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    Quote Originally Posted by Pantera Dude View Post
    I presume the tax credit would only apply to new cars and not used?
    Yes New Only
    SP-2823(sold), Tesla/Rav4EV, P+17252, XP-12

  8. #8
    Senior Member hcsharp's Avatar
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    Quote Originally Posted by Pantera Dude View Post
    I presume the tax credit would only apply to new cars and not used?
    Generally yes, new only. But the actual code section only says you have to be the "first user" of the vehicle. This was where the abuse started and why the IRS began paying more attention to these claims. There have been cases of cars sold to dealers or others who claimed the credit without actually registering the car, and then re-sold them as if they were new, conveniently not warning the buyer that there was no EV credit.

  9. #9
    mod squad TEG's Avatar
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    What about dealer demo cars sold to someone already with 1000s of miles on the odometer?

  10. #10
    Senior Member hcsharp's Avatar
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    Quote Originally Posted by TEG View Post
    What about dealer demo cars sold to someone already with 1000s of miles on the odometer?
    It would probably work if nobody had already claimed the credit for that car. You have to enter the VIN on Form 8936. I know of several that were filed for 2010 model year cars that were sold in 2011 and they had no problems.

    Picture yourself in front of an IRS auditor. He or she asks to see the invoice for when you bought the car. If the invoice looks like you bought a new car regardless of miles, then it would fly.

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