Form 8936 and Instructions for 2011 Tax Credit

[qwk]

Hmm... Well, it's worse than that; when pressed (and with the combined weight of TMC behind me) he admitted that he had made a typo and just put $2500 in the box which should have said $7500. Thanks to everyone who replied! We owe $5K less than we were told.

The guys's not bad enough that we'll get a new accountant for this but I may have the returns checked by a third party.

I'm glad you got it worked out. It sucks to have an accountant not paying attention.

[Lloyd]

It appears that the business deduction is limited to $2500, and that is where he got that figure from.

http://www.irs.gov/pub/irs-pdf/f8834.pdf

[hcsharp]

It appears that the business deduction is limited to $2500, and that is where he got that figure from.

http://www.irs.gov/pub/irs-pdf/f8834.pdf

That's wrong. You have the wrong form. The business credit (not a deduction) is the same $7,500 except that it's limited by the Alternative Minimum Tax (AMT) while the personal $7,500 credit is not. In the case that you don't have enough income tax to absorb the whole 7,500, using the car mostly for business the first year can be a good way to carryover the unused credit to future (or back) years when you have more tax.

[Lloyd]

That's wrong. You have the wrong form. The business credit (not a deduction) is the same $7,500 except that it's limited by the Alternative Minimum Tax (AMT) while the personal $7,500 credit is not. In the case that you don't have enough income tax to absorb the whole 7,500, using the car mostly for business the first year can be a good way to carryover the unused credit to future (or back) years when you have more tax.

Interesting, so the correct form is 8936?

http://www.irs.gov/pub/irs-pdf/f8936.pdf

[hcsharp]

Interesting, so the correct form is 8936?

http://www.irs.gov/pub/irs-pdf/f8936.pdf

Yes for all Tesla automobiles. For business use you will also need Form 3800. It appears the IRS computer (or possibly manually) is doing a rudimentary check to make sure the VIN is for an EV or HEV.

[Lloyd]

Yes for all Tesla automobiles. For business use you will also need Form 3800. It appears the IRS computer (or possibly manually) is doing a rudimentary check to make sure the VIN is for an EV or HEV.

So, please let me confirm this with you as I am picking up a car (Toyota) on Monday, and it will affect how i take title! I have a tax loss carry forward and will loose the credit if I take title personally. I have an S corporation for my business. If I take title in my S corporation, I can use the credit to the extent, or percentage that the vehicle is used for business.

[hcsharp]

So, please let me confirm this with you as I am picking up a car (Toyota) on Monday, and it will affect how i take title! I have a tax loss carry forward and will loose the credit if I take title personally. I have an S corporation for my business. If I take title in my S corporation, I can use the credit to the extent, or percentage that the vehicle is used for business.

@Lloyd I'm about to run out the door so I don't have time to read the Code right now but I'm 95% certain it works like this: If you take title in your S Corp then the credit would flow through to the stockholders personally and would require the same allocation between personal and business. The business use portion of the credit would then carry forward presumably like your other credits. If there's significant business use (keep a mileage log) then this might be a better way to go than taking title in your own name. The AMT is probably the biggest enemy in your case. It's often hard to find somebody who's spread between AMT and regular tax is more than $7,500 (AMT only applies to business use portion of credit). Regardless, if you know you're going to lose the whole credit if you take title in your name, you don't have anything to lose if your S corp buys it. Again, didn't have time to read the actual IRC!

- - - Updated - - -

Another thought: Can your S-Corp accrue a year-end bonus to you that would create a tax liability for you? It wouldn't necessarily have to pay the bonus this year if it was accrued. You would need to document a resolution from the stockholders and/or officers to approve the bonus.

[Timothy]

I bought my car 4/30/2011. I filed my 2011 tax return on time with the form 8936 and was denied the $7500 by the IRS. No reason stated. I called, was told to wait a few months, called back. Nothing. Then my accountant called and was told to wait until mid October. So we will try again. I just reviewed all the data on form 8936 and it was correct. I pay plenty of taxes, so I should get the refund.

I heard somewhere that early on buyers put the $$$ down for the car and didn't put the car on the road for a year or two as the car was not delivered right away and that you have to pay and register and drive in the same year that you are applying for the tax credit. Clearly I did all that correctly.

So we will see what happens. Has anyone else been denied their $7500 when they qualify?

[jerry33]

So we will see what happens. Has anyone else been denied their $7500 when they qualify?

I wasn't denied, just audited , but when I purchased the 2004 Prius the rules were that the in-service date had to be the same year that you claimed the deduction. This is proved by the vehicle's title.

[ElSupreme]

So we will see what happens. Has anyone else been denied their $7500 when they qualify?

I know of two LEAF purchasers that had these problems. It took them almost a year to get their credit. But they were persistent and eventually got their credit.