Solar panel tax credit

[kathyc2]

Client wants to enter into a contract for solar panels on their house. The sales company is telling them that if they pay this year, they can take credit on 2016 return even though they won't be installed until spring. My understanding is the credit can not be taken until the year installed. Since the company is saying differently, I asked client to have company provide authority for their claim. Am I missing something?

[Snaggletooth]

The only danger

Kathy2 knowing you from your previous posts, I'm assuming you've already looked for a cite, so I won't repeat the process or tell you have an answer for your question.

I will state that the only known danger is repeal of the credit. I've learned that the residential energy credit for such things as insulation, storm windows, etc. is in danger of not being renewed.

But this is not true for "renewable" sources such as solar, geothermal, whatever. The danger this taxpayer faces is that the credit becomes unavailable for 2017. I don't believe solar panels are in jeopardy from IRS standpoint, but there is growing opposition from energy providers who are being forced to pay farmers for wind energy generation. But this opposition is not to the tax credit, but instead they want to bail out of having to buy from solar and wind.

In addition to the credit for installation of the panels, there will also be a separate credit for kilowatts "sold" back to the local utility after the panels begin generating.

[Roland Slugg]

From IRS's instructions for F-5695:

For purposes of [the residential energy efficient property credit], costs are treated as being paid when the original installation of the item is completed, or, in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins.

[TAXNJ]

Similar to a TTB 3-30-16 post by Kram B ?

http://forum.thetaxbook.com/showthread.php?26705-New-Roof-Connected-to-Solar-Panels&highlight=Solar

[kathyc2]

From IRS's instructions for F-5695:

That's what I was using to say no credit until year installed.

[spanel]

The old how can you tell if a salesman is lying. His lips are moving!

or

Did you get that advise from a tax professional or the local coffee shop?

Chris

[New York Enrolled Agent]

That's what I was using to say no credit until year installed.

Here's what the Internal Revenue Code says at §25D

(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.