Are payments from SRECs (Solar Renewable Energy Credits) taxable income?

[FEDUKE404]

The general opinions lean from "likely" to "yes" but I can find no definitive guidelines.
Assuming the payments are taxable, where / how would you report them on Form 1040?
What about any state income tax liability?

A client in Virginia has received such payments, which apparently are processed for many states by SRECTrade .

[spanel]

They are non taxable

Chrsi

[New York Enrolled Agent]

They are non taxable

Chrsi

Here is a different take that says yes. Chris - do you a cite that refutes this conclusion?

Are My Illinois SRECs Taxable? ? Certasun

[rbynaker]

My (limited) research agrees with NYEA, these are taxable income because of how the transactions are structured:

https://www.irs.gov/pub/irs-wd/1035003.pdf

Rick

[spanel]

Your Mileage may vary.. I live in IL and have seen multiple solar installs with no tax forms issued. My understanding its an upfront purchase of clean energy and as long as you do not profit from this (your electricity company cannot pay you for excess), then its not a taxable event.

Chris

[spanel]

https://www.srectrade.com/blog/tag/are-srecs-taxable

Apparently its a bigger debate than I realized...

[TaxGuyBill]

My understanding its an upfront purchase of clean energy and as long as you do not profit from this (your electricity company cannot pay you for excess), then its not a taxable

SRECs are not a purchase of energy. I describe them as "bragging rights". It is completely separate from any buying, selling, or using the actual electricity.


So let's say your personal solar installation produces 10 Mega-watt hours of electricity a year and the electric company buys your SRECs. Because they now own the SRECs, the electric company can "brag" that they produce 10 Mega-watt hours of solar electricity, based on your solar installation (the state or federal may required them to 'produce' a certain amount of renewable energy, so they can 'use' your solar to meet that quota). That that completely separate from any buying, selling, or using the electricity itself.

[Kram BergGold]

I report them as taxable and then take a depreciation/amortization deduction based on the cost of the solar panels

[spanel]

I report them as taxable and then take a depreciation/amortization deduction based on the cost of the solar panels

How would you do this for an individual with no business??

Chris

[Kram BergGold]

I just enter the amount as cost basis on Form 8949. To me the taxpayer is selling electricity so I report on Schedule D.

[FEDUKE404]

I just enter the amount as cost basis on Form 8949. To me the taxpayer is selling electricity so I report on Schedule D.

I'm not sure that canine will track upon audit.
But creative. . .VERY creative!
Any cites to support your position ?