IL tax preparers-How to report sale of SRECs (property rites as referenced below)

[Art]

Taxpayer received $25,000 from the sale of SRECs (solar renewable energy credits) in 2022 under the Illinois Shines program but did not receive a 1099. Is this taxable income and how to show it on the 1040.

I found the attached article which states that the SRECs are treated as the "sale of property rights" by the IRS and are therefore taxable. This raises the question what is the cost basis (if any) in the property rights? Would the cost to install the solar system (net of the federal tax credit) be your cost basis? Example cost of the solar system $50,000 less 30% federal tax credit of $15,000 basis $35,000 before SRECs. If the SRECs are $25,000 and taxable per the referenced article, do you have a taxable gain? How much?

https://certasun.com/illinois-srecs-taxable/

[TaxGuyBill]

I would report SRECs as 'other income' on line 8 of Schedule 1 (assuming they are not claiming the solar production as a business). But I support short-term capital gain could be a reasonable place to report it.

There is no Basis. SRECs are basically 'bragging rights' for producing solar. The cost of the panels, etc are for the physical equipment, not for the "rights" for claiming solar production.

[FEDUKE404]

I had a client (Virginia) who received SRECs of approximately $1k per year from equipment installed on his personal residence. (The applicable energy credits for installation of the equipment were claimed in a prior tax year.)

We both researched the matter, to include inquiries to an organization that manages such operations in multiple states. They very politely used the "we don't give tax advice" but did mention there are often varying opinions as if / how the SREC income should be reported.

By mutual agreement, the full SREC income was reported as "miscellaneous income" on Form 1040. We felt it was clearly taxable income. There were no other entries on the client tax return re the SREC income, to include Schedule D.

Perhaps some definitive tax guidelines will eventually surface, but at the time his 2022 tax returns were filed there remained many gray areas.