Solar credit on property leased no house

[nwtaxlady]

Taxpayer has a hunting guide service business. He leases the hunting property and has a camp set up there. There is no power there and no house and he uses hunting tents. He paid $16,000 for solar panels.

Can he take the solar credit? I am thinking not because it is not on a house. And also doesn't live there. So if no credit, then how is it depreciated? how many years?

[TaxGuyBill]

It sounds like his primary purpose of doing that is to sell electricity, right? That is likely a business on Schedule C.

Form 3468 to take the solar credit for a business. HALF of the credit reduces Basis. Generally depreciated over 5 years. Could possibly be a passive activity, depending on the specific details.

[nwtaxlady]

It sounds like his primary purpose of doing that is to sell electricity, right? That is likely a business on Schedule C.

Form 3468 to take the solar credit for a business. HALF of the credit reduces Basis. Generally depreciated over 5 years. Could possibly be a passive activity, depending on the specific details.

No! He leases the land because he is a hunting guide. There is no structure and no power. Not selling power.

[TaxGuyBill]

The solar is to power the camps for his hunting business? Then mostly the same answer, except it will be on his hunting business and not be a passive activity.

[spanel]

No! He leases the land because he is a hunting guide. There is no structure and no power. Not selling power.

So far you have not told us what exactly the solar panels are for.

Is he charging batteries and then powering lights / electronics /etc?

In this scenario, you would also have batteries to deduct. Solar without a structure setup to grid tie needs batteries to be useful.

Chris

[New York Enrolled Agent]

The taxpayer definitely cannot take the energy credit under section 25D because there is no use as a residence. However, I think TGB is suggesting you might be able to use section 48 as there is an energy credit there also.