Hybrid 2005 vehicle

[Possi]

My client has a 2005 Honda Accord Hybrid placed in service 10-01-2005, and a $1500 credit was taken on the 2006 return. He said a credit was taken in 05, but I don't have the return.

In TTB 11-12, Honda Accord 2005 isn't listed. He's under the impression this is the last year he can take the credit.

I read TTB, and used form 8910, but I don't know the dollar amount for the credit. My software isn't being user-friendly on this gig, either.

Am I all wet here? Does this vehicle not qualify for the credit this year?

Thanks for any help I can get.
I hate feeling so stupid!

~possi

[S T]

Confused

If t/p purchased the 2005 Honda in 2005, he would have taken the credit on the 2005 tax return. No additional credit that I know of in future or subsequent years. Isn't the credit only available in the year of purchase, the t/p must be the original owner.

The t/p had to purchase the vehicle new from an authorized dealer to obtain the credit. The dealer would provide the t/p with a certificate and instructins on how to file for the credit in 2005.

In looking at some back information, the t/p could have taken on the 2005 tax return as little as $650 to as much as $2,100 depending on the model.

Am I missing something?

Sandy

[Gene V]

I don't think we had the credit in 2005, we had a deduction for Clean-Fuel Vehicles.
The credit for a 2005 Honda Accord taken on the 2006 tax return would be $650.00
That's all I know

Gene

[Possi]

the software is right, then

and i should go to bed....

Last year his tax preparer took 1500.00. I'm not going to question it. Everything I read says there is no credit for him this year.

Why does TTB 11-12 Column 2, Qualified Electric Vehicle Credits is followed by the hybrid vehicle listings? Appears that it is saying to use the 8834 for the vehicles listed below that topic.

Man, I need to go to bed...
g'nite
~possi

[S T]

Gene is right

There was no hybrid credit in 2005, it was effective in 2006 and the t/p had to take delivery of the vehicle on or after 1/1/06.

You must purchase a qualifying vehicle, and the qualifying vehicle must be "placed in service" in during the tax year for which you claim the tax credit. Placed in service means when you actually take possession of the vehicle, according to Mark Luscombe, JD, CPA and principal federal tax analyst for CCH. You must take delivery of the vehicle on or after January 1, 2006.

And in looking at the list, I don't see on a 2005 Hybrid Honda Accord more than $650 either.
Hope this helps!

Sandy

[Possi]

thanks!

Once again, thank you.....

[Possi]

docs from car dealer

Just spoke to my client and he said the incentive to buy was related to the tax advantage over 4 years.
The first year, 2005, he got 100% of the credit (2000)
The second year, 75% (1500)
The third year, this year, he would get 50% (1000)
The forth year he would get 25% (500)

It's a Hybrid Honda Accord.

Anyone?

[Davc]

Wishing doesn't make it so. You've received your answer.

[veritas]

Just spoke to my client and he said the incentive to buy was related to the tax advantage over 4 years.
The first year, 2005, he got 100% of the credit (2000)
The second year, 75% (1500)
The third year, this year, he would get 50% (1000)
The forth year he would get 25% (500)

It's a Hybrid Honda Accord.

Anyone?

Is he referring to a STATE tax credit ?

We have one in Oregon.

[Possi]

glad you asked...

...and I read AND called the state, but there is nothing in VA that would justify that breakdown.

I suppose the tax preparer from last year, done in another state, gave him the credit not knowing he didn't qualify for it.

Sometimes I get so bogged down trying to please a new client... and trying not to look like an idiot... that I waste precious time chasing bunnies.

He's a real nice family man, not ugly about it at all. If he wants to go someplace else, I'm ok with that. I just don't want to lose a deduction, so I exhaust it.

I just pray I don't exhaust the professionals on this board!

~poss

[S T]

From

IR-2004-125

Federal tax law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.

Under the recently signed Working Families Tax Relief Act of 2004, the clean-burning fuel deduction is up to $2,000 for certified vehicles first put into service in 2004 and 2005. The deduction will be limited to $500 for vehicles placed in service in 2006 and no deduction will be allowed after that year.

The one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner. Individuals take this benefit as an adjustment to income on Form 1040. They do not have to itemize deductions on their tax returns to claim it.

Sandy

[Bees Knees]

A 2005 Honda Accord Hybrid placed in service 10-01-2005 would have qualified for the old Qualified Clean-Fuel Vehicles deduction effective for tax years prior to 2006. That deduction was replaced with the new hybrid vehicle credits we use today.

TTB, page 1-10 from the 2005 tax year edition describes the deduction and lists the 2005 model year Honda Accord Hybrid as qualifying for a $2,000 deduction.

Also, according to the 2003 tax year edition of QF, Tab 11, the clean-fuel vehicle deduction was scheduled to phase out by 25% in 2004, 50% in 2005, and 75% in 2006, with a complete phase-out by 2007. Those rules changed when the new energy bill was signed into law.

Maybe the previous accountant thought you could take those amounts each year during the phase-out period. Maybe that is what is going on here.

[Possi]

ohhhhhhhhh

THANKS BEES!
I bet you are right!