Investment Tax Credit for Geothermal Power

[W]

I'm trying to understand the investment tax credit and bonus depreciation
for renewable energy for a business user. If a geothermal heat pump system
costs $60K to install (equipment plus drilling costs), does the business get
to take a 30% tax credit ($18K in this case) and a bonus depreciation of 50%
($30K in thise case)?

Assuming a 35% federal tax rate, the business gets $10.5K (35% * $30K) back
from first-year depreciation, $18K from tax credit, so $31.5K ($60K -
$10.5K - $18K) is the additional out of pocket cash expense for the business
during the first year, and that gets depreciated over the next few years?

Assuming business is an S-Corporation, the tax credit just passes through to
shareholders?

--
W

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[Gene E. Utterback, EA, RFC, ABA]

"W" <persis...@spamarrest.com> wrote in message
news:_OmdnW_Cd_u7stzW...@giganews.com...

> I'm trying to understand the investment tax credit and bonus depreciation
> for renewable energy for a business user. If a geothermal heat pump
> system
> costs $60K to install (equipment plus drilling costs), does the business
> get
> to take a 30% tax credit ($18K in this case) and a bonus depreciation of
> 50%
> ($30K in thise case)?
>
> Assuming a 35% federal tax rate, the business gets $10.5K (35% * $30K)
> back
> from first-year depreciation, $18K from tax credit, so $31.5K ($60K -
> $10.5K - $18K) is the additional out of pocket cash expense for the
> business
> during the first year, and that gets depreciated over the next few years?
>
> Assuming business is an S-Corporation, the tax credit just passes through
> to
> shareholders?
>
> --
> W

Without checking the details I'd say you have to reduce your depreciable
basis by the credit amount.

Gene E. Utterback, EA, RFC, ABA