Qualified fuel cell property (form 5695 line 8)

Stan Brown

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Nov 23, 2021, 6:09:03 PM11/23/21

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This year, I added a storage battery to my existing solar roof panels.
The solar battery company have listed broken the cost down into an
eligible and a non-eligible portion, which are the battery itself and
the installation and administration costs. They are saying that only
the battery qualifies for the tax credit, and not the other part of
the project cost. I believe they're wrong, and the entire cost
qualifies, but I would like to verify that with the good folks here.

The instructions for line 8 say "Enter THE AMOUNTS YOU PAID for
qualified fuel cell property. See Qualified fuel cell property costs,
earlier." [emphasis added]

Qualified fuel cell property costs says "Qualified fuel cell property
costs are costs for qualified fuel cell property installed on or in
connection with your main home located in the United States.
Qualified fuel cell property is an integrated system comprised of
a fuel cell stack assembly and associated balance of plant
components that converts a fuel into electricity using
electrochemical means. To qualify for the credit, the fuel cell
property must have a nameplate capacity of at least one-half
kilowatt of electricity using an electrochemical process and an
electricity-only generation efficiency greater than 30%."

My installation meets those criteria, and I see nothing about only the
cost of the bare battery being eligible for the 26% tax credit.

Am I missing something, or do I enter the total cost to me on line 8?

--
Stan Brown, Tehachapi, California, USA
https://BrownMath.com/
https://OakRoadSystems.com/
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Taxed and Spent

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Nov 23, 2021, 10:16:12 PM11/23/21

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On 11/23/2021 3:07 PM, Stan Brown wrote:
> This year, I added a storage battery to my existing solar roof panels.
> The solar battery company have listed broken the cost down into an
> eligible and a non-eligible portion, which are the battery itself and
> the installation and administration costs. They are saying that only
> the battery qualifies for the tax credit, and not the other part of
> the project cost. I believe they're wrong, and the entire cost
> qualifies, but I would like to verify that with the good folks here.
>
> The instructions for line 8 say "Enter THE AMOUNTS YOU PAID for
> qualified fuel cell property. See Qualified fuel cell property costs,
> earlier." [emphasis added]
>
> Qualified fuel cell property costs says "Qualified fuel cell property
> costs are costs for qualified fuel cell property installed on or in
> connection with your main home located in the United States.
> Qualified fuel cell property is an integrated system comprised of
> a fuel cell stack assembly and associated balance of plant
> components that converts a fuel into electricity using
> electrochemical means. To qualify for the credit, the fuel cell
> property must have a nameplate capacity of at least one-half
> kilowatt of electricity using an electrochemical process and an
> electricity-only generation efficiency greater than 30%."
>
> My installation meets those criteria, and I see nothing about only the
> cost of the bare battery being eligible for the 26% tax credit.
>
> Am I missing something, or do I enter the total cost to me on line 8?
>

How does a solar panel and a battery fit the definition of a fuel cell?
They are different technologies. Maybe you are referring to the wrong
tax incentive program.

Stan Brown

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Nov 24, 2021, 10:17:36 AM11/24/21

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I think I answered my own question.

It appears the IRS considers a battery ("energy storage device") to
be solar equipment if the battery derives 100% of its charge from
solar cells, which mine does, and even if it is a retrofit installed
in a later year than the solar cells, as mine is.

https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-
credit-solar-photovoltaics

So that would be line 1 of form 5695.

This article summarizes and links to the relevant revenue letters:

https://www.taxequitytimes.com/2018/03/residential-solar-storage-
eligible-tax-credit-subject-100-cliff/

"... the IRS ruled that the battery is considered to be property
which uses solar energy to generate electricity and is, therefore,
eligible for the Residential Solar Credit."

--
Stan Brown, Tehachapi, California, USA https://BrownMath.com/
https://OakRoadSystems.com/

Shikata ga nai...

Stan Brown

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Nov 24, 2021, 10:17:36 AM11/24/21

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On Tue, 23 Nov 2021 22:16:06 EST, Taxed and Spent wrote:

> How does a solar panel and a battery fit the definition of a fuel cell?
> They are different technologies. Maybe you are referring to the wrong
> tax incentive program.

You make a good point. So I need to expand my question:

Solar panels were on the roof when I bought the house. I had the
battery installed this year. The battery charges when the sun is
shining, and any excess electricity from the panels is sent out on
the grid. When the sun is not shining, the house uses electricity
from the battery and not from the grid. (In theory, if the battery is
exhausted then I take electricity from the grid, but that has not
happened since the battery was installed and is unlikely to happen in
the future, based on my usage patterns.)

So where on form 5695 do I report the purchase of the battery so as
to claim my 26% credit? Or is it a different form? Or did the solar
company lie to me, and adding a storage battery to an existing solar
system doesn't qualify for a tax credit?

--
Stan Brown, Tehachapi, California, USA https://BrownMath.com/
https://OakRoadSystems.com/

Shikata ga nai...

Taxed and Spent

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Nov 25, 2021, 10:46:05 AM11/25/21

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On 11/24/2021 7:14 AM, Stan Brown wrote:
>
> I think I answered my own question.
>
> It appears the IRS considers a battery ("energy storage device") to
> be solar equipment if the battery derives 100% of its charge from
> solar cells, which mine does, and even if it is a retrofit installed
> in a later year than the solar cells, as mine is.
>
> https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-
> credit-solar-photovoltaics
>
> So that would be line 1 of form 5695.
>
> This article summarizes and links to the relevant revenue letters:
>
> https://www.taxequitytimes.com/2018/03/residential-solar-storage-
> eligible-tax-credit-subject-100-cliff/
>
> "... the IRS ruled that the battery is considered to be property
> which uses solar energy to generate electricity and is, therefore,
> eligible for the Residential Solar Credit."
>

You made me look at the form and instructions. Yes, I concur with line 1.

Thanks for posting the links for future reference.