2022 vs 2023 Tax credit…Again

[emoore]

if you take delivery before March 2023 , the battery material requirement may not be considered, I did not sign BPA with Rivian and I reserved R1T before march 2022 with a price being around 72K
My worry is IRS would not care what I purchase for, and only care about the current MSRP pricing,
as you know quade motor adds $8000 and the Large battery which is the only available config at that time adds to the current base price by $6000, added $14000 to $73000 adventure package. so this will take you above 80,000 no matter what.
My dilemma is when you don't have any BPA of any kind and taking delivery in Jan 2023 with pre March 2022 MSRP pricing ($72,000) which price IRS considers, looks like they will consider 2023 price increase on Rivian cars no matter what, please let me know if I am wrong.

Not sure why you think the IRS won't care what you purchase it for. That's why they are using MSRP because there are so many variables in the cost of different model options. That's like saying they will only give you 30% off of $10k for a solar installation even if it costs you more for your unique solar installation. It doesn't work that way.

Sponsored

 

[kentma]

Not sure why you think the IRS won't care what you purchase it for. That's why they are using MSRP because there are so many variables in the cost of different model options. That's like saying they will only give you 30% off of $10k for a solar installation even if it costs you more for your unique solar installation. It doesn't work that way.

because of the following statement in the tax credit details for 2023

"MSRP is the retail price of the automobile suggested by the manufacturer, including options, accessories and trim but excluding destination fees. It isn't necessarily the price you pay."
Plus IRS never asks for your car sticker price.

R1T MSRP for Pre March of 2022 : 71,800
R1T MSRP for Post March of 2022: is over 80,000

 

[Thedude]

because of the following statement in the tax credit details for 2023

"MSRP is the retail price of the automobile suggested by the manufacturer, including options, accessories and trim but excluding destination fees. It isn't necessarily the price you pay."
Plus IRS never asks for your car sticker price.

R1T MSRP for Pre March of 2022 : 71,800
R1T MSRP for Post March of 2022: is over 80,000

Your sticker price is the MSRP. The base price does not matter.

 

[CotoR1TDude]

I sure hope so! That would be a nice surprise for those who are forced to wait. I like some of the things they included like the vehicles have to be assembled in the US - manufacturers are trying to move more production to the US partly in response to that requirement. The battery sourcing is a good idea in theory, but they probably should have eased into that one more slowly. I don't even disagree with the price limit, although I wish they had tiers instead of it being all or nothing at $80k.

I'm a CPA (how good of a CPA is debatable), but the idea that signing a BPA and taking delivery of the vehicle in a later tax year allows me to amend my 2022 to claim the credit in 2022 does not sound correct - notwithstanding the fact that the bill was written this way.

I believe the BPA will suffice to a support claiming a credit, but the question in my mind, is what tax year? The basic premise of IRC 30D is that the taxpayer can claim the credit in the year the vehicle is placed in service. Which would be the year you take delivery. Assuming you took delivery in 2023 or 2024, you would claim the credit as under the pre-2023 rules. But, on your 2023 or 2024 tax return.

The updated IRC 30D omits the wording in the bill about timing and simply says:

If you entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022 (for example, because the vehicle has not been delivered), you may claim the EV credit based on the rules that were in effect before August 16, 2022.

The opening to IRC 30D still reads:

(a)Allowance of credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new clean vehicle placed in service by the taxpayer during the taxable year.

So, I believe you take the credit in the tax year the vehicle is placed in service and, if you signed a BPA, you apply the pre-2023 credit rules.

Think Cash. When does the cash go out the door - I remember this on my CPA exam - converting GAAP accrual income/expenses to tax basis. I didn't practice tax, but conventional wisdom is the year you took possession and paid the cash. You have a binding agreement in 2022, but you still can walk away with a loss ($100). You didn't execute the agreement until 2023 (e.g.). THIS IS NOT TAX ADVISE (but if you are making decisions based on the credit, conventional wisdom should prevail). Also, as I understand it the new law may not go into effect until March.

 

[kentma]

Think Cash. When does the cash go out the door - I remember this on my CPA exam - converting GAAP accrual income/expenses to tax basis. I didn't practice tax, but conventional wisdom is the year you took possession and paid the cash. You have a binding agreement in 2022, but you still can walk away with a loss ($100). You didn't execute the agreement until 2023 (e.g.). THIS IS NOT TAX ADVISE (but if you are making decisions based on the credit, conventional wisdom should prevail). Also, as I understand it the new law may not go into effect until March.

it is not about getting the credit or not buying the car, just a discussion to see if anyone knows convoluted tax laws on this issue. and if anyone knows the way to get it, whatever you can get from uncle sam you are lucky or else goes to the next war in the world. Thanks

 

[CotoR1TDude]

it is not about getting the credit or not buying the car, just a discussion to see if anyone knows convoluted tax laws on this issue. and if anyone knows the way to get it, whatever you can get from uncle sam you are lucky or else goes to the next war in the world. Thanks

Oh sorry, I guess I read too much into it. I just thought if people are dropping $80K cash getting the credit would be important. Again, don't mean to tread on anyone. Ignore my comments/apology if it's not received correctly.

 

[HumanGenome]

Just received this from my CPA, she intends to file the credit in 2022 (signed BPA in Aug 2021, receiving delivery Feb 2023) This is coming from Spidell, a tax analysis and education resource many CPAs in the US use up through large accountancy firms.

 

[NashvilleR1S]

Just received this from my CPA, she intends to file the credit in 2022 (signed BPA in Aug 2021, receiving delivery Feb 2023) This is coming from Spidell, a tax analysis and education resource many CPAs in the US use up through large accountancy firms.

Please let us know how this goes. My CPA asserts that this is old language that has since been completely changed and if the vehicle went into service after 12/31/22, the binding agreement does nothing to apply the old rules.

 

[HumanGenome]

But what is the

Please let us know how this goes. My CPA asserts that this is old language that has since been completely changed and if the vehicle went into service after 12/31/22, the binding agreement does nothing to apply the old rules.

Send this to your CPA. Not pointing fingers but it seems some CPA do not stay "up to date" with all IRS concerns. It's broad and requires continuous education, that's why lots of CPA firms enroll their accountants in education/literacy programs to stay up to date.

https://www.irs.gov/pub/irs-drop/n-22-46.pdf

 

[NashvilleR1S]

Send this to your CPA. Not pointing fingers but it seems some CPA do not stay "up to date" with all IRS concerns. It's broad and requires continuous education, that's why lots of CPA firms enroll their accountants in education/literacy programs to stay up to date.

I might be missing something in all that, but I believe on page 8 it says that the AGI limits apply and the $80,000 MSRP limit applies.

 

[SANZC02]

Just received this from my CPA, she intends to file the credit in 2022 (signed BPA in Aug 2021, receiving delivery Feb 2023) This is coming from Spidell, a tax analysis and education resource many CPAs in the US use up through large accountancy firms.

The last thing I saw from the IRS had put in service after 8/16 but before 2023.

If you had it delivered before March and stay under income limit and 80k you will still get 7500 in 2023, maybe later if they postpone the battery source portion again, currently it is delayed until March.

 

[NashvilleR1S]

The last thing I saw from the IRS had put in service after 8/16 but before 2023.

If you had it delivered before March and stay under income limit and 80k you will still get 7500 in 2023, maybe later if they postpone the battery source portion again, currently it is delayed until March.

My R1S is at the service center to be delivered and is $81k. So I missed it.

 

[astonius]

My R1S is at the service center to be delivered and is $81k. So I missed it.

Man, should have bought the dark wheels post-delivery... sorry bud

 

[sacramentoelectric]

The last thing I saw from the IRS had put in service after 8/16 but before 2023.

If you had it delivered before March and stay under income limit and 80k you will still get 7500 in 2023, maybe later if they postpone the battery source portion again, currently it is delayed until March.

It's not looking good for those of us with binding purchase agreements who don't take delivery until this year. Here's the latest (January 31st, 2023) guidance from the IRS:

Purchase date vs. delivery date​

If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.​

​

If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, see Credit for New Clean Vehicles Purchased in 2023 and After.​

Don't know about you all but I would have taken something from the R1 shop if I knew I was going to lose my credit.

 

[jollyroger]

I think at this point, everyone should try to keep the vehicle price under 80k if reserved before March 2022, assuming your AGI is below the limits. 7.5k can buy a lot of fun stuff from the shop.

Maybe 2023 guidance will include the binding agreement, but we just don't know.

Sponsored