IRS Transition rule guidance changed

[pricedm]

This latest interpretation of the IRS rules might put additional downward pressure on the resale/flip market. Binding sales agreement signed before August 16, 2022 --> eligible for up to $7,500 federal tax credit.

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[MilliM]

So if my estimated delivery window is April to June, and I did sign the doc prior to 8/16/22, am I better off filing an extension until I take delivery (assuming I don’t get it before 4/15)?

 

[SeaGeo]

So if my estimated delivery window is April to June, and I did sign the doc prior to 8/16/22, am I better off filing an extension until I take delivery (assuming I don’t get it before 4/15)?

Wouldn't you just amend it?

 

[MilliM]

I guess I’ll ask my CPA her opinion, but you’re probably right.

 

[foxerson]

This guidance is in line with the actual text of the statute which says you deem the date of purchase to be the day before the IRA was enacted. (For those who had a BPA and want to use the pre-IRA rules)

Thanks for pointing this out. For those who are interested in a specific citation, I found this language on page 146 of https://www.govinfo.gov/content/pkg/PLAW-117publ169/pdf/PLAW-117publ169.pdf

-- EDIT -- copy and paste of the text --
(l) TRANSITION RULE.—Solely for purposes of the application of section 30D of the Internal Revenue Code of 1986, in the case of a taxpayer that— (1) after December 31, 2021, and before the date of enactment of this Act, purchased, or entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle (as defined in section 30D(d)(1) of the Internal Revenue Code of 1986, as in effect on the day before the date of enactment of this Act), and (2) placed such vehicle in service on or after the date of enactment of this Act, such taxpayer may elect (at such time, and in such form and manner, as the Secretary of the Treasury, or the Secretary’s delegate, may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of this Act.

 

[Honey]

I guess i should go ahead and add back the underbody shield then and possibly the 22" dark wheels, oh and the xpel

 

[BendR1S]

What would one fill out as the Purchase Date of the vehicle? The date that you signed the BPA?

[Context: I did sign the BPA prior to 8/16/2022, and I'm taking delivery on Thursday]

 

[JerseyGreens]

I guess i should go ahead and add back the underbody shield then and possibly the 22" dark wheels, oh and the xpel

Rivian stock price to the m00n!

 

[Dark-Fx]

I guess I’ll ask my CPA her opinion, but you’re probably right.

If you owe money now, less than $7500, you can avoid paying by filing an extension, but if Rivian doesn't actually deliver before your extension expires, you will owe penalties then when you have to file without the credit. Better to file now and file an amendment later.

 

[Tpaguy]

So if my estimated delivery window is April to June, and I did sign the doc prior to 8/16/22, am I better off filing an extension until I take delivery (assuming I don’t get it before 4/15)?

I don’t know if things have improved at the IRS, but my 2020 tax year amendment took over a year to be processed and receive the refund I was due. I’d personally opt for an extension since that seems to be quicker for processing, at least in my experience.

 

[Sgt Beavis]

With the IRS’ inconsistency on these rules, I’m happy I kept my R1T’s purchase price below $80K. I also need that tax credit because I sold a piece of property last year for a hefty profit.

 

[Yossarian]

Setting aside the question of whether the Rivian PBA satisfies the IRS requirements for binding contracts, I wonder if it will apply if you change the model you originally reserved. This could be voluntary, for example changing from the R1S to R1T, or involuntary as is the case if the model reserved is no longer on offer and you are forced reconfigure.

The latter would apply if your reservation was for a quad R1T Max, a model that has been delayed indefinitely, and so there is no choice but to change. Other situations may apply to folks with otherwise valid pre-IRA Preliminary Buyer's Agreements who may have changed from the R1T to the R1S (or vice versa) for various family reasons. With Rivian now offering an R1S Max, there is also the chance that some may change their order to that from the Large listed on their PBA.

 

[Dark-Fx]

Setting aside the question of whether the Rivian PBA satisfies the IRS requirements for binding contracts, I wonder if it will apply if you change the model you originally reserved. This could be voluntary, for example changing from the R1S to R1T, or involuntary as is the case if the model reserved is no longer on offer and you are forced reconfigure.

The latter would apply if your reservation was for a quad R1T Max, a model that has been delayed indefinitely, and you really have no choice but to change. Other folks with otherwise valid pre-IRA Preliminary Buyer's Agreements may have changed from the R1T to the R1S. With Rivian now offering an R1S Max, there is also the chance that some may change their order to that from the Large listed on their PBA.

The contract language didn't lock you into a specific vehicle, just "a vehicle".

 

[Yossarian]

The contract language didn't lock you into a specific vehicle, just "a vehicle".

It's not clear if the overall agreement actually locks you in to a specific vehicle, but mine at least has quite a bit of detail:

 

[Dark-Fx]

It's not clear if the overall agreement actually locks you in to a specific vehicle, but mine at least has quite a bit of detail:

PBAs are not the same thing as the BPA.

From the Binding contract:

RIVIAN BINDING CONTRACT TO PURCHASE

This RIVIAN BINDING CONTRACT TO PURCHASE (this “Agreement”) creates a binding obligation for you to purchase (the “Order”) a Rivian R1 vehicle (the “Vehicle”) and governs the terms of your Order. Rivian’s General Terms and Conditions contained at Rivian.com/legal/terms (“Rivian Terms”) are hereby incorporated by reference into this Agreement.

1. Agreement to Purchase & Deposit. As of the date of this Agreement (“Order Date”), you agree that you shall purchase the Vehicle from Rivian, LLC, or its affiliate (“we,” “us” or “our”), pursuant to the terms and conditions of this Agreement. You hereby create a binding contract with Rivian obligating you to purchase the Vehicle. Immediately prior to taking delivery of the Vehicle you will be required to sign a dealership-specific Rivian Motor Vehicle Purchase Agreement that contains further terms and conditions. As part of the consideration you provided to Rivian for this Order, one hundred dollars of the deposit amount you submitted with your preorder/reservation becomes non-refundable.

What you are referring to is the "additional terms" that you aren't given until Rivian has a specific vehicle they are going to sell you.

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