Timing of purchase and binding contract and Taxes oh my.

[Acoustic71]

lol ¯\_(ツ)_/¯

Sure. Maybe. Whatever. I get your point. However....

Until the IRS makes a legal interpretation of the new law this is still a crap shoot. Once the IRS makes that determination, updates Form 8936, and rules on the who, what, where and when for manufacturers to apply the $7,500 as a point of purchase reduction, then it is still speculation. You can read the new law and interpret it all you want. It's what the IRS says that will matter.

All I know for sure is that I will personally receive the $7,500 tax credit for my 2022 taxes as I have a fully signed contract with a VIN (not the PBA just released by Rivian). My delivery date is anywhere from a few days away, to a few weeks away, and that will meet the current criteria.

I wish everyone here the best of luck in receiving whatever amount you hope to receive and by whatever method works best for your situation.

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[tren01t]

Ok: so I have a question.

I was an Oct to Dec 2022 window. I have not received an updated window, but I’ve been told it likely is pushed to early 2023 since I live in New Mexico (no nearby service center and I am convinced half the US population thinks we are a foreign country).

Now I have signed the binding contract.
So, say I get my R1T in February 2023 before I file my 2022 taxes. Do I claim the tax credit on my 2022 taxes because of the binding contract? Or do I claim the credit on my 2023 taxes (filed in 2024) since the truck is put into service in 2023?
Or does Rivian apply the credit at point of sale in 2023 and takes off the 7,500 directly from list price?

confused in what I swear is one of the 50 states that make up ‘Murica

If you take delivery in 2022 then the credit would be used for 2022 tax year. If you take delivery in 2023 then you would be taking the credit for 2023 taxes.

 

[Ko Barrett]

I read the bill yesterday. It is complicated and hard to follow all the legalese and amendments to previous Internal Revenue Code, but there is apparently an opportunity to transfer the credit at point of sale to a dealership or seller. If true, aren't most of us going to do that? And doesn't a BPA in 2022 guarantee that we meet the criteria (if that works)? No income caps or vehicle cost limits.

 

[freshpow]

I read the bill yesterday. It is complicated and hard to follow all the legalese and amendments to previous Internal Revenue Code, but there is apparently an opportunity to transfer the credit at point of sale to a dealership or seller. If true, aren't most of us going to do that? And doesn't a BPA in 2022 guarantee that we meet the criteria (if that works)? No income caps or vehicle cost limits.

The point of sale provision is included in the language for the "new tax credit". If you signed the BPA to secure use of the "old tax credit", then the point of sale provision is irrelevant. Disclaimer: I am not a lawyer and this is not legal advice.

 

[Jac]

The point of sale provision is included in the language for the "new tax credit". If you signed the BPA to secure use of the "old tax credit", then the point of sale provision is irrelevant. Disclaimer: I am not a lawyer and this is not legal advice.

Agree. You don’t get to mix and match provisions from the old and new EV tax credit laws. Since the transition rules say the taxpayer who has a signed purchase agreement dated before the new law‘s enactment “may“ apply the old law, my interpretation is that taxpayer can choose whether to rely on either the old or the new EV tax credit law once they have their new EV.

 

[Ko Barrett]

The point of sale provision is included in the language for the "new tax credit". If you signed the BPA to secure use of the "old tax credit", then the point of sale provision is irrelevant. Disclaimer: I am not a lawyer and this is not legal advice.

Oh, of course, you are right . Thanks for the correction.

 

[CaptainX]

It is actually simpler than this: the transition rule treats the in-service date as 2022, if you now have a binding agreement to purchase the vehicle and complete the purchase after 2022 (no matter how late you take delivery of the vehicle). So this means that even if you take delivery in 2024, you took delivery for tax purposes in 2022. So if you've already filed your 2022 return when you take actual delivery, you actually need to amend the return to reflect that the delivery occurred (again, in fictional 2022). Kind of a pain, but if you want your 7500, them's the breaks.

This does not sound like a correct interpretation, but I am neither a tax accountant nor a lawyer. Perhaps you are.

 

[Autolycus]

You cannot get a tax credit for buying something in 2022 if you bought it in 2023. The tax year is the calendar year, not up to the point you file. The contract isn’t a purchase, it’s a loophole.

Weird, I bought a home in 2009 and got a credit on my 2008 taxes after filing an amended 2008 return -- and I am 100% certain that what I did was legal and expressly permitted within the 2009 FTHBTC's statutory provisions. And if you don't believe me, go look at Question 1C on the February 2009 revision of the 2008 Form 5405: https://www.irs.gov/pub/irs-prior/f5405--2008.pdf

Also, @rivordel's interpretation is correct. If you qualify for the transition rule, your "service date" will be August 15, 2022, regardless of when you actually take delivery. That almost certainly means your tax credit will be on your 2022 returns and will mean you'll have to file an amended 2022 return if you take delivery after you've already filed your 2022 returns.

 

[Gavinmcc]

Easiest solution: Rivian adds that second shift and delivers every bodies R1Ts and R1Ss before 12/31/2022.

a man can dream

 

[goldburger]

Weird, I bought a home in 2009 and got a credit on my 2008 taxes after filing an amended 2008 return -- and I am 100% certain that what I did was legal and expressly permitted within the 2009 FTHBTC's statutory provisions. And if you don't believe me, go look at Question 1C on the February 2009 revision of the 2008 Form 5405: https://www.irs.gov/pub/irs-prior/f5405--2008.pdf

Also, @rivordel's interpretation is correct. If you qualify for the transition rule, your "service date" will be August 15, 2022, regardless of when you actually take delivery. That almost certainly means your tax credit will be on your 2022 returns and will mean you'll have to file an amended 2022 return if you take delivery after you've already filed your 2022 returns.

I don't think it's weird because in the law you are referring to specifies when the home needs to e purchased... so if you bought it after Nov 7 2009 you wouldn't be bale to claim it for 2008. Showing that as proof for something entirely unrelated doesn't really work, IMO.

The IRA law writes "purchased, or entered into a written binding contract to purchase" so the binding contract is specifically different than a purchase. That being said my accountant says to assume I will get the tax credit for the year I actually purchased the Rivian, but that no one will know the IRS's interpretation Feb 2023, most likely.

I didn't mean to make everyone so upset! Jeez.

 

[rivordel]

The new guidance from the IRS is troubling, as it does seem to require a 5% deposit to be deemed an enforceable agreement. Effectively, they're saying that anything less means you don't have skin in the game. Understandable, but suggests that the Rivian attempt was insufficient.

 

[AZBruin]

I disagree, that binding contract is just a loophole, to make sure current reservation holders are not left out in the cold. If you get your truck in '23, that's when the sale takes place. The rebate or point of sale is the way to go - Rivian fronts the money and collects from Uncle Sam. BTW, in today's IRS world, filing an amended return could be a nightmare. I've heard stories that some 2019 and 2020 amended returns are still awaiting processing. If you are a paper filer you can expect the worst while simple electronic amendeds may not get any scrutiny.

 

[SANZC02]

I disagree, that binding contract is just a loophole, to make sure current reservation holders are not left out in the cold. If you get your truck in '23, that's when the sale takes place. The rebate or point of sale is the way to go - Rivian fronts the money and collects from Uncle Sam. BTW, in today's IRS world, filing an amended return could be a nightmare. I've heard stories that some 2019 and 2020 amended returns are still awaiting processing. If you are a paper filer you can expect the worst while simple electronic amendeds may not get any scrutiny.

Point of sale can be a nightmare as well. I did not see where they changed this to a refundable tax credit so if the dealer takes the full credit but your tax liability is less than 7500 you would owe the difference when filing your taxes. If something changed and you did not qualify, for instance you went over the income threshold you would owe it back as well when you file.

There are possibly challenges coming out of EU claiming the made in US clauses are violating our trade agreements we have with them. Several manufacturing companies are claiming this bill will negatively impact the EV adoption rates we have targeted by 2030 because the rebate restrictions are to tight because sourcing much of the material will not be readily available from required sources.

I think there will be a lot more work on this between now and the end of the year. Could be amendments to it and the IRS still will need to provide a lot more instructions around it.

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