Are Businesses Eligible for a Tax Credit?

The Business Energy Investment Tax Credit (ITC) is available for businesses.

In general, the following credits are available for eligible systems placed in service on or before December 31, 2016**:

Solar. The credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

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Summary of Federal “ITC”

Pursuant to Section 48 of the Internal Revenue Code.

  • Allows for a 30% investment tax credit for solar energy equipment placed into service before January 1, 2017.
  • Qualifying solar energy property includes equipment which uses solar energy to generate electricity.
  • Credit is claimed by the taxpayer that constructs the property, or if the property is acquired by the taxpayer it will qualify for the credit if the original use of the property commences with the taxpayer.
  • In the case of a lease, the credit is typically claimed by the lessor, unless the lessor allocates the credit to the lessee.
  • The credit is not allowed if the property is used predominantly outside the United States or if the property is used by a tax exempt entity.
  • The credit is claimed in the year the property is placed in service.
  • The credit can be used as an offset to either regular tax or alternative minimum tax. If the credit is not used in the current tax year, the credit can be carried back one year and forward 20 years.
  • Recapture rules (pursuant to IRC Section 50) apply if the taxpayer disposes of the property before the end of five full years following the date on which the property was placed in service. The amount recaptured is equal to 20% times the number of years (full or partial) remaining in the five-year recapture period multiplied by the total credit amount.

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