Any Tax advisors/consultants on this board? My tax credit dilemma...

[stejus]

Here's my question. I know the code basically states purchases made in 2009 and 2010 only. However, there's a clause deep inside IRS n-09-53 that may help me out.

My Timeline
12-23-2008 - Stove purchased
12-26-2008 - Stove installed - My installer wrote on the receipt "Do not use stove until inspected".
01-06-2009 - Stove inspected and in service.

The tax code Section 7.04 Effective Dates and Transition Rules.

.04 For amounts that are paid or incurred in taxable years beginning before
December 31, 2008, with respect to property placed in service in calendar year 2009,
the credit is computed in accordance with section 2.02 of this notice.

Do I qualify based on my purchase and in service dates?

Thanks in advance for any feedback

 

[jtp10181]

I'm no tax expert but if you truly did not use it until 1/6/09 I would say it qualifies based off wht you posted.

 

[DBoon]

Let me preface my comments by letting you know that I am not a tax advisor....

But in any case, I have a rental property, and the tax language seems very familiar. The IRS definition of "placed in service" in the case of a rental property describes when the property or depreciable item is ready and available for use. For instance, if I bought a bunch of carpeting in November 2008, but didn't have it installed until January 2009, then it wasn't "placed in service" until January 2009, and at that point, it becomes a depreciable item.

If your local jurisdiction has a specific law that indicates that the wood stove cannot be used until it has been inspected, then you clearly have not "placed it in service" until the inspection occurs. In that case, I think your claiming it for January 6, 2009 would be appropriate. If there is no law disallowing use until after inspection, then the best thing to do would be to get a letter from the inspector saying that he inspected it on such and such a date and he now approves it for use. Then, keep that letter with your tax files, and claim it for January 2009.

 

[Cluttermagnet]

I think DBoon has it nailed. Would help if you can document the 'placed in service' date. Receipt from inspector?

 

[newstove]

In MA, you are not "legally" allowed to use a stove until it has been inspected... I believe the towns have some lee-way in this (obviously) and some towns give you a very hard time for installing a used stove, and I know in my town, if they come out to inspect a new stove installation, and it has been burned in, you fail immediately. Thus, all the comments of "fire it up a few times outside to cure the paint" won't work in my town - once I've done that, my inspector would fail the installation. If it was a legitimate used stove, they have other hoops you must jump through...

Anyway, since you are in MA, you should have a signed copy of the installation permit from the inspector dated on the date he inspected it. That should be enough to prove the "in service" date.

 

[karl]

Take the credit. They aren't going to question you anyway, and you didn't light thing until 2009 so that's your in service date.

 

[Titus]

Here's my question. I know the code basically states purchases made in 2009 and 2010 only. However, there's a clause deep inside IRS n-09-53 that may help me out.

My Timeline
12-23-2008 - Stove purchased
12-26-2008 - Stove installed - My installer wrote on the receipt "Do not use stove until inspected".
01-06-2009 - Stove inspected and in service.

The tax code Section 7.04 Effective Dates and Transition Rules.

.04 For amounts that are paid or incurred in taxable years beginning before
December 31, 2008, with respect to property placed in service in calendar year 2009,
the credit is computed in accordance with section 2.02 of this notice.

Do I qualify based on my purchase and in service dates?

Thanks in advance for any feedback

You can take the credit. It all hinges on the "placed in service" date.

BTW, the $1500 credit is a cap for all items covered by the credit taken in 2009 and 2010. You can't take $1500 on the stove AND $1500 on insulation AND windows. If 30% of your stove lets you take the whole $1500 credit this year, then you can't take any credit for 2010... even if you put in new windows next year, for example.

 

[mbcijim]

x5

I'm not a tax advisor either, but everything I've read is 'placed in service' which means the day you start using it. I have spent a few hours reading up on the subject.

 

[stejus]

To all that replied, thanks for the info. I do have all the documents (purchase and install) and a signed Stove Inspection Approval Cert dated in 2009. The permit states that the stove can not be used until inspected and approved. I figure I'll get about $1000 of the $1500 credit! Not bad because I wasn't expecting it

 

[Diabel]

I have to disagree. These rules & regulations are invoice date driven & if the credit applies to 2009-10 then it is just that. Whether you started using it in 2009 or 2099 it doesn't really matter to IRS. Call & ask them!

D

 

[BrotherBart]

Disagree all you want but the IRS and the tax courts have ruled for many years that "placed in service" as the bill clearly states is when the asset is "available for use". If you legally can't use it, it ain't "available for use". North or South of the border.

Take the credit.

 

[stejus]

OK, I just called the IRS to discuss my timeline. He repeated twice that the key is the effective date that the property (i.e. my home) can start using the biomass appliance. I reviewed all my dates and he says that I can add up all my costs (stove, liner, liner insulation, cap and labor) associated with this new applicance.

So, for all you out there that fell into the same situation as me, purchased and installed in 2008, but inspected and first use in 2009, you can take the credit!