aqn wrote:If I buy a Leaf, drive the car for one day, then sell it, I'm OK.
planet4ever wrote:Well, of course, at that point you won't have been given the credit in the first place!
My guess is that if you no longer own the vehicle at the end of the tax year in which you buy it, the IRS computers are going to flag your return, and you are going to have to do some explaining in order to get the credit at all. There will, of course, be explanations that the IRS will accept. They might range from "my wife hated it" to "the car was totaled."
Again, all I know is what I read in that IRS publication (which has almost exactly the same wording as in the American Recovery and Reinvestment Act of 2009
). There is nothing
regarding how long
you have to keep your Leaf.
tps wrote:I suspect you'd have a hard time convincing the IRS the car was "not for resale" if you sold it during the tax year for which you were claiming the credit.
Why? How long do I need to keep it to avoid that? One week? One year? Ten years?
All that said, there is indeed a "not for resale" clause: "The vehicle is acquired for use or lease by the taxpayer, and not for resale; ...". The problem is that there are no
additional specifications of what that means. It'd be simple enough to include "for first purchaser's use for at least N days", but there is none. Instead, it's unspecified. Does that mean "not for resale", ever
, or "not for resale" until after one year, or "not for resale" until after one day?
It's clearly ambiguous (oxymoron!). How does would the IRS prove that a Leaf was purchased "for resale"? If the purchaser is a dealer, yes, it might be easy to prove that. What if the purchaser is an individual who bought only three cars in the past thirty years?
The reason I believe that it does not matter is because (and this is strictly my opinion) the intent of the tax credit (stemming from the Recovery and Reinvestment Act) is to promote migration away from use of fossil fuel for transportation, specifically, in this case, to promote sales and use of plug-in electric vehicles. To that end, once one buys a Leaf, regardless of how long one keeps it, the Act has already achieved its goal: one more plug-in electric vehicle on the road. It does not matter how long the new owner hangs on to the vehicle. The IRS doesn't care about people taking advantage of the tax credit and "flipping" the car because as said before, nobody is gonna by an used Leaf for more than about $25K (MSRP less the tax credit) when they can buy a brand new one for about the same amount?
(Also, as noted, the only way an used Leaf might go for more than $25K is if the demand for Leaf's is so huge that people are willing to pay more than (MSRP - tax credit) for an used Leaf because they did not have a reservation. In that case, one can make a profit selling a Leaf regardless of whether one gets a tax credit in the first place. The only difference will be the amounts involved: one pays "MSRP - tax credit" and sells for "MSRP - tax credit + mark-up because of demand", versus paying MSRP and selling it for "MSRP + mark-up because of demand".)
In the end, I'm not a tax accountant or tax lawyer, so obviously, each of us must form his/her own conclusion, or better yet, seek advice of a tax accountant.