I have a client who wants to make the payment required for the Five Percent Safe Harbor election in 2020 to meet the requirement for the 26% Investment Tax Credit for a Solar Energy project on his farm. The project will be finished and put in service in 2021. I cannot figure out how to make the Five Percent Safe Harbor election on the 2020 return or if this is the appropriate tax year to make the safe harbor election. More importantly, neither the guidance in the Instructions for Form 3468 nor IRS Notice 2018-59, are clear as to when the actual credit is claimed in conjunction with the safe harbor election. Is the safe harbor election made in 2020 when the payment is made and that just reserves the 26% amount of the credit to be claimed when the property is actually placed in service on the 2021 return? Or is the credit claimed in 2020 when the safe harbor election is made subject to successful completion of the project in 2021 (and the continuous effort requirements of the safe harbor election specified in Notice 2018-59.) Sorry to be so daft but the guidance does not make these critical points or the procedures clear. If this is not done properly, the amount of the credit drops to 22% in 2021 and the full credit could be at risk.

All knowledgeable assistance is appreciated. Thank you!