Solar Panels (Installed but not connected to edison yet)

[10409000]

First of all I want to thank everyone that is so helpful in taking their time in helping me out this year with all my questions. I truly appreciate you all! So my client installed solar panels dec 13 2022 but they told me that they are not connected to the power /edison yet. I read the pub and the tax book and all it says in order to get the credit is it must be installed.. so is my client ok to take the credit this year? or does he have to wait till they are connected to power/edison? 

[taxes96786]

He takes it in the year the contract is signed.

[TaxGuyBill]

I would take it this year.  To me, they are installed and fully operational. 

[IRonMaN]

But if it isn't plugged into the system it hasn't been placed in service yet.

[BobKamman]

If this were a toilet, would the installation be completed when it was not yet hooked up to the water lines and sewer?

Section 25D(e)(8)When expenditure made; amount of expenditure

(A)In general

Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.

(B)Expenditures part of building construction

In the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.

[TaxGuyBill]

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@IRonMaN wrote:

But if it isn't plugged into the system it hasn't been placed in service yet.

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I can't verify this for all installations, but my solar was plugged into my house before the utility company came out.  The installer even showed it powering things.   Just because he turned the light-switch back off doesn't mean it was no longer installed.

I THINK it even could have powered the 'grid' before the electric company came out (although I would not have received credit for it).  But the credit is not based in whether or not it is ready to power the grid, it is based being able to power your house.

[sjrcpa]

"He takes it in the year the contract is signed."

Only if that's the same year it is installed/placed in service.

[taxes96786]

I agree with Ironman.

[taxes96786]

Check IRS...if contract was signed late one year and PV company was too busy to install until following year you have effectively paid and installed the product.

If you use a credit card as payment in December but you don't pay the credit card until you receive the credit card Statement ...in which year would you take the credit?