Do Solar Panels Qualify For Bonus Depreciation

Under 50 bonus depreciation system owners may claim depreciation of half of their solar facility after it is placed in service.

Do solar panels qualify for bonus depreciation. Because the largest percentage of most renewable energy property i e wind and solar is personal property that is otherwise 5 year modified accelerated cost recovery system macrs property and because the new law did not change the general rule for wind or solar 5 year macrs the new 100 bonus depreciation is merely an option for wind and solar deals. Established a basis in solar panels and related equipment for purposes of claiming an energy credit under secs. It looks like solar panels have a 5 year life. 46 and 48 and a special allowance for depreciation under sec.

Depreciation on solar panels is one of the easiest ways businesses and farms looking to go solar can keep installation costs down rois high and paybacks short. For equipment on which an investment tax credit itc grant is claimed the owner must reduce the project s depreciable basis by one half the value of the 30 itc. The tax cut and jobs act of 2017 brought with it the option for 100 bonus depreciation on solar systems which is often a great way for businesses to quickly recover costs associated with integrating solar energy. Commercial solar arrays and macrs depreciation macrs depreciation of solar panels normally the depreciable life of solar panels is 85 of the full solar system cost which may be depreciated roughly as follows.

Had sufficient amounts at risk under sec. Satisfied the requirements of then applicable sec. Bonus depreciation a business with a solar pv system placed in service between january 1 2008 and september 8 2010 or between january 1 2012 and december 31 2017 can elect to claim a 50 depreciation bonus. More importantly i don t know your whole situation but i feel like you are eligible for a form 3468 investment credit for your solar panels.

On june 5 2018 the united states tax court ruled in favor of the petitioner taxpayer in claiming the solar energy credit under sections 46 and 48 and macrs bonus depreciation under section 168 k 5. The other 50 is depreciated using the normal depreciation table in this case 5 year macrs so in the first year the 50 bonus depreciation reduces the post itc basis by half from 850 000 to 425 000. However this year you can use 100 bonus depreciation if you would like to take the full cost as depreciation expense in 2018. The total section 179 deduction and depreciation you can deduct for a passenger automobile including a truck or van you use in your business and first placed in service in 2019 is 10 100 if the special depreciation allowance does not apply.