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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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I have a company that uses hydrogen injection technology, to

Resolved Question:

I have a company that uses hydrogen injection technology, to increase fuel efficiency and dramatically reduce emissions. I need to know exactly what the rules are for businesses to use tax credits or deductions in conjunction with Code 179A for this tax year.
Submitted: 5 years ago.
Category: Tax
Expert:  Ed Johnson replied 5 years ago.

DearCustomer

 

 

Please clarify your question,

 

by property do you mean property that produces clean fuel for use by vehicles?

 

do you mean producing clean fuel for heating or public utility use?

 

Do you mean hydrogen vehicles.

Customer: replied 5 years ago.
we use our units to Inject Hydrogen into the fuel system, converting the vehicle into a hybrid that uses supplemental hydrogen gas for a boost in horse power, and fuel efficiency, which also dramatically reduces emissions.

Can the whole truck be deducted as a hybrid or property? or can we get a tax credit on the unit costs? I need to know what the government is willing to let us deduct or take as a credit, the property being either the unit or the whole truck as a hybrid unit.
Expert:  MequonCPA replied 5 years ago.

DearCustomer-

 

The tax credit is only available to the purchase of new vehicles using alternative fuels. Below is a link to the IRS web page that lists the qualifying vehicles that have been approved.

 

http://www.irs.gov/businesses/article/0,,id=175456,00.html

 

The purchase of the "unit" would be depreciable and depending on your asset acquisitions you may be allowed a Section 179 deduction. Link below.

 

http://www.irs.gov/formspubs/article/0,,id=177054,00.html

 

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2323
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
MequonCPA and 4 other Tax Specialists are ready to help you
Customer: replied 5 years ago.
I can't accept this yet, I found this from the 2006 copy....something like this must still exist.

Clean-fuel vehicle property. Clean-fuel vehicle property is either of
the following kinds of property.

1. A motor vehicle (defined earlier) produced by an original equipment
manufacturer and designed to be propelled by a clean-burning fuel.
These include designated hybrid gas-electric automobiles which, at
this time, only include the Ford Escape Hybrid, Honda Accord Hybrid,
Honda Insight, Honda Civic Hybrid, Lexus RX 400h, Mercury Mariner
Hybrid, Toyota Highlander Hybrid, and Toyota Prius. Those
designated automobiles do not qualify for the electric vehicle credit.

For other than those designated automobiles, the only part of a
vehicle's basis that qualifies for the deduction is the part attributable
to:

a. A clean-fuel engine that can use a clean-burning fuel,
b. The property used to store or deliver the fuel to the engine, or
c. The property used to exhaust gases from the combustion of
the fuel.

2.Any property installed on a motor vehicle (including
installation costs) to enable it to be propelled by a
clean-burning fuel if:
a. The property is an engine (or modification of an engine) that
can use a clean-burning fuel, or

b.The property is used to store or deliver that fuel
to the engine or to exhaust gases from the
combustion of that fuel.
For vehicles that may be propelled by both a cleanburning
fuel and any other fuel, your deduction is
generally the additional cost of permitting the use of
the clean-burning fuel.
Expert:  MequonCPA replied 5 years ago.

 

DearCustomer-

 

There were credits and deductions similar to those you describe in your most recent response. However, those provisions expired on December 31, 2006. Below is an excerpt from an IRS web page (emphasis added) and a link to that page.

 

Electric and Clean-Fuel Vehicles

The maximum clean-fuel vehicle deduction and qualified electric vehicle credit were scheduled to be 25% lower for 2002 and both were scheduled to be phased out completely by 2005. The full deduction and credit are now allowed for qualified property placed in service in 2002 and 2003. The phaseout of the deduction and the credit will begin in 2004, and no deduction or credit will be allowed for property placed in service after 2006. For more information about electric and clean-fuel vehicles, see chapter 12 in Publication 535, Business Expenses..

 

http://www.irs.gov/publications/p3991/ch02.html#d0e589

 

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