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I have been selling renewabl energy credits (RECS). The clearing

house advertises that these sales...
I have been selling renewabl energy credits (RECS). The clearing house advertises that these sales are not taxable. Is this correct?
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Answered in 4 hours by:
8/2/2010
BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience: Owner of a CPA firm
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I am not familiar with this particular issue off the top of my head, but I am happy to look into this more for you. In the meantime, if another expert does know this up front, then I believe they should obviously answer to help both of us. I am therefore going to opt out for a while (I'm tied up today, sorry). If I can find the answer tomorrow, I will opt back in.

 

Thank you for your question.

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Customer reply replied 7 years ago
Thanks very much. Any help is appreciated. This is new and not many experts are familiar with it.
Customer reply replied 7 years ago
Relist: I still need help.
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,211
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Hello and thank you for your patience.

There is no explicit ruling or IRS documentation relating to Renewable Energy Credits, at this writing, so what you are going to get is an opinion based on interpretation.

That said......

 

I believe that since you are selling ( in your own words and those of countless others) an item you are required to report the gain on the sell of your property. Many advise that if you are not meaning to make a profit you do not need to worry about the sale. This does not really have tax logic behind it. Even those that rent a home to someone and do not make a profit will still have a tax consequence when they sale the home and in accounting for their expenses. If you are in a position to be receiving back only a portion of your investment cost then you would not have a gain yet to calculate tax due. The fact that the company does not issue you a 1099 form or other reportable document is not a reason to think of this as nontaxable income either.

The IRS code sites that all income is taxable unless it is specifically exclude by law. This pretty much covers any item the IRS does not have on a list or had not heard about yet.

Once you have recouped your investment costs for the RECs any amount you receive for them should be added into your income.

 

I sincerely XXXXX XXXXX information is helpful,

 

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,211
Experience: 15years with H & R Block. Divisional leader, Instructor
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I did a general internet search but wasn't finding anything too reliable and again assumed another expert would give a better answer. I have to agree with Robin, but I would be wary of finalizing such a return too at this point if I was personally preparing 'it.'

 

Why? Clearing houses are generally wary of giving tax advice. If they came out and said that your trades aren't taxable, I would like to know why first off. What was the name of that clearing house? I intend to research them / that claim further. There likely must be some sort of guidance, I believe.

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Robin D.
Robin D.
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