Don’t let the prospect of basking in the warm glow of a solar energy credit force you out in the cold as a result of failing to understand a state’s qualification requirements. Eligibility for a state credit can depend on a number of factors such as how the taxpayer acquired the solar equipment or energy.

The rules in some states are stricter than others.  And state requirements for solar credits still seem to be a work in progress.

Arizona recently issued tax rulings addressing taxpayer eligibility for the state’s solar energy device tax credit when leases and power purchase agreements (PPAs) are involved.

Taxpayers leasing solar energy devices installed on their businesses may claim the commercial solar energy device credit if the lease is structured as a capital lease but not if the lease is structured as an operating lease.

However, the ruling notes that taxpayers do not qualify for the commercial credit in the case of PPAs because the PPA administrator owns the solar property and incurs all of the costs associated with the solar property, not the taxpayer.

On the other hand, New York issued a memorandum stating that leases of solar energy equipment and purchases of power generated by solar energy systems are eligible for New York’s solar energy system equipment credit, reports a Bloomberg BNA Weekly State Tax Report article. 

Previously, taxpayers were required to purchase and install a solar energy system at their New York residence to qualify for the credit.

For more information about solar energy incentives, check out Bloomberg BNA’s Green Incentives Navigator.


In other developments . . .

The Louisiana Department of Revenue established a new central tax credit registry to record and register transferable credits granted by the state, according to a Bloomberg BNA Weekly State Tax Report article.

By:  Kathleen Caggiano

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