APPlumbing
New Member
Posts:2
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| 21 Apr 2010 12:44 PM |
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I am a Plumbing/Radiant heat contractor that recently got certified for geothermal. I installed a new system at my own house in 2009. I billed myself for my cost, about 20K. Now my accountant tells me that I may not qualify for the tax credit because I am the busines owner. Has anyone heard of this exclusion? Thanks. |
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geome
Advanced Member
Posts:987
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| 21 Apr 2010 01:52 PM |
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I'm not a tax professional, so get professional advise. I would start by asking your accountant to show you the IRS code/tax law that supports this. |
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| Homeowner with WF Envision NDV038 (packaged) & NDZ026 (split), one 3000' 4 pipe closed horizontal ground loop, Prestige thermostats, desuperheaters, 85 gal. Marathon. |
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engineer
Veteran Member
Posts:2749
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| 21 Apr 2010 08:14 PM |
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I'm not a tax guy either, but I would think you could deduct your direct costs NOT including your own labor. |
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Curt Kinder <br><br>
The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is - Winston Churchill <br><br><a href="http://www.greenersolutionsair.com">www.greenersolutionsair.com</a>
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joe.ami
Veteran Member
Posts:4377
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| 22 Apr 2010 10:14 AM |
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Not a tax pro, but this would be my take:
You can't have this one both ways; can't claim value for something you didn't pay for, without risk of creating taxable income.
Look at it this way, my company is incorporated. Therefore I could install my own geo system, bill myself 20K and take 6 K off my personnal taxes; perfectly legal. Money would have to change hands between entities (me to my corp.) but would be returned to me later as distribution......taxable income.
Depending on your tax bracket, 30% may not offset local and federal income taxes on the distribution "income".
However, I believe you can take 30% of defensible expenses which may include things you haven't thought of i.e. milage to supply house etc.
Good Luck,
Joe
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Joe Hardin
www.amicontracting.com
We Dig Comfort!
www.doityourselfgeothermal.com
Dig Your Own Comfort! |
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geome
Advanced Member
Posts:987
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| 22 Apr 2010 10:54 AM |
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Again, I'm not a tax expert. If you are only recording cost on the business side and invoice yourself only for that cost, the business side of the equation may be a wash since expenses=revenue (possibly no tax implication on the business side, and no distributions either). On the personal side, you would have an invoice for cost that you may be able to use for the 30% tax credit. You really need to get a tax expert involved. Unfortunately, calling the IRS may or may not yield the correct answer. You can do web searches for IRS incorrect answers as they relate to interest and penalties. Please let us know how you make out. |
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| Homeowner with WF Envision NDV038 (packaged) & NDZ026 (split), one 3000' 4 pipe closed horizontal ground loop, Prestige thermostats, desuperheaters, 85 gal. Marathon. |
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gregj
Basic Member
Posts:326
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| 23 Apr 2010 05:43 PM |
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As long as you personally paid your business the amount on the invoice, the payment shows up as income on your business records, and you can defend the amount of the invoice then I can't imagine why it wouldn't be a defendable credit. |
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APPlumbing
New Member
Posts:2
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| 23 Apr 2010 11:06 PM |
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Thanks for the advise. I didn't include any markup or myown labor. I paid my company including sales tax. I have a business partner so I didn't want him to have to pay any income tax on any profit. We will have to see what my accountant finds out now that tax day has passed and she has more time to look into this. I was counting on that 6K tax credit. By the way the system works like a champ.
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robinnc
Advanced Member
Posts:586
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| 23 Apr 2010 11:39 PM |
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Why not post on the thread....My GEHP setup, exp. and cost, eff...etc about your new geo?
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