Sign Up For Novogradac Industry Alert Emails

Circuit Court Rules that Taxpayers Must Have Profit Motive in ITC-Depreciation Deduction Case

Friday, November 11, 2022 - 12:15PM

Taxpayers must have profit as a primary objective of a venture to receive tax benefits that include renewable energy investment tax credits (ITCs), according to a decision issued this month by the U.S. Circuit Court of Appeals for the Tenth Circuit. The court upheld a lower court’s ruling that denied ITCs and depreciation deductions to a taxpayer, ruling that those benefits require a profit motive. The taxpayer entered a sale-and-leaseback transaction for solar lenses in a system that was never finished, yet the taxpayer claimed depreciation deductions and ITCs on the full price of the lenses, rather than the 30% that the taxpayer paid. The IRS ruled that the taxpayer lacked a profit motive and denied the depreciation deductions and ITCs.

Stay up to date on developments in the clean energy world with a subscription to the Novogradac Journal of Tax Credits.

Learn more about Novogradac's expertise and many services