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.

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