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Taxmap/pubs/p535-059.htm#TXMP3574524a Electric Vehicle Credit

Electric Vehicle Credit

You can choose to claim a tax credit for a qualified electric vehicle you place in service during the year. You can make this choice regardless of whether the property is used in a trade or business.

Taxmap/pubs/p535-059.htm#TXMP42a8a69e Qualified Electric Vehicle

Qualified Electric Vehicle

A vehicle is a qualified electric vehicle if it meets all of the following requirements.

1. It is a motor vehicle (defined earlier) powered primarily by an electric motor drawing current from rechargeable batteries, fuel cells, or other portable sources of electrical current.
2. You were the first person to use it.
3. You acquired it for your own use and not for resale.
4. It has never been used as a nonelectric vehicle.
5. It is not nonqualifying property, defined earlier.

Hybrid gas-electric vehicles are not qualified electric vehicles. However, certain of these vehicles may qualify for clean-fuel vehicles.

Taxmap/pubs/p535-059.htm#TXMP1e838c04 Amount of the Credit

The credit is generally 10% of the cost of each qualified electric vehicle you place in service during the year. If your vehicle is a depreciable business asset, you must reduce the cost of the vehicle by any section 179 deduction before figuring the 10% credit. If you need information on the section 179 deduction, see Publication 946.

Taxmap/pubs/p535-059.htm#TXMP26d562f4 Credit limits.

The credit is limited to $4,000 for each vehicle. The total credit is limited to the excess of your regular tax liability, reduced by certain credits, over your tentative minimum tax. To figure the credit limit, complete Form 8834 and attach it to your tax return.

Taxmap/pubs/p535-059.htm#TXMP0ca80b37 How To   Claim the Credit

You must complete and attach Form 8834 to your tax return to claim the electric vehicle credit. Enter your credit on your tax return as discussed next.

Taxmap/pubs/p535-059.htm#TXMP63f2671c Individuals.

Individuals claim the credit by entering the amount from line 20 of Form 8834 on line 54 of Form 1040. Check box "c" and specify Form 8834.

Taxmap/pubs/p535-059.htm#TXMP44e00fcb Partnerships.

Partnerships enter the amount from line 20 of Form 8834 on line 15f of Schedule K (Form 1065). The partnership then allocates the credit to the partners in Box 15, code U, of Schedule K-1 (Form 1065). See the instructions for Form 1065.

Taxmap/pubs/p535-059.htm#TXMP2b1ed3aa S corporations.

S corporations enter the amount from line 20 of Form 8834 on line 13g of Schedule K (Form 1120S). The S corporation then allocates the credit to the shareholders in Box 13, code V, of Schedule K-1 (Form 1120S). See the instructions for Form 1120S.

Taxmap/pubs/p535-059.htm#TXMP15962d14 C corporations.

C corporations claim the credit by entering the amount from line 20 of Form 8834 in the total for line 6c of Schedule J (Form 1120), checking the "QEV credit" box. See the instructions for Form 1120.

Taxmap/pubs/p535-059.htm#TXMP0fee0950 Recapture of the Credit

The electric vehicle credit is subject to recapture if, within 3 years after the date you place the vehicle in service, it ceases to qualify for the electric vehicle credit. You recapture the credit by adding it, or part of it, to your income tax for the year in which the recapture event occurs.

The vehicle will cease to qualify if it is changed in either of the following ways.

1. It is modified so that it is no longer primarily powered by electricity.
2. It becomes nonqualifying property, defined earlier.

Taxmap/pubs/p535-059.htm#TXMP7758303b Sales or other dispositions.

If you sell or otherwise dispose of the vehicle within 3 years after the date you placed it in service and know or have reason to know that it will be changed in either of the ways described above, you are subject to the recapture rules. In other dispositions (including a disposition by reason of an accident or other casualty), the recapture rules do not apply.

If the vehicle was subject to depreciation, the credit (minus any recapture amount) is considered depreciation when figuring the part of any gain from the disposition that is ordinary income. See Publication 544 for more information on dispositions of depreciable property.

Taxmap/pubs/p535-059.htm#TXMP45dcf3bb Recapture amount.

Figure your recapture amount by multiplying the credit by the following percentage.

• 100% if the recapture date is within the first full year after the date the vehicle was placed in service.
• 662/3% if the recapture date is within the second full year after the date the vehicle was placed in service.
• 331/3% if the recapture date is within the third full year after the date the vehicle was placed in service.

Taxmap/pubs/p535-059.htm#TXMP3a9d7898 Recapture date.

The recapture date is generally the date of the event that causes the recapture. However, the recapture date for an event described in item (2), earlier, is the first day of the recapture year in which the event occurs.

Taxmap/pubs/p535-059.htm#TXMP31a106ff How to report.

Report the recapture amount as follows.

Taxmap/pubs/p535-059.htm#TXMP17f66077 Individuals.

Include the amount on line 62 of Form 1040. Write "QEVCR" on the dotted line next to line 62.

Taxmap/pubs/p535-059.htm#TXMP0b228aef Partnerships.

Include in Box 15, code V, Schedule K-1 (Form 1065) the information a partner needs to figure the recapture of the credit.

Taxmap/pubs/p535-059.htm#TXMP709ab4c1 S corporations.

Include in Box 13, code W, of Schedule K-1 (Form 1120S) the information a shareholder needs to figure the recapture of the credit.

Taxmap/pubs/p535-059.htm#TXMP3bb9a19a C corporations.

Include the amount on line 10 of Schedule J (Form 1120), or line 4 of Part I (Form 1120-A). Check the box for "Other" and attach the required schedule. See the instructions for Form 1120.

Taxmap/pubs/p535-059.htm#TXMP5920b3fe Basis Adjustments

Basis adjustment.

If you claim a tax credit for a qualified electric vehicle you place in service during the year, you must reduce your basis in that vehicle by the lesser of:

1. $4,000, or
2. 10% of the cost of the vehicle.

This basis reduction rule applies even if the credit allowed is less than that amount.

If you must recapture part or all of the credit, increase the basis of your vehicle by the amount recaptured. If the qualified electric vehicle is depreciable property, you can recover the additional basis over the vehicle's remaining recovery period beginning with the tax year of recapture.

If you were using the percentage tables to figure your depreciation on the vehicle, you will not be able to continue to do so. See Publication 946 for information on figuring your depreciation without the tables.

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