Solar Tax Credit

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bpt
Posts: 6
Joined: Thu Dec 29, 2016 6:33 pm

Solar Tax Credit

Post by bpt » Thu Dec 06, 2018 9:10 pm

Hello, a regular reader but first time poster, trying to gauge the group thoughts/views regarding Solar Credits.

During a recent routine annual tax planning phone call, my CPA suggested to enroll into a solar equity exchange. In short, the annual taxes will be used by the IRS to invest 90% taxes into solar equity group (actual name of the company) with a 10% tax credit for me. This is available to high tax payers above a certain limit.

Considering this is first time hearing the information I was obviously skeptical :| . I am a regular BH forum reader but have yet to come across this topic and not found any information through the search engine. Only solar tax credit information available is for physical solar panels.

Please if you could share your thoughts regarding this and if anyone has ever enrolled for these credits.

Update:

My CPA sent me some more info on the company. Basically the company website ( which is legit) and a YouTube video (search “solar equity group top 4 questions”) regarding this tax credit. I am on the fence and will wait and see what other BH members think after watching the video.

A tax attorney will be involved, with assurance that it is legit. Previous clients have not been audited ie who have availed this tax credit.
Last edited by bpt on Sat Dec 08, 2018 12:59 am, edited 1 time in total.

mvilleguy9
Posts: 4
Joined: Fri Jul 27, 2018 10:02 pm

Re: Solar Tax Credit

Post by mvilleguy9 » Thu Dec 06, 2018 9:58 pm

I've Googled around a bit and can't find any info on it other than a) It's awesome b) Nancy Pelosi's son says it's awesome and c) Nancy Pelosi's son once got his picture taken with Mark Cuban. Sounds like a scam to me....

jminv
Posts: 641
Joined: Tue Jan 02, 2018 10:58 pm

Re: Solar Tax Credit

Post by jminv » Thu Dec 06, 2018 10:21 pm

bpt wrote:
Thu Dec 06, 2018 9:10 pm
Hello, a regular reader but first time poster, trying to gauge the group thoughts/views regarding Solar Credits.

During a recent routine annual tax planning phone call, my CPA suggested to enroll into a solar equity exchange. In short, the annual taxes will be used by the IRS to invest 90% taxes into solar equity group (actual name of the company) with a 10% tax credit for me. This is available to high tax payers above a certain limit.

Considering this is first time hearing the information I was obviously skeptical :| . I am a regular BH forum reader but have yet to come across this topic and not found any information through the search engine. Only solar tax credit information available is for physical solar panels.

Please if you could share your thoughts regarding this and if anyone has ever enrolled for these credits.
It sounds like what is actually happening is that you’re buying solar tax credits that the solar equity company has secured. Or investing in it? It doesn’t sound like your CPA explained very well exactly what’s going on. I’d only do it if it results in more than a dollar saved in taxes for a dollar owed with zero risk. It sounds like there might be some risk in this structure. Ask for more details.

I would be cautious about this because.
1. Your accountant told you that the IRS is investing your money in this. That obviously not the case.
2. Your accountant will receive compensation from the solar equity program for selling you on this. It’s pretty clear from their website that there’s a commission disguised as a billable hours payment.
3. Your accountant has used the ‘special club’ selling tactic on you, ie, only open to high earners/special people.
4. Your accountant has not provided a very clear explanation on how this works.

bpt
Posts: 6
Joined: Thu Dec 29, 2016 6:33 pm

Re: Solar Tax Credit

Post by bpt » Thu Dec 06, 2018 10:59 pm

Updated
Last edited by bpt on Sat Dec 08, 2018 12:58 am, edited 1 time in total.

bpt
Posts: 6
Joined: Thu Dec 29, 2016 6:33 pm

Re: Solar Tax Credit

Post by bpt » Thu Dec 06, 2018 11:17 pm

jminv wrote:
Thu Dec 06, 2018 10:21 pm
bpt wrote:
Thu Dec 06, 2018 9:10 pm
Hello, a regular reader but first time poster, trying to gauge the group thoughts/views regarding Solar Credits.

During a recent routine annual tax planning phone call, my CPA suggested to enroll into a solar equity exchange. In short, the annual taxes will be used by the IRS to invest 90% taxes into solar equity group (actual name of the company) with a 10% tax credit for me. This is available to high tax payers above a certain limit.

Considering this is first time hearing the information I was obviously skeptical :| . I am a regular BH forum reader but have yet to come across this topic and not found any information through the search engine. Only solar tax credit information available is for physical solar panels.

Please if you could share your thoughts regarding this and if anyone has ever enrolled for these credits.
It sounds like what is actually happening is that you’re buying solar tax credits that the solar equity company has secured. Or investing in it? It doesn’t sound like your CPA explained very well exactly what’s going on. I’d only do it if it results in more than a dollar saved in taxes for a dollar owed with zero risk. It sounds like there might be some risk in this structure. Ask for more details.

I would be cautious about this because.
1. Your accountant told you that the IRS is investing your money in this. That obviously not the case.
2. Your accountant will receive compensation from the solar equity program for selling you on this. It’s pretty clear from their website that there’s a commission disguised as a billable hours payment.
3. Your accountant has used the ‘special club’ selling tactic on you, ie, only open to high earners/special people.
4. Your accountant has not provided a very clear explanation on how this works.
Thanks for the response.
1. Agreed
2. Hmmm I will ask the CPA directly if he/she will receive any commissions. As per the agreement, if I proceed, I will be charged a flat fee of $2500 to file my taxes and pay the tax attorney to get the paperwork in order.
3.as per the info provided, the IRS allows this credit for tax filers with withholding more than 100k (not IRS info but tax attorney/CPA info).
4. Agreed. I don’t think they understand it fully themselves. On my insistence I was sent a YouTube link. Search “solar equity group top 4 questions”.

bpt
Posts: 6
Joined: Thu Dec 29, 2016 6:33 pm

Re: Solar Tax Credit

Post by bpt » Sat Dec 08, 2018 12:56 am

Any other thoughts?

HIinvestor
Posts: 1715
Joined: Tue Apr 08, 2014 3:23 am

Re: Solar Tax Credit

Post by HIinvestor » Sat Dec 08, 2018 1:03 am

How much is the CPA receiving in commission? To me, if it’s too complicated or seems too good to be true, be VERY skeptical. I’d ask around—a lot before thinking of sinking any money in this.

curmudgeon
Posts: 1655
Joined: Thu Jun 20, 2013 11:00 pm

Re: Solar Tax Credit

Post by curmudgeon » Sat Dec 08, 2018 1:46 am

bpt wrote:
Sat Dec 08, 2018 12:56 am
Any other thoughts?
Is this the new Bernie Madoff investment? I'd consider it very high risk. If it had the approval of one of the "Big 4" top accounting firms (and I would verify, not trust), I might look closer, but otherwise the odds of it being bogus and putting you at risk of getting hammered by the IRS is way too high.

jminv
Posts: 641
Joined: Tue Jan 02, 2018 10:58 pm

Re: Solar Tax Credit

Post by jminv » Sat Dec 08, 2018 3:07 am

bpt wrote:
Thu Dec 06, 2018 9:10 pm
Hello, a regular reader but first time poster, trying to gauge the group thoughts/views regarding Solar Credits.

During a recent routine annual tax planning phone call, my CPA suggested to enroll into a solar equity exchange. In short, the annual taxes will be used by the IRS to invest 90% taxes into solar equity group (actual name of the company) with a 10% tax credit for me. This is available to high tax payers above a certain limit.

Considering this is first time hearing the information I was obviously skeptical :| . I am a regular BH forum reader but have yet to come across this topic and not found any information through the search engine. Only solar tax credit information available is for physical solar panels.

Please if you could share your thoughts regarding this and if anyone has ever enrolled for these credits.

Update:

My CPA sent me some more info on the company. Basically the company website ( which is legit) and a YouTube video (search “solar equity group top 4 questions”) regarding this tax credit. I am on the fence and will wait and see what other BH members think after watching the video.

A tax attorney will be involved, with assurance that it is legit. Previous clients have not been audited ie who have availed this tax credit.
I looked into it some more and it's worth doing if all the facts they stated are correct.

From the video, you are essentially buying K1 net operating losses at 90 cents on the dollar. Your 'profit' (actually reduced tax payment) is 10 cents per dollar. What is interesting about this tax equity solar scheme, as opposed to some other forms, is that it is a riskless transaction (according to the promoter) that can be used in full immediately (as opposed to up to 5 years in other forms).

According to the video, he has sold tax equity to 1500 clients over 7 years. I suppose that's a positive.

I'd probably go through with it but with the understanding that it might trigger an audit and you might not be buying exactly what you expect.

Some Cautions:
The founder of this company is a salesman. He's not a CPA. His experience is in direct sales and he is clearly selling you tax equity as the middleman. It's worrying to me that at the end of his bio, which I assume to be his more recent work history, he's moved onto asset protection schemes operating out of Belize, BVI, Saint Vincent and the Grenadines, Seychelles, etc.

It bothers me that they don't detail the structure of the tax equity scheme anywhere except in a youtube video. I watched it and only a very brief and vague reference was made to how the tax equity scheme works with the rest of the video repeatedly focused on how it was a risk free deal, a win win for everyone, an immediate profit, 'one of the rare financial deals where there's just no losers', the different groups they sponsor or are aligned with, and helping the environment.

The video's answer to the audit question isn't exactly clear cut, either. He says that no one has been audited by the IRS because they participated in this scheme but that people that did participate were audited for other reasons. I think there's enough wiggle room in his statements to conclude that it could flag your return for review, at which time they find the tax equity scheme to be okay but other aspects of your return to be problematic. If it does flag your return for review, it could also lead to expenses on your end in excess of the tax credit, depending on your tax liability.

It's odd that it's net operating losses that you are buying. I think the other schemes are generally tax credits (since the solar company has no tax liability they sell them to those who do) and depreciation (which is perhaps what this is, depreciation driving the net operating loss).

You mentioned that your CPA is billing you $2500 for this scheme. Consider that he is, at the very least, being paid an equal amount by Solar Equity Group in the form of a billable hours refund. It's in their 'tax professionals' section. I would question why you have to pay anything at all. Nail down your CPA on whether he is going to receive compensation for this or not and if so how much. You could perhaps get a better deal if he rebates part of the commission to you or doesn't charge you $2500.

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4nursebee
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Location: US

Re: Solar Tax Credit

Post by 4nursebee » Sat Dec 08, 2018 5:33 am

There are other ways of doing similar and obtaining better returns.
4nursebee

bpt
Posts: 6
Joined: Thu Dec 29, 2016 6:33 pm

Re: Solar Tax Credit

Post by bpt » Sat Dec 08, 2018 5:14 pm

From the video, you are essentially buying K1 net operating losses at 90 cents on the dollar. Your 'profit' (actually reduced tax payment) is 10 cents per dollar. What is interesting about this tax equity solar scheme, as opposed to some other forms, is that it is a riskless transaction (according to the promoter) that can be used in full immediately (as opposed to up to 5 years in other forms).
Thank you for reviewing the video and providing your assessment. Buying into the K1 operating losses makes more sense of how this works.

Since you have put so much time into reviewing the issue and also to answer 4nursebee post, I think I should mention the reason why this tax credit idea was propose by my CPA.

I am in the 35% tax bracket for individual tax filer. At the end of the year I file a simple W-2 with only deductions being donations. For religious reasons I do not invest in stocks and mutual funds (I can explain but it will be off topic) so don’t have any investments. I do max out my 401k to get employer matching and reduce the taxable income. So my CPA tried thinking out of the box to decrease my taxable income and get some sort of credit. So the mention of the solar tax credit. Considering I will be paying approximately 120k in fed taxes in 2018, the 10% tax credit for buying into the operating losses of 90% will be 12k. Honestly, it will not make a huge difference to my lifestyle to get the added credit (maybe bump my donations) but I do not want to be left with the nagging feeling that it is unethical or I am so-called “gaming the system”.

I know some would say “why read and post on an investing forum” if I have such strong views regarding investment. Agreed, but over the last few years I garnered invaluable information apart from investing :happy

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TomatoTomahto
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Re: Solar Tax Credit

Post by TomatoTomahto » Sat Dec 08, 2018 5:26 pm

bpt wrote:
Sat Dec 08, 2018 12:56 am
Any other thoughts?
If you accurately described how he explained it, i would get a new CPA.

It seems too “clever” by far.

ETA:
I do not want to be left with the nagging feeling that it is unethical or I am so-called “gaming the system”.
I’m not familiar with this scheme, but my guess is that the feeling you get afterwards will be more acute than nagging.
Zero Net Carbon by 2019.

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