gift of energy efficient windows

[Kea]

Client got "sound proof" windows for their house. This was a gift from their kids. Qualified windows cost $4000, with each kid paying $2000.

Who, if anyone, gets the energy credit? Or, is it lost?

Thanks.

[BulldogTom]

I think (don't hold me to this) that the form says "expenses that you paid for improvements to your main home located in the United States".

That would mean lost. The kids can't say it was their main home and the parents can't say they paid the expense.

Tom

Lodi, CA

[Jack from Ohio]

I totally agree with Tom.

[Bart]

Client got "sound proof" windows for their house. This was a gift from their kids. Qualified windows cost $4000, with each kid paying $2000.

Who, if anyone, gets the energy credit? Or, is it lost?

Thanks.

I would say the kids gifted the money to the parents and the parents get the credit.

[Kea]

I was fairly sure the credit was lost. But I was hoping that there might be some kind of work-around (such as what Bart suggested) that might be acceptable - or even possible after the fact.

So, is Bart's method OK? Or anything else? Would it help if the client repaid the children, then later the kid gift the money to the parents? I'm guessing that might have been OK then, but would violate the spirit of the law if done now.

Thanks

[Chrisbry]

Unless the parents actually wrote the check to pay for the windows, the credit is lost.

Is it really worth risking a fraudulent return for $200 credit (maximum on windows).

[Kea]

I was only looking for legal ways to do it. No, I'm not going to jail for anyone for any amount!

[Maribeth]

I agree with Bart. The kids gifted the money to the parents; the parents bought the windows. The parents are entitled to the credit. Substance over form here. What really happened? A gift from the kids; a purchase by the parents.

Maribeth

[Janitor Bob]

I agree with Bart. The kids gifted the money to the parents; the parents bought the windows. The parents are entitled to the credit. Substance over form here. What really happened? A gift from the kids; a purchase by the parents.

Maribeth

I agree with Bart...I would not have a problem with giving this credit to the parents

[Jack from Ohio]

I agree with Bart. The kids gifted the money to the parents; the parents bought the windows. The parents are entitled to the credit. Substance over form here. What really happened? A gift from the kids; a purchase by the parents.

Maribeth

Get an auditor to buy that...???

[Jake]

[is it really worth risking a fraudulent return for $200 credit (maximum on windows).

[kcjenkins]

Well, the problem is with whether the kids paid the bill, or gave the money to the parents to pay it, and the parents actually paid it. To take the credit, you have to do two things, put the qualified purchase on your own principle residence, and pay for that purchase. So unless they can get an invoice for it showing that they paid for it, it's not going to fly. Kids should have gifted the parents the money, and let them buy the windows. If they did not do that, do not take it. My 2¢ worth.

[Kea]

Kids completely paid for it. It was a surprise gift. The mom couldn't sleep and the kids wanted to fix the problem quickly. Invoice / credit card receipt is in one kid's name.

[Jack from Ohio]

Kids completely paid for it. It was a surprise gift. The mom couldn't sleep and the kids wanted to fix the problem quickly. Invoice / credit card receipt is in one kid's name.

No credit. I can hear an auditor laughing out loud at this one. The requirements are clear.

[Kea]

Thanks everyone. It's what I figured, but wanted to check if I was missing any legal loopholes.

[jainen]

>>Substance over form<<

The substance was NOT that the kids gave money to the parents who then decided to buy windows. As Kea describes it, the intention from the beginning was to give them windows directly as a gift. One of the most important elements of the gift was that the money was not an issue, right? It was a nice thing just in itself. The kids might even be offended if the parents looked at this gift as some kind of tax dodge.

[Kea]

Just to add another wrinkle. What about the sales tax on home building materials? Even though it was one credit card purchase, the other kid did pay back the 1st kid. So they can split the sales tax, right? No stipulation on whose house for that.

The invoice just shows the total. There is no breakdown between the windows, labor and tax. (Yes, I know the kids, also - all of them are clients.)

Thanks.