Residential Energy Credit

[Christian]

A client installed solar panels on his home in 2020. The resulting energy credit totaled in excess of $11,000 dollars. The panels did not perform as advertised so he sued in 2021 and won a settlement in which he was absolved of paying the loan he contracted with the company to pay and the company removed and absorbed his legal costs. There remains a carryover energy credit in excess of $4,000 for use in 2021. Is he still entitled to use this in light of the fact the panels are now gone and he received legal redress ? My thinking is he was not responsible for the defective equipment and he gets to use the credit. Any input is appreciated.

[Lee B]

It would seem to me that his basis has been significantly reduced.

[Christian]

This has also occurred to me. I'll have to call his wife as he has since died and try and determine what part of the loan was paid and what part dropped. As about half the credit is already used I may simply drop the portion allocable to this year. This is one of those "can of worms" I alluded to awhile back.

[Christian]

Well she decided to take her chances on being checked which I adjudge as very small indeed explaining that if checked she could discuss the basis with them.