2005 Tax Changes Affecting Electric and Clean-Fuel Vehicles
untingWEB.com - January 04, 2006 - Taxpayers who put a qualified electric or clean-fuel vehicle into service during 2005 can claim the maximum electric vehicle credit and/or the maximum clean-fuel vehicle deduction, according to the Internal Revenue Service (IRS). Other clean-fuel property placed into service this year may also be eligible to take the maximum deductions.
Popular gas/electric hybrid vehicles, such as Toyota’s Prius and Honda’s Insight, not powered primarily by an electric motor, are NOT qualified electric vehicles. If the gross vehicle weight rating of the hybrid vehicles does not exceed 10,000 pounds, however, they may qualify for the clean-fuel vehicle deduction.
Qualified Electric Vehicle Credit
The IRS generally defines a qualified electric vehicle as:
- Being powered primarily by an electric motor drawing current from rechargeable batteries, fuel cells or other portable sources of electrical current.
- Having at least four wheels and is manufactured primarily for use on public streets, roads and highways.
- Is originally used by the taxpayer.
- Was not acquired for resale purposes
- Has never been used as a non-electric vehicle.
- Is used predominantly in the U.S.
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