The regulation says the property is placed in service when it is “ready and available for its specifically assigned function”. There are 5 factors the IRS looks for, although no one factor is controlling:
1. Approval of required licenses and permits;
2. Passage of control of the facility to taxpayer;
3. Completion of critical tests;
4. Synchronization to the power grid for generating electricity to produce
income; and
5. Commencement of daily or regular operation
You have some flexibility to determine what the assigned purpose is. For example, if the solar panels are generating electricity for you but are not connected to the grid yet to sell electricity back, you can decide that the main assigned purpose is to make electricity for you—then the property is in service. If the main purpose is to sell electricity to the utility, then it is not in service yet.
If the solar panels are not even making electricity for you, I would probably say they are not in service. But I am not an attorney.
