We purchased a solar system in 2020 for $55,000. In 2021, we received an income check for our SREC's. How do I file this investment and income?

[DanPaul02]

deleted incorrect reply

[Opus 17]

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@DanPaul02 wrote:

After you receive enough income from SRECs to recover the $55,000 investment, then additional SREC's will be taxable income.

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The credits are taxable income from day 1.  See IRS ruling

https://www.irs.gov/pub/irs-wd/1035003.pdf

You would report them as "other income".  You are not a small business selling electricity, so this is not going on a schedule C or subject to self-employment tax.  

The payor is probably required to issue a 1099-MISC if the payment is more than $600 in any year.  You can enter this as income.  Even if the payments are smaller and no 1099 is issued, you would enter this as other miscellaneous taxable income.