EV Tesla Tax Credit

[Tony478]

I bought a Tesla Model 3 and took delivery on December 28, 2019 ... then I returned the car to Tesla on January 4, 2020 (they have 7-day return policy 100% back). I legally owned the vehicle from 2019 to 2020, can I still claim the tax credit? (right now it's only the $1750).

[AlexanderS08]

No, you cannot claim the Credit. If you claim the credit, you would be required to amend your return upon returning the Tesla. So since you have already returned it and not filed, you simply just do not claim the credit. Nice idea, though.

[Tony478]

@AlexanderS08 can you explain your answer a bit more in detail? Would it have been different if I sold the car back to the dealer as oppose to giving it back?

[AlexanderS08]

Sure, here is the meat and potatoes from IRC 30D in block quote below. 

So in theory you could claim the credit on your 2019 taxes, but it is fools gold because you would have to report a gain for 2020 of the same amount.

The basis of the car = Purchase Price minus tax credit taken.

So when you sell it back for purchase price (which is $1750 above your basis) you now have a $1,750 gain. To me, it is easier to just not reduce the basis and not claim the gain. Hope this helps!

(f)Special rules

(1)Basis reduction

For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (c)).