Installed solar panels and have sold the carbon credits to offset the cost of the installation. Is the sale of the carbon credits taxable?

[carrie_woodard]

Carbon Solutions Group says they were advised they do not have to send out 1099-misc but won't commit to whether or not these sales of carbon credits are taxable or not.  In our case, we are not profiting off the solar installation, so the credit should just be offsetting the cost.   But should we include the sale as part of our income?

[LeonardS]

Yes, as a general rule, the taxpayer has taxable income measured by the fair market value of the credits.  This income should be entered on your tax return as other income.

To enter your income from the sale of carbon credits as other income follow these steps:

1.        Open or continue your return, if you're not already in it.

2.        Select the Wages & Income tab

3.        Scroll down to Less common Income select show more

4.        On the line Miscellaneous Income, 1099-B, 1099-C select Start/revisit

5.        On the page Let’s work on any miscellaneous income click Start/Revisit on the line Other reportable income

6.        Answer yes to Any other taxable income

7.        Enter the description and amount on the page Other Taxable Income.

8.        Answer Done on the page Other Taxable Income Summary.

[carrie_woodard]

Thank you for your help!  This made it more clear than anything we could find elsewhere.  Much appreciated.