What does date placed in service mean? vehicle expense?

[MargaretL · Accepted solution]

Placed in service means the date that you started using the car for business/work purposes. 

[tvhsccasneryoda]

Does that mean of THIS tax year, or the date you first EVER started using it for bussiness?!? Answers and questions like this just aren't clear enough!

[biteddie]

Need a more clear answer. For example, if I purchased and took delivery of  car in November but only started using it in December? then Will December could be the date vehicle was placed in service? Any paperwork that we will need to prove this ?

[Carl]

The date of purchase and the date placed in service are two separate dates usually. Though they can be the same.

The date you purchased the vehicle could have been years ago. The date placed in service could have been yesterday.

[biteddie]

Thank you I am actually considering to purchase an EV(TESLA) and take delivery this Month since the car is ready and tesla is pushing me to take delivery. But I don't need to  drive it this month, can I keep the car in the garage and start using it in January and then claim that "the date vehicle was placed in service" is January (my mileage can tell )so that I could have better chance to access the new EV Tax credit. Will this work? 

[jxinleblanc]

Whether you receive EV tax credit depends on the "date of purchase", not "the date vehicle was placed in service" for a business.  As of now, a Tesla purchased in December 2021 doesn't qualify for any tax credit.  If BBB law in the current form passes, it will retroactively enable a Tesla bought in Dec 2021 qualify for the $7500 federal tax credit due to the current 200k vehicle sales limit.  But it will not qualify for any additional tax credit congress is considering in BBB.

[JMorrison619]

Can you cite your source for this information, everything that I read references placed in service - which as mentioned in the thread above, may or may not be the same day it was purchased?

[aclsmb1smbacl]

I noticed the Turbo Tax walkthrough form supporting IRS Form 8936 asks for the Acquisition Date and Date Placed in Service, but the actual IRS Form 8936 itself only asks for the Date Placed in Service. I'm not going to be using my EV for business. If I purchase the EV in 2022..meaning I complete and sign a binding contract in December 2022, but I don't take delivery until January 1, 2023, is it correct that the Date Placed in Service is January 1, 2023?  If so, what is the reason Turbo Tax asks for the Acquisition Date and does the Acquisition Date have any bearing on determing the eligibility for the tax credit?  My specific situation is that I'm looking to purchase a GM or Tesla...which until January 1, 2023 is NOT eligible for a tax credit because they have hit the 200K cap, although they are assembled in North America. But can I actually sign the binding contract in December 2022 and then take delivery in January 1, 2023 when the 200k cap is lifted and still get the tax credit since I will have taken delivery (which I'm assuming means, Placed in Service) in January 1, 2023.  Or does the fact that the binding contract (which I'm assuming is the Acquisition Date that Turbo Tax is referring to) has a December 2022 date mean I would NOT be eligible for the EV tax credit?

[jxinleblanc]

Here's a link to the IRS EV credit info that might help.

https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

Please note under section Pre-Inflation Reduction Act of 2022 Information, first paragraph,  it says pre-IRA rules applies to "qualifying vehicles purchased and delivered prior to January 1, 2023".    If you took delivery of a Tesla or GM EV on 1/1/2023, you should qualify for the new credit under IRA.   Another thought:   the vehicle title should have a "transfer date".  Maybe you can ask the seller what that date will show on the title paper if you take delivery on January 1, 2023.

Also as others have already answered in this thread, the "Place In Service" date is the date you start using the vehicle for business (for example: using it as a Uber driver).   Leave that field blank if you use the vehicle for personal purposes only.  

Note:  IRA = Inflation Reduction Act passed by congress in August 2022.

[jtax]

@jxinleblanc has supplied the right answer for EV credits. (No business use required.) This thread changed in the middle to be about non-business EV credits. It started as a vehicle expense (presumably business otherwise vehicle expenses are not currently relevant).

So the "date placed in service" question usually is a term of art relating to business property and depreciation.  The criteria is "ready and available" for use.  It is not necessary purchase or first use.

https://www.irs.gov/publications/p946#en_US_2020_publink1000107328, which says 

You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Even if you are not using the property, it is in service when it is ready and available for its specific use.

Example 1.

 

Donald Steep bought a machine for his business. The machine was delivered last year. However, it was not installed and operational until this year. It is considered placed in service this year. If the machine had been ready and available for use when it was delivered, it would be considered placed in service last year even if it was not actually used until this year.

Example 2.

 

On April 6, Sue Thorn bought a house to use as residential rental property. She made several repairs and had it ready for rent on July 5. At that time, she began to advertise it for rent in the local newspaper. The house is considered placed in service in July when it was ready and available for rent. She can begin to depreciate it in July.

Example 3.

 

James Elm is a building contractor who specializes in constructing office buildings. He bought a truck last year that had to be modified to lift materials to second-story levels. The installation of the lifting equipment was completed and James accepted delivery of the modified truck on January 10 of this year. The truck was placed in service on January 10, the date it was ready and available to perform the function for which it was bought.

[alfredoborrero]

I took delivery of my 2022 Tesla on January 2023.

Can I still get a EV Tax Credit for the 2022 Fiscal Year?

According to turbotax I am not eligible and I will get zero tax credit. Am I doing something wrong? I was under the impression that I can take advantage of the EV Federal Tax Credit if I purchase a vehicle before March 2023. Please reply as soon as possible. 

[ErnieS0]

No, you cannot claim a 2022 credit for a vehicle purchased in 2023.

Rules for claiming the electric vehicle credit changed for 2023. However, Treasury and the IRS will not issue final regulations until March so those changes will not be reflected in TurboTax until the government issues instructions.

Refer to “Treasury Releases Additional Information on Clean Vehicle Provisions of Inflation Reduction Act”

The current electric vehicle credit Form 8936 is for use for tax years beginning in 2021 or later, until a later revision is issued. Use prior revisions of the form for earlier tax years. All revisions are available at IRS.gov/Form8936.

For information about credit for vehicles purchased in 2023 see “Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2023 or After.”

@ alfredoborrero

[missileboss2022]

A 2022 chevy bolt euv was a demo vehicle at a dealership, the date of placed in service for the car's warranty was in summer 2021. However the car was sold as new in February 2023 due to having a blank title. The dealership signed that the car would be classified as a New Clean Vehicle sold after 2022. Would this car be eligible for the maximum $7,500 tax credit? All criteria is met otherwise besides the date placed in service. Or would date of placing in service be the day the customer purchased the car, hence placing the car in service? 

If not eligible for up to $7,500, can the dealership be held accountable for falsely certifying that the car would be classified as a New Clean Vehicle?

[KrisD15]

Or would date of placing in service be the day the customer purchased the car, hence placing the car in service? 

Yes, the date the customer actually picked up the vehicle.