Income exceeds EV tax credit?

[jorlinick]

If I earn above the limit for the EV $7,500 tax credit, can my son (who earns less than the cap) purchase the car for me to drive and claim the tax credit?  Can he then gift it to me in the future?

[Opus 17 · Accepted solution]

Maybe.

On paper, yes.  You can give your son money, he can buy a car and claim the credit (register and insure it in his name).  Then at some future time, he gives you the car.  There is no minimum time he must own the car to claim the credit.  Note that if the amount of either gift is more than $17,000, the giver must file a form 709 Gift Tax Return to report the gift.  Payment of gift tax is not required unless the giver's lifetime gifts are more than $13 million, but the form must be filed to keep track of large gifts.

However,

The IRS uses the doctrine of substance over form.  That is, a transaction or piece of business can be improper if the purpose and result are improper, even if the specific steps are individually legal.  More specifically, "The substance over form claim argues that the transaction in question should not be evaluated based on the formal legal structure of the transaction, but rather the tax impact should be driven by the underlying substance of the transaction.  The IRS raises this argument often when the government believes the transaction was structured in a manner that lacked any real economic substance, but was specifically chosen to achieve a specific tax objective."

The substance of your transaction is for you to acquire an EV and claim a tax benefit that you don't qualify for.  If audited, and if the IRS chooses to apply the substance over form doctrine, you and your child could be liable for back taxes, interest and penalties.

This is not legal advice.  You may want to discuss your plan with your own tax professional. 

[Mike9241]

under the law the vehicle is supposed to be acquired for use by the taxpayer and not for resale.  the IRS could 

view the gift as a deemed sale.  Since you don't own it, if you use it in a business, the only deductions you could take are your out-of-pocket costs. You would not be entitled to depreciation. if it were gifted then your basis for depreciation at that time would be the lower of his tax basis or Fair Market Value. There is also the question of insuring the vehicle which needs to be discussed with your son's insurance agent.  

[NCperson]

@jorlinick does your son have the income to do so? there must be a tax liability of at least $7500 on Line 22 (prior to the credit) for him to be able to take the credit.