The Colorado Department of Revenue has updated its guidance
for the treatment of alternative fuel income tax credits, which expired
December 31, 2011 and created a new publication, FYI Income 67, Innovative
Motor Vehicle Credit, which essentially supersedes the alternative fuel credit
for periods after 2011 and before 2016. For purposes of computing the
alternative fuel credit for 2010 and 2011, vehicles must be purchased on or
after January 1, 2010 and before January 1, 2012, the credit is only available
in the year during which the vehicle was purchased or converted. The cost used
in computing the credit must be reduced by any credits, grants, or rebates,
including federal credits, grants, or rebates for which the purchaser is
eligible. Credits generated in 2010 or 2011 that exceed the tax due for that
year are not carried forward but are refundable. For purposes of the innovative
motor vehicle credit, vehicles purchased or converted on or after January 1,
2012 and before January 1, 2016 may be eligible for the credit if the vehicle
is an alternative fuel vehicle, converted a motor vehicle to use alternative
fuel, have replaced a vehicle's power source with an alternative fuel power
source, or is modified to include idling reduction technology. The vehicle must
be titled and registered in Colorado
to qualify. The innovative motor vehicle credit is calculated according to
percentage of the difference in the actual cost incurred by the taxpayer in
purchasing, replacing, or converting to an alternative fuel/hybrid/plug-in
electric vehicle or a vehicle has been modified with idling reduction
technology. The credit percentage depends on the vehicle category and the year
for which the credit is sought (ranging from 75% to 10% for the income tax year
beginning January 1, 2012 and before January 1, 2013 to 75% to 0% for the
income tax year beginning January 1, 2015 and before January 1, 2016). There is
a $6,000 cap on credits per vehicle, $7,500 if the credit involves the
conversion of a vehicle into a plug-in electric hybrid. Also, the list of
vehicles eligible under the existing alternative fuel income credit has been
updated.
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