Issue link: https://read.dmtmag.com/i/45785
MANAGEMENT By Lee J. Peterson Recovery and Reinvestment Act (ARRA), also known as the Obama Stimulus Act of 2009, established a new U.S. Treasury program allow- ing project owners to apply for a 30% cash grant instead of tak- ing the 30% federal investment tax credit mentioned above. This benefit is known in the solar trade as the "1603 Grant," which sim- ply refers to the section of ARRA law that provided for the grant. Although originally set to expire in 2010, Congress, as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, extended this 30% cash grant program through 2011. Thus, solar projects ei ther uring the past few years, many industries have begun using solar energy in their daily busi- ness operations. In particular, my accounting firm has seen a growing interest (pun intend- ed) in solar technology among Cali- fornia wineries and vineyards. And why not? Vineyards and wineries use a lot of expensive utility-provid- ed energy in their operations, and solar power systems can help them reduce their energy costs – or even to eliminate them altogether. The associated federal and state tax incentives make the idea of going solar even more appealing. FEDERAL TAX BENEFITS On the federal level, commer- cial solar energy investments can qualify for a meaningful income tax benefit that covers 30% of the costs for such equipment: specifi- cally, a 30% federal investment tax credit (ITC). With proper advice and financial structuring, the federal tax benefits can often cover up to 65% of the equipment costs. This includes 30% in the form of a fed- eral tax credit, plus either an imme- diate 100% "Bonus Depreciation" 66 VINEYARD & WINERY MANAGEMENT NOV - DEC 2011 Incentives for 2011-2012 Solar Tax Rebates and tax breaks help vintners and growers offset costs tax deduction (in 2011) or a 50% deduction in 2012. (You can opt instead for a five-year accelerated depreciation – or MACRS – in 2012. See more on this option below.) In lieu of ITC, the American placed in service in 2009, 2010 or 2011, or projects that began con- struction during 2009, 2010, or 2011, are eligible to apply for the cash grant. There are, however, a number of complex rules and pre- cise deadlines that relate to qualify- ing projects for this year and future years, so you must seek advice of competent counsel today if you hope to qualify by the end of 2011 for this grant. If you begin construction in 2011 and pay or incur 5% of the eligible costs, you have until 2016 to place in service the solar system. If you fail to do the above, then you won't ever be eligible for the cash grant and can only take the 30% tax credit. We have seen clients who apply for this "tax-free" cash from U.S. Treasury receive their pay- ments within 30 days of applying. Note, however, that unlike the AT A GLANCE There's an increasing interest among vintners and growers in solar technology. Federal and state tax incentives can help offset installation costs. Federal tax benefits can help cover more than 30% of solar equipment costs. Individual states also offer tax breaks and rebates. WWW.VWM-ONLINE.COM