Hey guys,

I need some help from a tax expert on this board.

Specifically I need help regarding the Alternative Fuels deduction that the 05 Tax books has.

Specifially you can qualify for up to a $2,000 deduction if you purchased a NEW vehicle in 2005 that runs on alternative fuels - E85 being one of them. I read the stuff on this and MAN is it ambiguous!!!

So, we purchased our Explorer Jan 1, and the VIN number confirms that it is an FFV. Specific to our case (since we're not using it as a company vehicle or for a non-profit organization, blah blah blah), the only thing I can SUPPOSEDLY deduct is the "costs accrued related to the alternative fuels." WTF does that mean?

Did anyone choose this deduction in 05 and, if so, can you tell me if you have any solid proof of the deduction? Did you press your luck and take the maximum $2,000 or did you go at an amount lower than this? Did you confirm it with Ford or not? Please, any help - am trying to get these $*&%*&$ taxes in the mail!!

Thanks everyone!

 

Sorry, I really can't help with your questions. I just did a return for a guy that bought a Prius and took the deduction on line 36 of the 1040. You moght go to this site and llook at Pub 535, , page 46.

http://www.irs.gov/formspubs/

Sorry can't be more help.

 

See, the thing is that I know that my Explorer IS an FFV and therefore does qualify, because I can pop open the hood and it says "This Flexible Fueled Vehicle...." in a sticker on the underside of the hood where it talks about emissions.

It's a guaranteed deduction based on what Publication 535 says, but is it a guaranteed TWO THOUSAND dollar deduction? That would be very nice if it was, since this means that I could see an additional $400 on the tax return.

I want to call Ford Customer Service tomorrow, but know that they probably won't know jack about it. Did your friend with the prius claim the full 2,000? Because if he did, then I certainly could get away with the full 2K on my Explorer. I guess if I ever got audited, I could snap a photo of that emissions sticker and send it in to them.

 

bump - wanna see if I can get an answer on this sometime by tonight if possible.

 

http://www.fueleconomy.gov/feg/tax_afv.shtml

I'm not an accountant and you may already have this information. Hope it helps anyway.

 

From the website I linked to above:
"The deduction is equal to the cost of the vehicle's engine, the equipment used to store or deliver the fuel, and the equipment used to exhaust combusted gases, up to a maximum of $2,000 for vehicles places in service by the end of 2005.

For vehicles that may be propelled by both a clean-burning fuel and any other fuel, the deduction is limited to the additional cost of permitting the use of the clean-burning fuel, with the same maximum deductions detailed above.

The IRS determines the maximum deduction for specific gasoline-electric hybrid models. Click here for more information on hybrids."

I don't know how to calculate this, but I am sure that someone has dealt with this before you.

 

It is the cost of the fuel saving equipment up to $2000. It should be on the invoice. Since you probably did not pay invoice, I would assume you would get a % and apply to your actual cost.

 

Yeah....invoice..

Therein lies my problem.

I ended up gettin' the Exploder for about 8,000 off, but that included a 3,000 down payment. So, technically, I got 5K off the sticker.

So, you're saying that I need to look for that on the invoice, take 16.129 percent off (since that's what 5,000 off comes to), and put that on the line?

I hope I can find the invoice. Better yet, I hope it says something about the "fuel saving equipment" because when I was deducting the TAX I paid, I didn't see anywhere where it actually stated "fuel saving equipment."

The hunt begins! Will keep you informed for anyone else who is like me and hasn't filed yet

 

OK, so maybe I was more organized than I thought.

Man I found EVERYTHING - ***INCLUDING*** the actual window sticker!

OK, it's listed as:

2005 4DR 4x2 XLT
4.0L SOHC V6 FLEX FUEL ENG
5-SPEED AUTOMATIC O/D TRANS

In the "OPTIONAL EQUIPMENT" section, it says "4.0L SOHC V6 FLEX FUEL ENG", but there is nothing in the space to the right where all the other prices are for the other options (like there is with the running boards, reverse sensing, power pedals, etc.)

According to this statement: "The deduction is equal to the cost of the vehicle's engine, the equipment used to store or deliver the fuel, and the equipment used to exhaust combusted gases, up to a maximum of $2,000 for vehicles places in service by the end of 2005"

If I had to replace all of that stuff with NON FFV stuff, I'd be spending well over 2K to do it.

Ideas?

 

I think you can safely assume that it is more than $2000. I would deduct the $2000 on line 36 if the vehicle is not used in business. Depending on your bracket it will save you $500 or $600 in tax. The very worst that can happen is if you are audited, they might come up with a different number and you would owe a small amount of tax plus penalty.

 

Well, I capped out last year, so I don't know where I am. I think I calculated about $450-$500 with the $2000 deduction.

I just called Ford Customer Service and got the LAMEST ANSWER that I've EVER RECEIVED in my life. They told me that their RESEARCH TEAM was going to research it and call or write to me at my physical address within 2-3 days.

LAME

Today after work, I think I'm going to go bother a newbie car salesman at my dealership - unless someone can enlighten me!

 

Well, for all of those who care (since this deduction will supposedly be in place in 2006 except with smaller deduction amounts), the IRS told me the following today (after holding for 45 minutes to speak with someone):

The vehicle counts as long as it meets publication 535's standards
The proof in case you get audited? The purchase sheet and a copy of the dealer invoice or window sticker.

So, I'm happy - $2K extra in deductions is a niiiiiiiice extra