Blog | WM. F. Horne & Company, PLLC

19Aug2010

2010 is the Last Year for the Lean Vehicle Credit

2010 is the final year during which taxpayers can purchase an advanced lean burn technology vehicle and claim a tax credit for the purchase. Unlike the hybrid credit, the lean burn credit is available to vehicles with internal combustion engines that are designed to operate primarily using more air than is necessary for complete combustion of the fuel, incorporate direct injection, and achieve at least 125% of the 2002 model year city fuel economy rating. The table below lists the vehicles currently certified by the IRS as qualifying for the advanced lean burn credit.

If a vehicle is used both for business and personal use, the credits are divided between personal and business use and can be used to offset both the regular and alternative minimum tax. The personal portion is a non-refundable credit, and can only reduce your current year tax to zero; any excess is lost. The business portion becomes part of the general business credit, and unused credits are carried back one year and forward twenty years.

The credit will be phased out starting in the quarter following the one in which the manufacturer records its 60,000th sale of hybrid and lean burn vehicles. Volkswagen Group America (includes Audi vehicles) has already reached that limit; thus, the allowable credits (as shown in the table below) are reduced by 50% for Audi and Volkswagen vehicles purchased for the balance of 2010.

2010 VEHICLES CURRENTLY CERTIFIED FOR THE LEAN BURN CREDIT

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Vehicle Description

Credit

Volkswagen

Jetta – 2.0L TDI (manual and automatic)

$

1,300

Sportwagen – 2.0L TDI (manual and automatic)

$

1,300

Touareg – 3.0L TDI

$

1,150

Golf 2.0L TDI (automatic)

$

1,700

Golf 2.0L TDI (manual)

$

1,300

Audi A3 2.0L TDI Automatic

$

1,300

Audi Q7 3.0L TDI

$

1,150

Mercedes-Benz

GL350 Bluetec

$

1,800

R350 Bluetec

$

1,550

ML350 Bluetec

$

900

BMW

335d Sedan

$

900

X5 xDrive35d

$

1,800

ActiveHybrid x6

$

1,550

If you are contemplating purchasing a vehicle that qualifies for the advanced lean burn technology tax credit or one that qualifies for the hybrid tax credit, it may be appropriate for you to call our office in advance to see how the credits will or won’t benefit you. This is especially true if you are basing your purchase decision on receiving the credit. Keep in mind that the personal portion of the credit is not refundable and cannot be carried over to another year. Therefore, you may not benefit as much from the credit as the car salesperson might lead you to believe.

  • 19 Aug, 2010
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