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Question

We purchased a solar system in 2020 for $55,000. In 2021, we received an income check for our SREC's. How do I file this investment and income?

Forum|Forum|4 years ago
August 10, 2021
1 reply
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TurboTax Online

deleted incorrect reply

Employee

@DanPaul02 wrote:

After you receive enough income from SRECs to recover the $55,000 investment, then additional SREC's will be taxable income.

The credits are taxable income from day 1. See IRS ruling

https://www.irs.gov/pub/irs-wd/1035003.pdf

You would report them as "other income". You are not a small business selling electricity, so this is not going on a schedule C or subject to self-employment tax.

The payor is probably required to issue a 1099-MISC if the payment is more than $600 in any year. You can enter this as income. Even if the payments are smaller and no 1099 is issued, you would enter this as other miscellaneous taxable income.

I understand from reading previous posts (posted several years ago) that the income from SRECs is considered taxable income by the IRS, and should be shown as "Other Income". BUT, what value is to be used? The sale of SRECs is typically through a broker (SRECTrade, SolSys, etc.) and I don't receive a 1099-MISC from the broker. Is the gross value to be used on my tax forms or the net value (total value minus the brokerage fees)?