For all you E-85 guys, check your state reg for AFV Income Tax Credit. CO is $6,000.

[J. Fast]

While conducting some tax research I found this and thought I'd share with you guys.

Here's the rules: >>>> Alternative Fuel Vehicle Income Tax Credit <<<<

Alternative Fuel Vehicle Income Tax Credit
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Colorado income tax credits are available for the purchase of an alternative fuel vehicle, for a motor vehicle that is converted to use alternative fuel, or for the replacement of the power source with a power source that uses alternative fuel. To qualify, the vehicle must be titled and registered in Colorado. (C.R.S. 39-22-516)

Definition of Alternative Fuel
Alternative fuel means compressed natural gas, propane, methanol and ethanol, or any mixture thereof containing 85% or more of methanol or ethanol by volume with gasoline or other fuels, electricity, or any other fuels, which may include, but are not limited to, clean diesel and reformulated gasoline so long as these other fuels make comparable reductions in carbon monoxide emissions and brown cloud pollutants as determined by the air quality control commission.

Computations of Credit
The credit is only available in the year during which the vehicle was purchased or converted. The credit is a percentage of:

the difference between the cost of the vehicle and the cost of the same or most similar vehicle that uses a traditional fuel, or
the cost incurred in converting the vehicle to an alternative fuel, or
the difference between the cost of replacing the power source and the cost of the same or most similar power source that uses a traditional fuel.

Limitations to the Credit
A vehicle can qualify for this credit only one time. To claim the credit on the purchase of a used vehicle a taxpayer must:

Provide a history of the vehicle indicating the prior owners and why they did not claim this credit.
Provide the cost difference used in computing the credit and the basis on which it is computed.
The cost difference will usually decrease ratably with the decrease in the value of the vehicle. For example, if the price paid for the used vehicle is 40% of the original MSRP, then the credit allowed will be 40% of the credit available for that vehicle when new.

If a ten-year old vehicle had a new alternative fuel engine put in one year ago, then the vehicle must be compared to the most similar vehicle valued with a one-year old gas engine, not a ten-year old engine.

To the extent the allowable credit exceeds the tax liability, the excess may be carried forward for up to five years.

Some More:

According to the Department of Energy in 2011 alternative fuel vehicle's or AFV's became eligible for a $6000 Income Tax Credit.

Here's the outline:

Colorado AFV Incentives and Laws for Vehicle Owner/Driver's
The list below contains summaries of all Colorado incentives and laws related to Vehicle Owner/Driver.

State Incentives
Alternative Fuel, Advanced Vehicle, and Idle Reduction Equipment Tax Credit


An income tax credit is available from the Colorado Department of Revenue for a motor vehicle titled and registered in Colorado that uses or is converted to use an alternative fuel, is a hybrid electric vehicle (HEV), or has its power source replaced with one that uses an alternative fuel.

Alternative Fuel Definition:

Alternative fuel is defined as compressed natural gas, propane, ethanol, or any mixture containing 85% or more ethanol (E85) with gasoline or other fuels, electricity, or any other fuels, which may include, but are not limited to, clean diesel and reformulated gasoline, so long as the Colorado Air Quality Control Commission determines that these other fuels result in comparable reductions in carbon monoxide emissions and brown cloud pollutants. Alternative fuel does not include any fuel product that contains or is treated with methyl tertiary butyl ether (MTBE). (Reference Colorado Revised Statutes 25-7-106.8 )


Laws and Regulations
Alternative Fuel Vehicle (AFV) Registration

Upon registering a motor vehicle with the Colorado Department of Revenue Division of Motor Vehicles, the vehicle owner must report the types of alternative fuel used to operate the vehicle and whether the vehicle is dedicated to one alternative fuel or uses more than one fuel. The Department of Revenue provides forms for the purpose of registering motor vehicles and must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol/M85, ethanol/E85, biodiesel, and other. (Reference Colorado Revised Statutes 42-3-113 )

Links:

http://www.afdc.energy.gov/afdc/prog...aws.php/CO/ETH
Alternative Fuels and Advanced Vehicles Data Center: Colorado Incentives and Laws for Vehicle Owner/Driver


From what I've gathered, once you register your vehicle as 100% alternative fuel converted you're eligible for the one time $6000 Income Tax Credit. I'm going to Register my VR-4 as an AFV converted vehicle in 2012 and take the deduction in 2012.

Second important point, with the ethanol conversion I'm also eligible for the Curb Idle Reduction Credit which means I can use an aftermarket ECU (such as an AEM) for the ECU if my curb Idle emissions are lower than the Fed Tier I and II emission limits. As long as the limits are below the Clean Air Regulation the vehicle is also exempt from OBDII reading.

The tax credit is for the cost to convert. A new Engine, Engine Management, Injectors, Fuel Delivery Setup, Emission testing, Tuning, and ALL Parts and Labor... any expense incurred for converting.

So how bout them apples guys... That's awesome.

That's pretty cool that I can run an AEM at the Colorado Emission Testing Center on E-85, now and I can deduct my upgrade .


I would suspect similar states have the same rules. Do some digging in the other 50 states! Just trying to get the word out!


Cheers Guy's

Jeremy

[DuTTch]

Holy shit thats awsome, I asked my tax lady last year and she said no,bit then again she doesnt know it all ofcourse. So let me send this to her and see what she says.

[Gearheadvr4]

I think this would matter if your state has an income tax. If it does then you should move.

Good find though!

[DuTTch]

I think this would matter if your state has an income tax. If it does then you should move.

Good find though!

all your state income taxes are hidden in the property taxes in TX, u really think tx can pay their bills from air? lol

[a2j]

this would be nice...

[wingnut]

all your state income taxes are hidden in the property taxes in TX, u really think tx can pay their bills from air? lol

Indeed it is...our current house in Cali is worth 3-4 times what our Texas house was worth, and we pay the same dam dollar amount here, that we did there

[niterydr]

Excellent find, I'll have to file this in the "need to do for the 2012 tax year" return.

[Greg E]

I saw this when I was doing my taxes. Partially what motivated me to look into turning my car into a true "flex fuel" vehicle. Problem is, since this was never an option for our cars, the gov't won't acknowledge the mod. Haven't done much research into ways around this yet.

[j2k4]

I'll stay tuned to find how this shakes out...

[J. Fast]

I saw this when I was doing my taxes. Partially what motivated me to look into turning my car into a true "flex fuel" vehicle. Problem is, since this was never an option for our cars, the gov't won't acknowledge the mod. Haven't done much research into ways around this yet.

According to our State Regulation the tax credit is based on an air certification. Once you convert you have to visit a state emission testing center and have the tailpipe sniffed. Once sniffed your emssions will be given a desigantion and registered back to the state under an air quality certification level. You take the cost incurred to perform the conversion and multiply it by the Emission Certification Level given to you at the testing center.

Colorado Certification Levels are this:

LEV - Low emissions certified vehicles have a 50% reimbursement valuation so a .50 multiplier
ULEV or ILEV - Ultra Low or Inherently Low Emitting Vehicle have 70% or .7 multiplier
ZEV - Zero emitting vehicle have an 85% reimbursement value so the multiplier is .85

As far as only being eligible if the MFR produced a hybrid model, that doen't matter either. It doesn't say anywhere in the Colorado Department of Revenue Taxpayer Service Division Regulation dated 5/11 Titled: Income 9 Alternative Fuel Income Tax Credits about having a kit installed by a qualified service professional, installing a regulated kit, or only qualifying if the MFR makes an AFV engine. The regulation only states you have to show the conversion expense and submit the state AFV registrar's application.

Regarding "Flex Fuel" The regulation does say the vehicle has to run soley on one type of fuel. Therefore, if you've converted for a flex fuel setup you can't take the credit. The reg also states you must have a visable AFV designation wherein the vehicle must be badged for distinction purposes. You have to install badging on the vehicle viewable from the sides and the rear with the fuel type you're running. The badging can only read Ethanol or E-85, or Methanol, or Propane, and etc. If you have no badging, the badging doesn't co-inside with a sniff, or it say's "Flex Fuel" you don't qualify for the deduction.

As far as monitoring, the state monitors and regulates the registration process by requiring two year renewal sniffs or multile passes thru any of the (50) or so Mobile Rapid Screen Testing Stations setup on the highway on ramps in Colorado. If you fail a sniff on the rapid screen you're notified by mail and required to visit an emission testing center.

Here's the main excerpt from our 22 page regulation, as far as I've come to find out, Indiana, California, Washington State, and Wyoming use the same verbage and follow the same rules.

Computation of Credit – Prior to 2010

For vehicles purchased or converted prior to January 1, 2010, the credit is a percentage of:

a) The difference between the cost of the vehicle and the cost of the same or most similar vehicle that uses a
traditional fuel, or

b) The cost incurred in converting the vehicle to an alternative fuel, or

c) The difference between the cost of replacing the power source and the cost of the same or most similar
power source that uses a traditional fuel.

In a) and c) above, if the cost of the traditional fuel option is greater than or equal to the cost of the alternative fuel option, the credit will be $0.

The percentage of the credit depends on the certification level of the vehicle and the year in which the expenditure is made. The credit is only available in the year during which the vehicle was purchased or converted. If the credit allowed exceeds the net tax liability for that year, any excess credit may be carried forward and claimed on future year returns for up to five years until the credit is fully utilized.

Certification level Tax year beginning prior to January 1, 2010

Low-emitting vehicle (LEV) 50%
Ultra-low-emitting vehicle or Inherently-low-emitting vehicle (ULEV or ILEV) 75%
Zero-emitting vehicle (ZEV or SULEV) 85%

Certification levels have the same meaning as set forth in Part 88 of Title 40 of the Code of Federal Regulations. A near zero-emitting vehicle shall be treated as a zero-emitting vehicle. At this time, the California certified SULEV (Super ultra low emitting vehicle) is the only vehicle rating that qualifies as a near zero-emitting vehicle. The
percentage of the credit may be doubled, up to a maximum of 100% of the Incremental Price Difference (IPD), if the vehicle or power source permanently displaces (will never be operated on Colorado highways in the future) or replaces a vehicle or power source that is ten years old or older. To claim this additional credit you must provide a
copy of the bill of sale to an out-of-state buyer or salvage yard.