[TurtleBoy]

Originally Posted by rennsportny

Wait, should I drop my options to bring my MSRP < $80k? Just in case the guidance gets issued before the end of the year. So, that I would at least get the assembly portion of the credit?

Apologizes for all the newb questions

No you shouldn't. The MSRP limits have nothing to do with the battery guidance. The MSRP limits start 1/1/23.

There is no such thing as the assembly portion of the credit, assuming vehicle not battery. Being assembled in NA just means it is eligible for a credit not that it qualifies for one. The two credits are based on the battery and as of now it looks like the 45e will qualify for neither of them.

Just order the vehicle you want and enjoy it and the credit.

Edit: Not sure we have posted this yet, here are the battery requirements:

(1)Critical minerals requirement
(A)In general
The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the applicable critical minerals (as defined in section 45X(c)(6)) contained in such battery that were—

(i)extracted or processed—
(I)in the United States, or
(II)in any country with which the United States has a free trade agreement in effect, or
(ii)recycled in North America,
is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
(B)Applicable percentage
For purposes of subparagraph (A), the applicable percentage shall be—

(i)in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 40 percent,
(ii)in the case of a vehicle placed in service during calendar year 2024, 50 percent,
(iii)in the case of a vehicle placed in service during calendar year 2025, 60 percent,
(iv)in the case of a vehicle placed in service during calendar year 2026, 70 percent, and
(v)in the case of a vehicle placed in service after December 31, 2026, 80 percent.


(2)Battery components
(A)In general
The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the components contained in such battery that were manufactured or assembled in North America is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).

(B)Applicable percentage
For purposes of subparagraph (A), the applicable percentage shall be—

(i)in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 50 percent,
(ii)in the case of a vehicle placed in service during calendar year 2024 or 2025, 60 percent,
(iii)in the case of a vehicle placed in service during calendar year 2026, 70 percent,
(iv)in the case of a vehicle placed in service during calendar year 2027, 80 percent,
(v)in the case of a vehicle placed in service during calendar year 2028, 90 percent,
(vi)in the case of a vehicle placed in service after December 31, 2028, 100 percent.


(7)Excluded entities
For purposes of this section, the term new clean vehicle shall not include—

(A)any vehicle placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle (as described in subsection (e)(1)(A)) were extracted, processed, or recycled by a foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act (42 U.S.C. 18741(a)(5))), or
(B)any vehicle placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle (as described in subsection (e)(2)(A)) were manufactured or assembled by a foreign entity of concern (as so defined).

[eluded]

What if you don't meet income requirements of the new law. Could you still get a 2023 and get the credit?

[outsidepls]

Originally Posted by eluded

What if you don't meet income requirements of the new law. Could you still get a 2023 and get the credit?

So long as you take delivery of a North American-assembled vehicle from a manufacturer that has not met the cap of the old law before the end of the year, which would include the X5 xDrive45e.

[quad_drive]

I watched this video.. Seems to explain the Bill pretty well.

Seems that the consensus is that X5 45e is good for $7.5k credit if you take delivery by 12/31/2022, align with the discussions from the forum.
Mainly, Turtle_boy..

[math08]

I have a contract that I signed for an order on the 15th of August and have a 111 production code. I thought that I have no problem since I have a binding contract prior to Biden signing the law into effect.

I read this on a IRS site today:

Motorists who bought cars before August 16 but that were delayed after that date — say, because of supply-chain issues — don't need to worry about sourcing requirements, according to the Internal Revenue Service. As long as the buyer made a binding commitment to buy a car, such as by putting down a deposit of 5% of the car's price or more, the IRS will consider the purchase made before the new law went into effect.


I did not make a 5% down payment. The dealer only asked me for $1,000, however I believe that I have a valid binding contract. Has anyone else had this looked at the amount of deposit required by the IRS?

Second, I am worried that if this caused the binding contract to fail, that the 2023 is not on the list, even though the 2022 is and there is no difference between the 22 and 23. Has anyone heard if the list is being updated?

[TurtleBoy]

Originally Posted by math08

I have a contract that I signed for an order on the 15th of August and have a 111 production code. I thought that I have no problem since I have a binding contract prior to Biden signing the law into effect.

I read this on a IRS site today:

Motorists who bought cars before August 16 but that were delayed after that date — say, because of supply-chain issues — don't need to worry about sourcing requirements, according to the Internal Revenue Service. As long as the buyer made a binding commitment to buy a car, such as by putting down a deposit of 5% of the car's price or more, the IRS will consider the purchase made before the new law went into effect.


I did not make a 5% down payment. The dealer only asked me for $1,000, however I believe that I have a valid binding contract. Has anyone else had this looked at the amount of deposit required by the IRS?

Second, I am worried that if this caused the binding contract to fail, that the 2023 is not on the list, even though the 2022 is and there is no difference between the 22 and 23. Has anyone heard if the list is being updated?

That is the Transition rule. Since you will likely take delivery prior to 12/32/22 you don’t have to worry about that since the 45e qualifies for the credit since it is assembled in NA. The 23 qualifies for the credit. With all the changes that list may not be updated for awhile.

[El Frank]

2023 X5 45E listed on https://www.fueleconomy.gov/feg/taxevb.shtml

[math08]

Thats really helpful, thanks, I feel a lot better.

Now the wait for the car to move to Scheduled for Production. LOL

[viperdoc]

It appears that the transition rule is more for people who ordered a vehicle that is built in other countries...Like the i4 and iX. That is where the contract is important. For the 45e, as Turtleboy has mentioned, Since final assembly is done here, as long as you take delivery before the Jan 1 2023 (whether you order one or find one on a lot somewhere), nothing has changed regarding the $7500 tax rebate.

[Tall Paul]

Originally Posted by math08

As long as the buyer made a binding commitment to buy a car, such as by putting down a deposit of 5% of the car's price or more…..

As TB stated, if you take delivery before 12/31, no issues.

As a long time CFO/CPA, all states we operated in you DO NOT need to have a deposit to make the contract binding (my guess all states are the same). We had binding contracts for $Millions without a deposit. Your state law should provide the ultimate guidance.

The quote states “such as” - they are simply providing an example. This is not the only element to make the contract binding, nor is it absolutely require. Of course, all of this is IMHO.

[TurtleBoy]

Originally Posted by Tall Paul

As TB stated, if you take delivery before 12/31, no issues.

As a long time CFO/CPA, all states we operated in you DO NOT need to have a deposit to make the contract binding (my guess all states are the same). We had binding contracts for $Millions without a deposit. Your state law should provide the ultimate guidance.

The quote states “such as” - they are simply providing an example. This is not the only element to make the contract binding, nor is it absolutely require. Of course, all of this is IMHO.

A deposit is not needed to make a contact binding however the IRS has a different definition of a binding contact when it comes to the EV credit. In this case a written binding contract is one that is enforceable by state law and does not have a specified limit on damages (liquidated damages or a forfeiture of a deposit for example). However, if that limit on damages is at least 5% then it is not considered to be limiting and therefore a valid written contract.

What it boils down to is if you have a valid written contact with damages being losing a non-refundable deposit then that deposit must be at least 5% of the contract price in order for it to be considered valid by the IRS.

[gqxxflip]

Originally Posted by TurtleBoy

A deposit is not needed to make a contact binding however the IRS has a different definition of a binding contact when it comes to the EV credit. In this case a written binding contract is one that is enforceable by state law and does not have a specified limit on damages (liquidated damages or a forfeiture of a deposit for example). However, if that limit on damages is at least 5% then it is not considered to be limiting and therefore a valid written contract.

What it boils down to is if you have a valid written contact with damages being losing a non-refundable deposit then that deposit must be at least 5% of the contract price in order for it to be considered valid by the IRS.

Could the contract also just state if customer terminates contract they’ll need to owe 5% of total contract value? This being for those that don’t want to put down a 5% deposit, but will still pay 5% if contract is terminated. That would be liquidated damages part right?

[TurtleBoy]

Originally Posted by gqxxflip

Could the contract also just state if customer terminates contract they’ll need to owe 5% of total contract value? This being for those that don’t want to put down a 5% deposit, but will still pay 5% if contract is terminated. That would be liquidated damages part right?

Yes, that would meet the criteria.

[P1]

I went to the dealership today and if I had ordered a 45e today, seems like it wouldn't be delivered until January of 2023.

Does this mean the $7,500 credit is out of the question?

Also, and perhaps I should ask my CPA this, but is the $7,500 a deduction (if you made $107,500 it would now be reduced to $100,000) or is more along the lines if you are going to get a $5,000 return from the IRS, now you'll get $12,500 from the IRS?

[TurtleBoy]

Originally Posted by P1

I went to the dealership today and if I had ordered a 45e today, seems like it wouldn't be delivered until January of 2023.

Does this mean the $7,500 credit is out of the question?

Also, and perhaps I should ask my CPA this, but is the $7,500 a deduction (if you made $107,500 it would now be reduced to $100,000) or is more along the lines if you are going to get a $5,000 return from the IRS, now you'll get $12,500 from the IRS?

Sounds like they have a long waiting list, probably want to look around and see if you can find a dealer with a shorter one.

It is a credit not a deduction. In order to take advantage of it you will need to have at least a $7,500 tax liability for the year since it is non-refundable.

[P1]

Originally Posted by TurtleBoy

Sounds like they have a long waiting list, probably want to look around and see if you can find a dealer with a shorter one.

It is a credit not a deduction. In order to take advantage of it you will need to have at least a $7,500 tax liability for the year since it is non-refundable.

Interesting. So you're saying to adjust the amount of taxes I'm paying in now to ensure I'll at least owe in $7,500?

[math08]

The $7,500 is a credit against the tax you owe. You reduce your tax by that amount dollar for dollar.

With regard to taking delivery in 2023, that is not clear. There are limits on income for the car buyer $300,000 modified AGI for someone filing married, joint, and $150,000 for a single individual. There are also a number of other provisions which will limit the vehicles that would qualify for the credit. I don't believe anyone knows at this point which vehicles would qualify for certain in 2023.

[TurtleBoy]

Originally Posted by P1

Interesting. So you're saying to adjust the amount of taxes I'm paying in now to ensure I'll at least owe in $7,500?

No, not at all. It is based on your tax liability for the year not what you owe when you file your return. It would be line 24 on the 1040.

[TurtleBoy]

Originally Posted by math08

The $7,500 is a credit against the tax you owe. You reduce your tax by that amount dollar for dollar.

With regard to taking delivery in 2023, that is not clear. There are limits on income for the car buyer $300,000 modified AGI for someone filing married, joint, and $150,000 for a single individual. There are also a number of other provisions which will limit the vehicles that would qualify for the credit. I don't believe anyone knows at this point which vehicles would qualify for certain in 2023.

Not quite, it can only reduce it to zero.

We are fairly certain the 45e will not qualify due to the battery requirements. The memo from the BMWNA CEO said no BMW vehicles will qualify for the credit. Of course that memo was filled with errors so I guess that could have been one of them.

[math08]

In answer to your question, you will need to have a total tax liability of at least $7,500. If after withholdings and estimated taxes, you owe this or more, you would subtract this from that amount and pay the net. If you fully covered your taxes or in fact overpaid due to withholding and estimated taxes, you would get a refund.

[math08]

It is interesting as to the 2023 delivery quoted. I was concerned when I went to my dealer, who told me that they were running around 8 weeks for delivery. This seemed fairly short to me, but when I signed my contract, I was given a production number which is a good sign. I am still at 111, and hope that going to 112 will not take to much longer.

[TurtleBoy]

Originally Posted by math08

In answer to your question, you will need to have a total tax liability of at least $7,500. If after withholdings and estimated taxes, you owe this or more, you would subtract this from that amount and pay the net. If you fully covered your taxes or in fact overpaid due to withholding and estimated taxes, you would get a refund.

This not correct. Your withholdings and estimated taxes do not come into play. It is your total tax liability not what you owe when you file your taxes.