Ford's tax credit availability

[Regularmache]

You can slice the salami several ways but you end up with the same amount of salami. You can have the credit reduce the MSRP: (MSRP-$7500) - Residual. You can raise the residual: MSRP - (Residual + $7500). Or you can do lease cash: (MSRP - Residual) - $7500. It's all the same.

However, option two, adding it to the residual, is the worst because it means no one, even those who would like to stay in the vehicle, will be exercising the right to buy at lease end because the buy out price will be too high.

Other than purchase price the deal -- residual, money factor -- should be the same at all dealers.

Are you fronting the cash on the first scenario?
Which would lower the monthly payment.

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[DBC]

Are you fronting the cash on the first scenario?
Which would lower the monthly payment.

The amount down simply reduces the amount you need to pay monthly. It has no real effect on how much you pay in total.

Note that regardless of how the credit is treated, the the monthly payment will be pretty much be the same. But there are other considerations. The problem with the first option is Ford would be lowering the MSRP, something it most certainly does not want to even appear to be doing. The problem with the last option is that the buy out price would very likely be well above fair market value, which means fewer conversions from lease to buy. Ford also does not want to do that since it could get more from a sale to the lessee.

Just to use an example with made up numbers: If the MSRP is $50K, and the residual is $25K, then the "depreciation" is always $50K - $25K - $7.5K or $17.5K or $486/month on a 36 month lease (remember my numbers are made up).

 

[mattbostonmache]

is there a web site that list all the manufacturers, how many total BEV and PHEV cars they've sold total, and how many they've sold each quarter for the past couple years?

 

[dbsb3233]

is there a web site that list all the manufacturers, how many total BEV and PHEV cars they've sold total, and how many they've sold each quarter for the past couple years?

These aren't quarterly, but here's a few links...

https://evadoption.com/ev-sales/federal-ev-tax-credit-phase-out-tracker-by-automaker/
https://www.fueleconomy.gov/feg/taxevb.shtml
https://cars.usnews.com/cars-trucks/how-does-the-electric-car-tax-credit-work

 

[RyZt]

is there a web site that list all the manufacturers, how many total BEV and PHEV cars they've sold total, and how many they've sold each quarter for the past couple years?

Quarterly (for Ford, Mercedes, BMW only): https://www.irs.gov/businesses/irc-30d-plug-in-electric-drive-motor-vehicle-credit-quarterly-sales

 

[Badger_Prof]

It's in fact reserved specifically for the reservation holder and is unavailable to the dealer for retail sale. You travel to a resort and their is no rooms available, the person behind you goes to the counter and gets a room they reserved. The room is unavailable to you, but available to them as they had a reservation. I don't disagree with you but would have no trouble arguing either case.

Don't see how anyone could argue successfully that a car is available for their use on 12/31/20 if they have not yet taken possession of the car. What argument would that person make if their car fell off the car carrier on 1/1/21 before they took possession of it? Would they then argue that they should assume responsibility for the broken car and that their insurance company (or they) should pay for the repairs?

 

[jhalkias]

Don't see how anyone could argue successfully that a car is available for their use on 12/31/20 if they have not yet taken possession of the car. What argument would that person make if their car fell off the car carrier on 1/1/21 before they took possession of it? Would they then argue that they should assume responsibility for the broken car and that their insurance company (or they) should pay for the repairs?

W-2’s aren’t required to be sent until the end o January. That’s a whole additional month for the car to get here and not fall off the truck before anyone really thinks about filing their 2020 taxes.

 

[Badger_Prof]

W-2’s aren’t required to be sent until the end o January. That’s a whole additional month for the car to get here and not fall off the truck before anyone really thinks about filing their 2020 taxes.

Valid point--that you don't need to make the tax credit claim until you file your tax return, which could be as late as April 15. Still, I personally would not be comfortable making a false claim (of having possession and availability of the car by 12/31/20 if not true) in a federal tax return.

 

[mattbostonmache]

Quarterly (for Ford, Mercedes, BMW only): https://www.irs.gov/businesses/irc-30d-plug-in-electric-drive-motor-vehicle-credit-quarterly-sales

Thanks @RyZt ! Just what I was looking for.

So Ford is at 123,000 as of June 30, 2020. That's less than 70k left for all the Ford and associated brands.

I wonder why that irspage only list Ford, MB, and BMW.

 

[Regularmache]

Valid point--that you don't need to make the tax credit claim until you file your tax return, which could be as late as April 15. Still, I personally would not be comfortable making a false claim (of having possession and availability of the car by 12/31/20 if not true) in a federal tax return.

Again not saying your argument isn't without merit, I'm merely offering a "reasonable" interpretation by the filer of functionality and availability and it's common use in everyday commerce.

 

[DBC]

Valid point--that you don't need to make the tax credit claim until you file your tax return, which could be as late as April 15. Still, I personally would not be comfortable making a false claim (of having possession and availability of the car by 12/31/20 if not true) in a federal tax return.

The representation isn't "possession" it's "in service". That can mean different things to different people. For example, if you bought a car and took delivery in 2020 for a son or daughter who is out of the country until 2021, when was the car put "in service". Or let's say that I signed the paperwork and paid for the car on December 22nd but waited until January 1st to drive it off the lot. When was the car put "in service".

FWIW I don't disagree about the merits of the argument. Just how important it is and whether it's "lying". Taxes aren't about ethics they are about money. The fundamental question -- and the only one which matters is: Does it change the amount of tax due? If it doesn't, then claiming it one year or the other is the prototypical "no harm no foul" situation.

 

[JellyBelly]

Ford Options charges interest just like traditional financing, it's a daily interest calculation, not precompute. So if you make your monthly payments on a faster schedule or pay more than your normal monthly payment you would pay less interest.

Traditional lease is different. The interest charges are precomputed so paying early or more each month results in no savings. If you wanted to save money on a lease you could do what Ford calls an Advance Payment Plan lease (APP). An APP lease you pay all of the monthly payments upfront at delivery instead of monthly. You get a discount on the lease rate by doing an APP.

At this point Ford options interest rate is higher than normal financing. Not sure why.

 

[jhalkias]

At this point Ford options interest rate is higher than normal financing. Not sure why.

It has been that way every time I have checked. @hybrid2bev is that common?

 

[hybrid2bev]

It has been that way every time I have checked. @hybrid2bev is that common?

It’s hard to say. The Options rate may be higher than traditional financing but the Options monthly payments should still be lower than a normal 72 month loan.

The Ford Options program has been dormant for several years. The plan is that it’s only being brought back for a limited time and only for the Mach-E.

The last time that it was active we got like 4 contracts because the Options monthly payments were higher than a traditional lease would be. But there is the added benefit of the tax credits with Options this time around, so we’ll see what happens.

 

[JWW]

The representation isn't "possession" it's "in service". That can mean different things to different people. For example, if you bought a car and took delivery in 2020 for a son or daughter who is out of the country until 2021, when was the car put "in service". Or let's say that I signed the paperwork and paid for the car on December 22nd but waited until January 1st to drive it off the lot. When was the car put "in service".

FWIW I don't disagree about the merits of the argument. Just how important it is and whether it's "lying". Taxes aren't about ethics they are about money. The fundamental question -- and the only one which matters is: Does it change the amount of tax due? If it doesn't, then claiming it one year or the other is the prototypical "no harm no foul" situation.

What “In Service” means to the IRS and the courts is what matters. I go over the 3 elements that the IRS looks at for "In Service" in a separate thread.

In general, for this credit, the IRS relies on when title passes for State law purposes; and it is only if a red flag is raised that “in service” detail items are questioned. In the Airplane case the taxpayer shot themselves in the foot by talking too much; they lost (this is one reason you pay someone to talk to the IRS).

The IRS is provided with enough information from outside sources that, IMHO, 80% of the individuals in the US could have the IRS prepare their return completely and correctly. The IRS is provided with the make, model, model year and any other appropriate identifiers, for every vehicle sold that qualifies for the credit. The information is provided directly from the manufacturer on a quarterly basis (see above from @RyZt ). When someone claims the credit they provide the VIN and date in service – if I were to guess the IRS will match the VIN they put on their return with the information provided by the manufacturer. If there is a match they have no problem.

If not a match they will get a letter from the IRS; note that up to now the IRS has used computers to do all its work. If the taxpayer ends up losing, it isn’t just the timing (no harm no foul); as I mention in the other thread there is a 20% automatic penalty added, because the tax increased more than $5,000.

If the IRS is provided with doctored documents (change the date) to support the claim, this is fraud and the taxpayer may get a visit from IRS agents, that carry a sidearm…..

Remember that pigs get fat and hogs get slaughtered.

As with all tax items consult with your tax professional (don’t rely on what you read on an MME Forum)

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