Q. I purchased a Toyota Prius in 2006. I also had substantial income that year from selling property. Now my accountant says I can’t claim the credit for a hybrid vehicle on an amended return because of the AMT. Is that correct? W.E., via e-mail
A. Yes. The credit for hybrid vehicles cannot be used to reduce your federal income tax liability below your alternative minimum tax (AMT) liability as reduced by certain other credits. (IRC Sec. 30B(g)(2)) Unfortunately, you’re probably stuck with the AMT for 2006 because of the other events that transpired during the year. Therefore, you reap no tax benefit from purchasing the hybrid vehicle.
Tip: Credit amounts begin to phase out for a manufacturer once it has sold more than 60,000 eligible vehicles. As a result, Toyota and Lexus hybrids no longer are eligible for credits.
- Small Business Tax Deduction Strategies No matches