Excess Solar electricity (net metering)

[Catherine]

Colleague having a gnarly client discussion.

Installed a solar electricity system on the home.  They have "net metering" from the electric company.  If, in some months, they generate more electricity than they use, they end up with a credit balance.  When they use more than they generate, they use the credit balance until that is zeroed, then pay whatever is left.  

They can continue to accumulate credit and are allowed to use that to pay someone else's electric bill.  (Must have a huge solar array and no trees to do that consistently, but we'll ignore this.)

What the client wants to know is, if they use the credit from the electric company to pay part of the electric bill of a charity, is that a charitable deduction?  Or not?

[Lee B]

I 'll throw an example where it's not deductible  -  Donation of your Airline Miles to a charity  -  no deduction.

[DANRVAN]

4 hours ago, cbslee said:

-  Donation of your Airline Miles to a charity  -  no deduction.

No basis - no deduction.  Although an entirely different situation, I believe the net metering ends up in the same boat.

Case law has held that most consumer "points", rewards etc.... are not taxable income, therefore there is no basis to deduct.

In the case of the net metering, the taxpayer also does not recognize income by producing more energy than he/she  produces but receives a credit instead.  It sounds like the only options are: use it, lose it, or give it away.

If the taxpayer had an option to receive cash, the excess electricity produced could generate taxable income and a 1099.  In that case the taxpayer would have a basis to deduct.

So it appears to me without a basis there is no deduction.

 

[Catherine]

Thank you all.  That was my inclination, but I am not yet "back" from vacation to have thought it through fully, yet.