Businesses can generally deduct related expenses on their tax returns. If there’s doubt that a profit motive exists, the IRS may deny deductions. One married couple purchased solar lenses that were supposed to eventually be leased. They claimed depreciation deductions and solar energy tax credits that allowed them to pay little or no income taxes. The IRS found a clear lack of profit motive. The couple hadn’t acted in a businesslike manner, had no industry expertise and consulted no experts. The IRS concluded they were mostly focused on obtaining tax breaks. For these reasons and more, a U.S. Appeals Court denied their depreciation deductions and solar credits. (Olsen, CA 10, 11/4/22)
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