Actually, Ford independently developed their own technology for the Escape Hybrid. Ford then discovered it had developed technology covered by Toyota Patents. Ford and Toyota then cross licensed their Hybrid patents.

 

Thanks for the correction!

So the Prius WILL get tax credit even though it didn't improve mileage by 25%... now this law confuses me. What exactly are they basing it on, then?

 

Yea. They shouldn'tve told us the math they used b/c its complicated. They should just generalize and say "savings is proportional to clean mileage" and then just given us a table of each car, and the credits for each

I stil wanna know the tax credit for 2006 HCH

 

It's based on a comparison between the average of all the 2002 cars in the same weight class, not specific models. So the reason the Insight doesn't get all that much is because it's weight category puts it in a class with other very light cars that tend to get good mileage anyhow. The Prius is in a class with much heavier vehicles and thus it's delta from the average in that weight class is massive, giving it a big credit.

 

I wouldn't be so sure about the 'in service' date. I think (not a CPA here) that the only way you could make that distinction valid is as a business expense. Even then, IIRC from old tax rules, in-service simply means when purchased. But do some research to be sure, I don't want to mislead anyone.

 

It was my understanding that Ford's trouble was in developing the algorithm that HSD incorporates, and that's why they had to go to Toyota with their tail between their legs and license the patents. If I'm wrong about it, I'd like to know because I'd feel better about Ford. I never heard about a "cross" licensing scheme 'cause it was my understanding for all of Ford's efforts they brought nil to the table.

My brother wound up with a Ford Escape Hybrid 4x4 instead of a Prius for lifestyle reasons and is generally okay with his decision but has complained a lot about the quality/fit/workmanship of the interior for the price he paid for the vehicle. He said if he'd bought a stripped down Escape for 18,000 the interior might be okay, but when you pay over 30,000 for a car you expect a little more. He's used to driving luxury cars, though, so he may just be spoiled.

All of this is to say that Ford is not competing very well on the hybrid front, and I agree that it sounds like there were probably backroom deals made to try to slant the tax credit in favor of US manufacturers instead of forcing them to do something like make a Pontiac Solstice-looking car that gets equivalent or better mileage than the Insight.

 

Re: the tax credit...

So if the tax credit amount for the HCH2 is more than I actually owe (say I owe $1000 and the HCH@ credit is for $2000) do I get the rest of the money back?

 

Got this from here... http://go.ucsusa.org/hybridcenter/incentives.cfm

Federal Tax Credits for Advanced Vehicles: On August 8, President Bush signed the comprehensive energy bill into law. Included were new tax credits for advanced vehicle technologies ranging from $250 to $3,400 depending on the vehicle's level of fuel economy improvement. For a limited time, quality hybrids like the Honda Civic Hybrid, Toyota Prius or Ford Escape Hybrid will qualify for tax credits in the range of $1,700-$3,150. The tax credits will be available beginning on January 1, 2006 and will be available through December 31, 2010, though they will expire earlier for the most popular hybrids. The full tax credits will be available until a manufacturer reaches 60,000 vehicles sold (60,000 for Toyota, 60,000 for Ford, etc.). Once a manufacturer has sold 60,000 vehicles, a one-year "phase out" will begin after the next complete calendar quarter; 50% of the credit will be available for that manufacturer's hybrids in the first two quarters of the phaseout period and 25% in the final two quarters. UCS estimates the following credits for each hybrid vehicle currently sold:

HEV Model Emissions Rating Tax Credit

2005-2006 Toyota Prius Bin 3 $3,150

2005 Honda Insight (automatic) Bin 5 $1,450

2005 Honda Insight (manual) Bin 9 $0

2005 Honda Civic Hybrid (automatic) Bin 2 $1,700

2005 Honda Civic Hybrid (manual 5-speed) Bin 2 $1,700

2005 Honda Civic Hybrid (lean burn, automatic) Bin 9 $0

2005 Honda Civic Hybrid (lean burn, manual 5-speed) Bin 9 $0

2006 Honda Civic Hybrid Bin 2 $2,100

2005 Honda Accord Hybrid Bin 5 $650

2005 Ford Escape Hybrid (front wheel drive) Bin 4 $2,600

2005 Ford Escape Hybrid (four wheel drive) Bin 4 $1,950

2006 Mercury Mariner Hybrid (four wheel drive) Bin 5 $1,950

2006 Toyota Highlander Hybrid (front wheel drive) Bin 3 $1,950

2006 Toyota Highlander Hybrid (four wheel drive) Bin 3 $2,200

2006 Lexus RX-400h (four wheel drive) Bin 3 $2,200


Sorry, I tried like hell, but couldn't get the table to format correctly in the post.

 

--

 

A friend spoke to the IRS on this issue. Same as yours. They told him that they 'trust' everyone until proven otherwise. Generally 'in service' would be the date you had access to use the vehicle. Dec 24th? But .. if you claim it on your 2006 taxes ( refund due Apr '07 ) they will assume you put it in service after 1-1-06. All will be well - unless you are auditted - then you might have to show justification and argue with them over their terminology.

Another complicating factor is how is the IRS going to count the first 60000 units from each manufacturer in order to start and stop the clock. It will likely be based on state DMV registration dates. Take that for what it's worth. If your vehicle was registered in your state in Dec '05 and you claim 'in service' Jan '06 this make kick out your return and flag you for an audit.

How about some other complications:
Can you buy 10 Prius' and collect $31500 in tax credits?
What if a married couple each purchased a hybrid this year; must they file separately in 2007?

By all means speak to your tax advisor and then get actual citations and read them yourself to make sure it's understood. BTW the IRS to my knowledge now has not published the actual rules and guidelines needed to implement this law. Sometime this year they must.