Tax Court Disallows Clean Vehicle Credit for 2019 for Vehicle Placed in Service in 2013

(Parker Tax Publishing October 2025)

The Tax Court held that a married couple was not entitled to take a $7,500 Code Sec. 30D tax credit on their 2019 tax return for a plug-in electric drive motor vehicle that they purchased and began driving in 2013 and for which they had claimed yearly tax credits. The court found that the Code Sec. 30D credit is a one-time credit that can be taken only in the year the vehicle is placed in service and that the couple clearly placed their car in service in 2013. Moon v. Comm'r, 165 T.C. No. 4 (2025).

Background

In 2013, Artena and Kenneth Moon purchased a new Chevrolet Volt, a plug-in electric drive motor vehicle. From 2013 through 2019, they claimed a $7,500 plug-in electric vehicle tax credit under Code Sec. 30D for their vehicle. The IRS issued the Moons a Notice of Deficiency disallowing the $7,500 tax credit that they claimed on their 2019 federal income tax return. In addition to assessing a tax deficiency, the IRS also assessed a Code Sec. 6662(a) accuracy-related penalty which it subsequently conceded. The Moons filed a Tax Court petition challenging the tax assessment.

As in effect for tax year 2019, Code Sec. 30D(b) provides an income tax credit of up to $7,500 for a new qualified plug-in electric drive motor vehicle (renamed "new clean vehicle" in 2022) that is "placed in service" during the tax year. Code Sec. 30D does not define the phrase "placed in service." Code Sec. 30D has been amended several times, most recently by the One Big Beautiful Bill Act of 2025, which terminates the credit on September 30, 2025.

Observation: In 2024, the IRS issued final regulations under Code Sec. 30D in T.D. 9995. Under Reg. Sec. 1.30D-2(b)(36), a new clean vehicle is considered to be placed in service on the date the taxpayer takes possession of the vehicle. The final regulations apply to tax years ending after December 4, 2023, and thus do not apply to the years at issue in this case.

Analysis

The Tax Court held that the Code Sec. 30D credit was allowable only for the tax year that the Moons' vehicle was first placed in service and that the Moons placed the vehicle in service in 2013. Thus, the court concluded that the Moons were not entitled to the credit for 2019 and the couple was liable for the $7,500 tax deficiency.

With respect to the lack of a definition of "placed in service" in Code Sec. 30D, the court observed that this phase is defined in regulations relating to other provisions in the Code. For example, the court cited Reg. Sec. 1.48-1(a) in noting that the Code Sec. 38 general business credit is allowed only for the tax year in which the taxpayer first places Code Sec. 38 property in service. The court also observed that, under Reg. Sec. 1.46-3(d)(1), Code Sec. 38 property is placed in service on the earlier date of (1) the date when the period for depreciation with respect to such property begins, or (2) the date the property is placed in a condition or state of readiness and availability for a specifically assigned function.

In addition to citing regulations dealing the definition of "placed in service," the court also cited several Tax Court cases that bolstered its conclusion that the vehicle credit was not available for each year the Moons owned the vehicle. Specifically, the court cited (1) Consumers Power Co. v. Comm'r, 89 T.C. 710 (1987), where the Tax Court held that a hydroelectric power plant was placed in service only once it had passed all required inspections and was regularly generating power; (2) Noell v. Comm'r, 66 T.C. 718 (1976), where the Tax Court concluded that an airport runway was placed in service when it was fully paved and available for regular service; and (3) Madison Newspapers, Inc. v. Comm'r, 47 T.C. 630 (1967), where the Tax Court found that a printing press was placed in service when the unit was installed and regularly publishing newspapers.

For a discussion of the Code Sec. 30D tax credit, see Parker Tax ¶101,701.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com

We hope you find our professional tax research articles comprehensive and informative. Parker Tax Pro Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker Tax Pro Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!

Sincerely,

James Levey

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com