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I am also considering submitting an amended return, and would appreciate any comments or suggestions from anyone who purchased a new 2001 or 2002 Prius for personal use in calender year 2001. I already filed my 2001 return and took the clean fuel vehicle credit, but that does not rule out the possibility of filing a amended return for 2001 during the next three years if it takes that long to get a ruling from the IRS. The following write-up was just taken from the yahoo Toyota Prius message board number 29391, and I feel it's includes all the pertinent facts.

<http://groups.yahoo.com/group/toyota-prius/message/29391>

regards,
Don Good
 
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It's my understanding that no fines apply if you took the credit in good faith (you would just owe the tax). In which case you could refile for the deduction instead. The new language on the form is discussed in post <http://groups.yahoo.com/group/toyota-prius/message/25959>
Steven B. Augustine sees the wording the same way that I do:

snip

On a different note, the new language that accompanies the Electric
Vehicle Credit is, IMHO, no less ambiguous than it was before. Please
observe that the language is:

"Caution: Gasoline/electric hybrid vehicles (such as the Honda Insight
or Toyota Prius) that are not powered primarily by an electric motor are
not qualified electric vehicles."

NOT

Caution: Gasoline/electric hybrid vehicles that are not powered
primarily by an electric motor (such as the Honda Insight or Toyota
Prius) are not qualified electric vehicles."

The difference is subtle, but by properly observing the mechanics of the
English language, one will discover that the first version simply
enumerates the Prius and Insight as hybrid vehicles, whereas the second
explicity states that they are not primarily powered by an electric
motor. As written, the caution appears to be no clearer than the version
that lacked the "such as" language.

snip

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I am in the opinion of taking both clean fuel and electric vehical credits. I have a close family member (my brother in law) who will represent me in tax court should it come down to that. The wording of the IRS laws is at best ambiguous and if one looks at the intent of the original rules, then one would also feel justified about taking these credits with the Prius.

We shall see - I will be filing shortly..

Of course I probably will not hear anything from the IRS for months afterwards...

Steve Dickerson
NYS '02 super white 10,050 miles

luvin it...

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I think an IRS agent who might buy a Prius and visit this site or the Prius Group on Yahoo would have a good source of addresses to check up on. I'm not a Tax Attorney but I wondered what I missed when I filed my taxes for last year, having taken delivery on our Silver in December.

All the information I can find leads me to believe that the deductions being taken are for Business related expenses. For instance, IRS Publication 535 states on the cover page, "Business Expenses." As described in the publication, "This chapter covers the general rules for deducting business expenses. Business expenses are the costs of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit. If you have an expense that is partly for business and partly personal, separate the personal part from the business part." We use our car entirely for personal use and are, therefore, not eligible for any deduction.

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If you read further, it says that you can take the alternative fuel deduction whether or not you use your vehicle for business. Read the actual section about the alternative fuel deduction. If you've already filed your taxes for 2001, you can file an amended return, and you should. I got a substantial instead of a puny refund because of the extra $2,000 deduction. Wish I could take it _every_ year!

Barbara
 
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Dan & Dianne:

Publication 535 covers a lot more than business expenses. The best way to verify the info is to go to the irs web-site and print out the actual form 8834 (two pages) with the instructions, and then bring up publication 535 which I believe is about 108 pages of info. On the 535 you need to print out chapter 12 pages 44 thru 47. Page 47 will give you some additional info concerning the 8834 tax credit. These are all in pdf format so if you do not have acrobat reader, you will need to download it first, but it is free.

regards,
Don Good
 
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