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form 5695 residential energy credit

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Level 1

Client just got a CP12 letter, citing a " miscalculation" Details are as follows: Client had a tree fall on their house. They chose to install solar panels in restoring their roof. Form 5695 is a bit tricky, but I assumed the $33,061 qualified for Part I, allowing for a 30% credit of $9,918.IRS sent the CP notice of change, stating that Part II of the Form 5695 is limited to $500. IRS changed from Part I to Part II. My question is:  Did I misinterpret the rules as to what qualifies for Part I vs Part II, or did IRS make an error in their review?

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5 Replies 5
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Level 12

It definitely sounds like an IRS error.  Did you accidently fill out ANY of page 2 of the 5695?

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Level 1

Hi Guy:  No entries on Part II. It's a mystery why the IRS cites Part II, when all entries are on Part I.

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Level 11
Level 11

Could the credit be limited by their tax lability 

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Level 1

Hi Terry: The tax liability exceeds the credit calculated on Part I. 

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Level 11
Level 11

If tax lability is more than credit it would seem the IRS is in error if no errors in filling out form 5695.

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