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Thanks for your observation. After reading what you said and re-reading my post, it DOES appear that there are TWO instances of binding contracts the IRS will recognize for tax credit purposes:

1. A contract that one's STATE defines and accepts ... so Ariya reservists may want to research how their state defines and accepts a binding contract. [Here in Illinois, the wording appears to be in my favor ... that is, I DO have a valid binding contract with Nissan.]
2. A contract in which a customer has made a significant, non-refundable deposit ... which apparently is NOT relavant to our Ariya binding agreement with Corporate Nissan.

I just hope the IRS is in agreement with my state's interpretation of a binding contract when tax time comes around!
For me in Maryland ....
What Makes a Legally Binding Contract in Maryland?
There are five critical parts of a contract to make it a legally binding contract in Maryland:
  1. Offer: The contract must include a proposal to pay something, do something or have some exchange of things of value.
  2. Competent Parties: Minors, those who are deemed to be mentally incapacitated and others who are not competent to enter into a contract cannot do so.
  3. Acceptance: All parties must agree upon the contents of a contract.
  4. Consideration: All parties must get something through the contract, even if the “something” in question is relatively small.
  5. Performance: There is something that must be fulfilled through the contract. In some cases, once that obligation is met, the contract is automatically terminated. In others, it could be ongoing until both parties mutually agree to terminate it.
 

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1. A contract that one's STATE defines and accepts ... so Ariya reservists may want to research how their state defines and accepts a binding contract. [Here in Illinois, the wording appears to be in my favor ... that is, I DO have a valid binding contract with Nissan.]
Yes. Unfortunately Nissan did it in such a way (leaving the deposit refundable) that it may not be "binding" in all states. Fortunately, it does appear favorable for me in Ohio also.
 

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Other observations/comments that I've run across about our Ariya delivery issue are these:
  1. Since it appears we can opt to declare our Ariya purchase to have occurred on the date of our binding contract with Nissan (which was in August, before the Act was signed), we may NOT need to worry about Nissan exceeding the 200,000 EV sale threshold ... because we would've 'purchased' ours in August of 2022, and Nissan had NOT exceeded the 200,000 sales threshold in August 2022! So, in that instance, we needn't worry about any phase-out of the tax credit kicking in ... whenever.
  2. But ... on the other hand ... IF we elect to declare our Ariya purchase to be on the date of the binding contract, does that actually shorten our car's warranty? That is, does the warranty then take effect on the August 2022 date, even if we don't take delivery until MUCH later ... even into 2023? If so, owner's have 'lost' months of their warranty. If that is the case, we would need to think twice about WHEN to declare the Ariya purchase for tax purposes.
Does anyone want to chime in about either of these two possibilities? (We really ARE traveling in new territory with this 'binding contract' issue and how both the IRS and Nissan will implement it.)
 

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Other observations/comments that I've run across about our Ariya delivery issue are these:
  1. Since it appears we can opt to declare our Ariya purchase to have occurred on the date of our binding contract with Nissan (which was in August, before the Act was signed), we may NOT need to worry about Nissan exceeding the 200,000 EV sale threshold ... because we would've 'purchased' ours in August of 2022, and Nissan had NOT exceeded the 200,000 sales threshold in August 2022! So, in that instance, we needn't worry about any phase-out of the tax credit kicking in ... whenever.
  2. But ... on the other hand ... IF we elect to declare our Ariya purchase to be on the date of the binding contract, does that actually shorten our car's warranty? That is, does the warranty then take effect on the August 2022 date, even if we don't take delivery until MUCH later ... even into 2023? If so, owner's have 'lost' months of their warranty. If that is the case, we would need to think twice about WHEN to declare the Ariya purchase for tax purposes.
Does anyone want to chime in about either of these two possibilities? (We really ARE traveling in new territory with this 'binding contract' issue and how both the IRS and Nissan will implement it.)
I am not an accountant. However here’s my previous experience and why I believe our advisers won’t be applying a tax credit for our Ariya until the actual calendar year that we take physical delivery:
I signed a binding contract with my local Nissan dealership in 2010 for our Leaf and also made a substantial deposit at that time. This step was required during the Leaf reservation process as the dealer was required to submit to Nissan a final configuration order for our vehicle.
However our Leaf actually didn’t arrive in the US until late October 2011. (Long story here …..largely impacted by the 2011 Tsunami and the eventual melt down of the Fukushima Nuke plant less than 100 miles from where our Leaf was manufactured)
Regardless, since the delivery of our Leaf actually took place in 2011 (2011 also being the calendar year when the largest and final monetary transaction for our vehicle occurred) our tax adviser didn’t apply for our $7500 tax credit until the 2011 calendar year.
 

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I am not an accountant. However here’s my previous experience and why I believe our advisers won’t be applying a tax credit for our Ariya until the actual calendar year that we take physical delivery:
I signed a binding contract with my local Nissan dealership in 2010 for our Leaf and also made a substantial deposit at that time. This step was required during the Leaf reservation process as the dealer was required to submit to Nissan a final configuration order for our vehicle.
However our Leaf actually didn’t arrive in the US until late October 2011. (Long story here …..largely impacted by the 2011 Tsunami and the eventual melt down of the Fukushima Nuke plant less than 100 miles from where our Leaf was manufactured)
Regardless, since the delivery of our Leaf actually took place in 2011 (2011 also being the calendar year when the largest and final monetary transaction for our vehicle occurred) our tax adviser didn’t apply for our $7500 tax credit until the 2011 calendar year.
BTW-my warranty period didn’t begin until the date I took delivery.
 

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I am not an accountant. However here’s my previous experience and why I believe our advisers won’t be applying a tax credit for our Ariya until the actual calendar year that we take physical delivery:
I signed a binding contract with my local Nissan dealership in 2010 for our Leaf and also made a substantial deposit at that time. This step was required during the Leaf reservation process as the dealer was required to submit to Nissan a final configuration order for our vehicle.
However our Leaf actually didn’t arrive in the US until late October 2011. (Long story here …..largely impacted by the 2011 Tsunami and the eventual melt down of the Fukushima Nuke plant less than 100 miles from where our Leaf was manufactured)
Regardless, since the delivery of our Leaf actually took place in 2011 (2011 also being the calendar year when the largest and final monetary transaction for our vehicle occurred) our tax adviser didn’t apply for our $7500 tax credit until the 2011 calendar year.
Other observations/comments that I've run across about our Ariya delivery issue are these:
  1. Since it appears we can opt to declare our Ariya purchase to have occurred on the date of our binding contract with Nissan (which was in August, before the Act was signed), we may NOT need to worry about Nissan exceeding the 200,000 EV sale threshold ... because we would've 'purchased' ours in August of 2022, and Nissan had NOT exceeded the 200,000 sales threshold in August 2022! So, in that instance, we needn't worry about any phase-out of the tax credit kicking in ... whenever.
  2. But ... on the other hand ... IF we elect to declare our Ariya purchase to be on the date of the binding contract, does that actually shorten our car's warranty? That is, does the warranty then take effect on the August 2022 date, even if we don't take delivery until MUCH later ... even into 2023? If so, owner's have 'lost' months of their warranty. If that is the case, we would need to think twice about WHEN to declare the Ariya purchase for tax purposes.
Does anyone want to chime in about either of these two possibilities? (We really ARE traveling in new territory with this 'binding contract' issue and how both the IRS and Nissan will implement it.)
The new Inflation Act is allowing for federal tax credit to be taken in calendar year 2022, even if the car is delivered in 2023 (with binding commitment). The "binding commitment" is for IRS purposes, and vehicle warranty based on date of actual purchase.
 

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The new Inflation Act is allowing for federal tax credit to be taken in calendar year 2022, even if the car is delivered in 2023 (with binding commitment). The "binding commitment" is for IRS purposes, and vehicle warranty based on date of actual purchase.
I hear the discussion about warranty and caps but I still worry about the IRS definition of a binding contract for a tax credit. I don't believe that what Nissan did in an attempt to declare a binding contract meets the IRS definition. I would love and need the tax credit.
If a neighbor says he wants to sell his Lexus ES350 for $17,000 (an Offer)and you say I would like to buy Your Lexus ES350 for $17,000 ( an acceptance). Then that is a binding contract. The is Lexus ES350 And $17,000 are CONSIDERATION a binding contract. Nissan binding contract has no consideration, No price, no car Id such as make model vin number. I think some of dealers even said they could not offer a binding contract because the car was not on the dealer lot for ID. Somebody tell me I am wrong,
 

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BTW-my warranty period didn’t begin until the date I took delivery.
That's nice to know and may answer the 2nd issue I raised. Even when one buys a 'demonstrator' car from a dealer with miles on it, the purchaser's warranty begins the day they take possession. So maybe there is no warranty issue with which to concern ourselves ... hopefully.
 

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I hear the discussion about warranty and caps but I still worry about the IRS definition of a binding contract for a tax credit. I don't believe that what Nissan did in an attempt to declare a binding contract meets the IRS definition. I would love and need the tax credit.
If a neighbor says he wants to sell his Lexus ES350 for $17,000 (an Offer)and you say I would like to buy Your Lexus ES350 for $17,000 ( an acceptance). Then that is a binding contract. The is Lexus ES350 And $17,000 are CONSIDERATION a binding contract. Nissan binding contract has no consideration, No price, no car Id such as make model vin number. I think some of dealers even said they could not offer a binding contract because the car was not on the dealer lot for ID. Somebody tell me I am wrong,
Funny thing about defining a 'contract.' In an internet search, I have found 'definitions' that list 2, 3, 4, 5 and 7 conditions that must be met for a legal contract! Is this how attorneys stay in business? They have to EXPLAIN legal terms to those of us who need to know? LOL We've all hard the term 'legalese' haven't we??
 

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I’m curious if anyone has talked to a tax accountant or tax advisor and what their opinion is on whether that binding agreement would be accepted. Does the IRS typically provide an opinion before hand or do we have to wait to apply the credit and see if it gets rejected before we know where the IRS stands?
 

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I’m curious if anyone has talked to a tax accountant or tax advisor and what their opinion is on whether that binding agreement would be accepted. Does the IRS typically provide an opinion before hand or do we have to wait to apply the credit and see if it gets rejected before we know where the IRS stands?
The IRS position is: What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

The loop-hole is what your State law may define as binding. The IRS will not provide an opinion on your specific case prior to filing taxes; they may reject it after the fact/filing.
 

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The IRS position is: What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

The loop-hole is what your State law may define as binding. The IRS will not provide an opinion on your specific case prior to filing taxes; they may reject it after the fact/filing.
I think the reference to State law has to do with those States that give tax credits for EV's on State income tax. Not sure if the IRA can calculate what is binding by State for the whole country for tax purposes. Federal income tax follows the federal guidelines of a binding contract. limited damages, non-refundable etc.
 

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I think the reference to State law has to do with those States that give tax credits for EV's on State income tax. Not sure if the IRA can calculate what is binding by State for the whole country for tax purposes. Federal income tax follows the federal guidelines of a binding contract. limited damages, non-refundable etc.
Nope, contract law varies from state-to-state. So what constitutes "binding contract" will depend on where you are. This was not designed to be easy for us or for the IRS. Best bet is talking to a local tax professional before you take delivery.
 
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