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Internal Revenue Code of 1986

The official collection of federal tax laws in the United States.

Tax credit

A direct reduction in the amount of income tax a person or business owes, dollar-for-dollar.

Basis

For tax purposes, the original cost of a property, used to calculate things like depreciation or gains/losses when the property is sold. In this context, it refers to the purchase price of the equipment.

Zero-emission electric equipment

Equipment that runs on electricity (from batteries, solar, or the power grid) and does not produce exhaust gases or other direct pollutants during operation.

Taxable year

The 12-month period for which an individual or company reports their income and expenses for tax purposes. For most individuals, this is the calendar year.

Elective payment

A feature that allows certain organizations (like non-profits or government entities) to receive the value of a tax credit as a direct cash payment from the government, even if they don't have a tax bill to offset.

Transfer of credit

Allows a taxpayer who is eligible for a tax credit to sell or transfer that credit to another taxpayer, often a company that has a larger tax liability and can fully utilize the credit.