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What MSRP to use for the new tax credit?

Texas Dan

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The $80k price cap for the new $7,500 tax credit rule will eliminate the tax credit for the XLT and the Lariat with an extended range battery. I have also read that the IRS will use the Base MSRP and the extended range battery would be considered an option, not considered in the MSRP determination for the tax credit. Not considering options in the MSRP determination would make the determination a lot less complicated for the IRS, the dealers and the buyers.

I’m starting this thread so that we can track how the new tax credit rules play out. Please post any experience or opinions you have related to MSRP determination for the new tax credit rules.
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Ostrichsak

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I can't neither confirm nor deny but if that ends up being the case I will immediately change my order to include the big battery pack at a minimum. It would also make sense since SO many trucks/SUVs are barely under $80k w/o the most popular items people include. We really need to incentivize people to buy larger battery packs, not punish them. That's an important aspect to getting more usable EVs on the road... especially down the road once they're used and battery degradation comes into play. The more higher capacity vehicles they build today the more efficient the charge infrastructure and the better the used car inventory options years from now. In addition to the items you've mentioned, seems like a win all the way around other than for big oil.
 

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Jer

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Yes, but as of now it is stated everywhere i have read MSRP, not base MSRP, manufacturers could make this work to everyone’s advantage very easy, if it it goes off of base MSRP. Rules can change, but i don’t see how it would go off of anything but Total MSRP, which is simply MSRP. However, IRS rules rarely make sense to most of us.
 

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Use the one that comes out to $79,999 or less!
 

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cvalue13

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Inflation Reduction Act -- MSRP Cap x F150 Lightning 2023 MSRP Conjecture - Extended Range (ER) under $80K possible?

but i don’t see how it would go off of anything but Total MSRP
thing is, whatever we *think* “total” or “MSRP” means, it likely has no relationship to what the IRS thinks “MSRP” means

for example, there’s no statutory or objective definition of what is included in “total” MSRP

for that matter, different manufacturers don’t even describe these things similarly:

Ford F-150 Lightning What MSRP to use for the new tax credit? 12AD1F14-F30F-4D34-BFC3-B79175DD25E5
Ford F-150 Lightning What MSRP to use for the new tax credit? 6B4E5D71-EDBE-46A2-B3B1-44AEDC417E83
Ford F-150 Lightning What MSRP to use for the new tax credit? EB9D8A13-5B2E-43B9-8245-566F10A6F120
Ford F-150 Lightning What MSRP to use for the new tax credit? 2C61315C-F548-4373-B014-FBC69A01D6AC


Notice, in particular, that the only thing these 4 manufacturer window stickers agree on is they all describe the base vehicle price as the MSRP “standard equipment at no additional cost”, before and excluding optional equipment, D&D, etc.

That consistency, I believe, is due to what little the statutory language does say about “MSRP” - basically, it’s the cost of the vehicle before additions.

Now that said, none of that suggests anything about how the IRS must or might interpret the present law.

Instead, only to point out that whatever one person is certain must be the reasonable interpretation, it doesn’t take much to find another answer more reasonable.
 

Jer

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Inflation Reduction Act -- MSRP Cap x F150 Lightning 2023 MSRP Conjecture - Extended Range (ER) under $80K possible?



thing is, whatever we *think* “total” or “MSRP” means, it likely has no relationship to what the IRS thinks “MSRP” means

for example, there’s no statutory or objective definition of what is included in “total” MSRP

for that matter, different manufacturers don’t even describe these things similarly:

12AD1F14-F30F-4D34-BFC3-B79175DD25E5.jpeg
6B4E5D71-EDBE-46A2-B3B1-44AEDC417E83.jpeg
EB9D8A13-5B2E-43B9-8245-566F10A6F120.jpeg
2C61315C-F548-4373-B014-FBC69A01D6AC.jpeg


Notice, in particular, that the only thing these 4 manufacturer window stickers agree on is they all describe the base vehicle price as the MSRP “standard equipment at no additional cost”, before and excluding optional equipment, D&D, etc.

That consistency, I believe, is due to what little the statutory language does say about “MSRP” - basically, it’s the cost of the vehicle before additions.

Now that said, none of that suggests anything about how the IRS must or might interpret the present law.

Instead, only to point out that whatever one person is certain must be the reasonable interpretation, it doesn’t take much to find another answer more reasonable.
You aren’t wrong, for sure all assumptions at this point. Going off of Ford.com. The base MSRP for a 2023 XLT ER. Is over $80k. Again they could possibly make a change to the current approach, if any of that will matter in the end
Ford F-150 Lightning What MSRP to use for the new tax credit? 1BE54EE9-6166-4889-B5B9-CB461F3C59F2
 
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Texas Dan

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You aren’t wrong, for sure all assumptions at this point. Going off of Ford.com. The base MSRP for a 2023 XLT ER. Is over $80k. Again they could possibly make a change to the current approach, if any of that will matter in the end
1BE54EE9-6166-4889-B5B9-CB461F3C59F2.png
I saw what was on the Ford.com but what is shown on Ford.com does not agree with what is shown on the actual window sticker. The actual window sticker for the Lariat with extended range battery shows a Base MSRP as $74,484 with a $11,500 option for the ER battery. The F150L window sticker above is for a Platinum where the ER battery is standard, so it’s not listed as an option.
 

cvalue13

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If we assume Ford wants customers to be incentivized by the tax credits (there are some out there who don’t agree, apparently), then I would think:

(1) North American assemblers are right now educating
lobbying
the IRS as to the preferred interpretation, and

(2) once the interpretations are final, can possibly further reconnoiter their offerings to squeeze some more juice
 

Jer

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I saw what was on the Ford.com but what is shown on Ford.com does not agree with what is shown on the actual window sticker. The actual window sticker for the Lariat with extended range battery shows a Base MSRP as $74,484 with a $11,500 option for the ER battery. The F150L window sticker above is for a Platinum where the ER battery is standard, so it’s not listed as an option.
That is accurate as well, and why in my opinion, until further IRS guidance is released the only safe assumption currently is that any truck purchased/put in service on or after 1-1-23 with an MSRP at or under $80k should be approved for the tax credit, assuming the North American assembly requirements are met, and or course income limits are not exceeded. None of this really makes it easier to make a decision for anyone looking to take advantage of the credit, at least at this current time.
 

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mr.Magoo

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This is the IRS you're talking about.

If they were to say that the cap only applies to base price/configuration it'll take no more than two seconds for a Tesla Model S to cost $79,999 in base trim, but it'll be with a 5kw software limited battery, dyson sized motor, no paint, no wheels, no nothing and you'll have to put on $50,000 in options to be able to drive the thing.

So, I think it's pretty safe to say that the cap will apply to the total, as configured, MSRP since this is the only way to prevent manufacturers from playing games with base price and options.
 

cvalue13

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None of this really makes it easier to make a decision for anyone looking to take advantage of the credit, at least at this current time.
yeah, people placing orders over the next ~3-~6 months are flying a little blind RE credits

however, absent this new law, people placing orders over the next 3-6+ months were increasingly assured zero credits

So either way, if the credits were the difference maker, for most folks this was going to be a time of uncertainty
 

cvalue13

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can they not still “play games” if they want, even then?
So, I think it's pretty safe to say that the cap will apply to the total, as configured,
What’s included in “total,” in your mind?

D&D?

Bedliner?

An over-bed tent?

Wheel upgrade?

I suppose at some point, on your view, Ford facultatively looks to place base price just above the credit cut-off or else people stop electing for the options, which are lucrative.

I’m not as convinced the IRS is hell bent on ensuring manufactures customers don’t get the credits.

Not convinced the other direction, either
 

PV2EV

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Many state refunds use the base model MSRP, regardless of trim. Have they ever considered MSRP in any tax law?
 

cvalue13

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Have they ever considered MSRP in any tax law?
from the thread I linked above - the follow-on question is if anyone has tax guidance rulings on the bellow-quoted bits, clarifying the definitions

but notice the law appears to target item (1), not items (2)-(4)


(1) Prior IRS guidance on “MSRP” points to the laws behind the “Monroney Sticker” requirements

One prior IRS vehicle tax-credit precedent guidance I found concerned the long-ago expired (2010) “qualified alternative fuel motor vehicle” (QAFMV) credit. For the QAFMV, the law based the credit on an MSRP calculation, and so the IRS issued guidance that amongst other things defined/clarified the relevant sense of MSRP (my emphasis in underline, quoted only in relevant part):

“.03 Manufacturer’s Suggested Retail Price. If the manufacturer of a QAFMV or a mixed-fuel vehicle is required under 15 U.S.C. § 1232 to provide a manufacturer’s suggested retail price for the vehicle, then the manufacturer’s suggested retail price for the vehicle is the price provided in accordance with 15 U.S.C. § 1232 for that vehicle
.”

The code section referenced above, 15 U.S.C. § 1232, is the underlying substance of the Monroney Sticker.

(2) Unhelpfully, 15 U.S.C. § 1232 does not itself make reference to “manufacturer’s suggested retail price”

Below I post the relevant portions of the code, my emphasis again underlined:

“Every manufacturer of new automobiles distributed in commerce shall, prior to the delivery of any new automobile to any dealer, or at or prior to the introduction date of new models delivered to a dealer prior to such introduction date, securely affix to the windshield, or side window of such automobile a label on which such manufactures shall endorse clearly, distinctly and legibly true and correct entries disclosing the following information concerning such automobile —

(a) the make, model, and serial or identification number or numbers;

(b) the final assembly plant;

(c) the name, and the location of the place of business, of the dealer to whom it is to be delivered;

(d) the name of the city or town at which it is to be delivered to such dealer;

(e) the method of transportation used in making delivery of such auromobile, if driven or towed from final assembly point to place of delivery;

(f) the following information:

(1) the retail price of such automobile suggested by the manufacturer;
(2) the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment, physically attached to such automobile at the time of its delivery to such dealer, which is not included within the price of such automobile as stated pursuant to paragraph (1);
(3) the amount charged, if any, to such dealer for the transportation of such auromobile to the location at which it is delivered to such dealer; and
(4) the total of the amounts specified pursuant to paragraphs (1), (2), and (3);
(g) if one or more safety ratings for such auromobile 
. [omitting remainder]
”

Unhelpfully, nowhere does the statute itself reference the exact term “manufacture’s suggested retail price.” The IRS guidance instead says “the manufacturer’s suggested retail price for the vehicle is the price provided in accordance with 15 U.S.C. § 1232 for that vehicle.” For this language, statute item Item (1) appears to be the nearest match, then, as “retail price of such automobile suggested by the manufacturer.”

Noting that item (2) is a requirement to list not the “retail price” of the automobile, but instead the retail “delivered” price, “for each accessory or item of optional equipment, physically attached to such automobile,” I deduce (from my armchair) that item (2) is not included within the IRS’s notion of “manufacturer’s suggested retail price for the vehicle” but instead the “MSRP” for the optional equipment. (And more certainly it’s not the case that item (3), delivery charges, are a “retail price” at all, much less inherent to the price of the vehicle.)

Instead (from my armchair), the IRS’s notion of “MSRP” for the vehicle I take to relate only to item (1) in the statute. (If anyone has on-point rulings from the IRS relarinf to the QAFMV credit definition of MSRP, that might settle it!)

On this view,” “MSRP” appears to mean the price of the base trim level before options or delivery.

(3) The view that “MSRP” mean the price of the base trim level before options and delivery is probably supported by examples of Monroney Stickers

Taking this view of “MSRP,” it has the benefit of seeming to square with the Monroney Sticker themselves:

Ford F-150 Lightning What MSRP to use for the new tax credit? d49f5447-3995-4ac6-849f-71935313bf6e-jpe


Note that there is listed an “MSRP” for the vehicle, separately from the “MSRP” for the options, and together - along with D&D - described as “total” MSRP.

Looking at the sticker alone, one might worry if the new EV law’s reference to “MSRP” could be to the “total” number on the sticker; but looking first to the IRS’s prior guidance and the operative code language regarding the MSRP for “the vehicle,” as distinct from MSRP for options/D&D, the sticker instead seems to support the read that the IRS is looking to - in effect - the base trim level MSRP, before options
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