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IRS: Reflective Roof Installed in Connection with Solar Panels Qualifies for Energy Credit. (Parker Tax Publishing December 26, 2014)

The IRS ruled that a reflective roof, when installed in connection with a bifacial paneled solar power system, constituted energy property under Code Sec. 48 to the extent that the cost of the reflective roofing exceeded the cost of reroofing the Taxpayer's building with a non-reflective roof. PLR 201450013 (12/12/14).


Taxpayer, a privately held limited liability company, considered purchasing a rooftop solar photovoltaic generation system (the system) to help defray energy costs. The system included bifacial panels, able to generate electrical energy using not only direct sunlight that strikes the panels from above, but also sunlight that is reflected from the surface on which the panels are installed. It was recommended that the panels be installed over highly reflective roof membranes in order to generate a significant amount of electrical energy through reflected sunlight.

In connection with the installation of the solar panel system, Taxpayer anticipated installing a reflective membrane over the portion of the roof located beneath the system and requested a ruling that the reflective roof, when installed in connection with the system, constitutes energy property under Code Sec. 48.


Code Sec. 48(a)(3)(A)(i) provides that energy property includes any equipment which uses solar energy to generate electricity.

Reg. Sec. 1.48-9(d)(1) provides that energy property includes solar energy property, however, Reg. Sec. 1.48-9(d)(2) specifically excludes from qualification as energy property "passive solar systems" based on the use of conductive, convective, or radiant energy transfer. Reg. Sec. 1.48-9(d)(3) provides, in part, that solar energy property includes equipment that uses solar energy to generate electricity, and includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items.

The IRS stated that the reflective roof satisfies the definition of energy property under Reg. Secs. 1.48-9(d)(1) and 1.48-9(d)(3) when installed in connection with the system. Because the unique double-sided panels generate electricity using sunlight reflected from the surface on which the panels rest, the reflective roof helped enable the system to generate significant amounts of electricity, and was part of the equipment and materials using solar energy to directly generate electricity. Thus the IRS ruled it constituted energy property under Code Sec. 48 to the extent that the cost of the reflective roofing exceeded the cost of reroofing the Taxpayer's building with a non-reflective roof.

For a discussion of energy credits, see Parker Tax ¶104,315 (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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