Biomass fuel is an energy-efficient building property

The American Recovery and Reinvestment Act of 2009 provides that certain expenditures made by the taxpayer for energy-efficient building property are eligible for the nonbusiness energy property credit. The term "energy-efficient building property" includes a biomass fuel stove that burns biomass fuel to heat a dwelling unit that the taxpayer uses as a residence, or to heat water for use in the residence, and that has a thermal efficiency rating of at least 75%, as measured using a lower heating value [§25C(d)(3)(E)] . "Biomass fuel" means any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers [§25C(d)(6)].

Individuals are allowed a credit for the tax year equal to 30% of the sum of:

• The amount paid or incurred by the taxpayer during the tax year for qualified energy efficiency improvements
• The amount of the residential energy property expenditures paid or incurred by the taxpayer during the tax year [§25C(a)(2)].

The aggregate amount of credits allowed to a taxpayer for tax years beginning in 2009 and 2010 may not exceed $1,500 [§25C(b)]. The dollar limitations on residential energy property expenditures—$50 for each advanced main air circulating fan, $150 for each qualified natural gas, propane, or oil furnace or hot water boiler, $300 for each item of qualified energy efficient property have been eliminated [§25C(b)]. This credit applies only to existing principal residences [IRS Notice 2009-53].

John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent - Direct phone # 720-234-1177