Monthly Archives: January 2015

Renewable Energy Credits


On December 31, 2013, the Residential Energy Credit expired.  This credit allowed homeowners to deduct 15% of qualifying nonbusiness energy efficient improvements up to a maximum allowable credit of $500.00.  While this credit has been allowed to sunset, the Residential Renewable Energy credit offered by the federal government will be in effect until December 31, 2016.  The state of North Carolina offers a more generous Renewable Energy Tax Credit through December 31, 2015.  These credits are available to any taxpayer installing eligible renewable energy technology on their primary residence.  The two main viable sources of renewable energy available in North Carolina are geothermal heating and cooling systems and solar power.   Both energy sources qualify for the Renewable Energy Credits.Plug-and-Outlet

Solar power has two options under the existing credits.  If a homeowner installs a solar hot water heater, they are eligible for a 30% federal credit on the cost of the system including installation.  There is no limit to the dollar amount of the federal credit.  However, the federal credit does not apply to a heater for a swimming pool or a hot tub.  The North Carolina credit is 35% of the cost of the system including installation.  This credit has a cap of $1,400 but it can be used for a solar pool heating system.

The other solar option is the installation of photovoltaic solar panels.  The photovoltaic panels actually generate power from solar energy.  If a homeowner installs photovoltaic panels for their personal residence, they are eligible for a 30% credit on the cost of the system including installation with no dollar limit.  North Carolina offers a 35% credit on the cost of the system including installation.  The credit caps at $10,500.  The combined credits can cover up to 65% of the cost of the entire system.  Add that to the savings in energy costs and the breakeven time of a solar system becomes very short.

Another type of renewable energy that is eligible for the Renewable Energy Credit is a geothermal heating and cooling system.  Any homeowner installing a geothermal system will also be eligible for a 30% federal credit on the cost of the system including installation.  This credit, like the solar credit, has no dollar limitations.  The state of North Carolina offers a 35% credit on the cost including installation.  For a geothermal system, the credit has a dollar cap of $8,400.

For questions about either of these credits, please contact our office.  Langdon & Company LLP would love to answer any questions you may have.


On the Horizon: Revenue Recognition

by Lee Byrd

content updateOn May 28, 2014, Financial Accounting Standards Board’s (FASB) released Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU replaces more than 600 pieces of current revenue recognition guidance with a five-step model. Under the current guidance, entities recognize revenue when earned and realizable. Under the new ASU, entities will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As such, the application of the revenue recognition criteria is based on the terms of the contract with the customer rather than on industry specific guidance. The standard requires entities to make more estimates and use more judgment than current guidance.

The five-step model is as follows:

Step 1 – Identify Contracts with Customer

Step 2 – Identify Performance Obligations

Step 3 – Determine Transaction Price

Step 4 – Allocated Transaction Price to the Performance Obligations

Step 5 – Recognize Revenue When (or as) Performance Obligations are Satisfied

The standard becomes effective for public and private companies in 2017 and 2018, respectively. Early adoption is not permitted for public companies. While this gives entities time to become familiar with the new guidance, entities will need to use this time wisely to analyze the cost and benefits of the two approaches to implementation. Entities can choose the full retrospective method, which requires that the standard be applied retrospectively to each prior reporting period presented, or the modified retrospective method, which allows the cumulative effect of initially applying the update recognized at the date of initial application with disclosure of the amount by which each financial statement line item is affected in the current year. If the full retrospective method is chosen, the ASU allows some practical expedients to be used during implementation.

Langdon & Company LLP can provide further information or assist with implementation of ASU 2014-09. Please contact our office for more information.

Lee ([email protected]) is an audit manager focused primarily on single audit procedures associated with healthcare clients.