I'm trying to understand the investment tax credit and bonus depreciation for renewable energy for a business user. If a geothermal heat pump system costs $60K to install (equipment plus drilling costs), does the business get to take a 30% tax credit ($18K in this case) and a bonus depreciation of 50% ($30K in thise case)?
Assuming a 35% federal tax rate, the business gets $10.5K (35% * $30K) back from first-year depreciation, $18K from tax credit, so $31.5K ($60K - $10.5K - $18K) is the additional out of pocket cash expense for the business during the first year, and that gets depreciated over the next few years?
Assuming business is an S-Corporation, the tax credit just passes through to shareholders?