Clean Fuel Tax Deductions

Following are excerpts from IRS Publication 535 viewable at http://www.irs.gov/publications/p535/ch12.html#d0e10094.

You are allowed a limited deduction for the cost of clean-fuel vehicle property and clean-fuel vehicle refueling property you place in service during the tax year.

Clean-burning fuels. The following are clean-burning fuels.

1. Natural gas.
2. Liquefied natural gas.
3. Liquefied petroleum gas.
4. Hydrogen.
5. Electricity.
6. Any other fuel that is at least 85% alcohol (any kind) or ether.

Deduction for Clean-Fuel Vehicle Property

The deduction for this property may be claimed regardless of whether the property is used in a trade or business

Clean-fuel vehicle property. Clean-fuel vehicle property is either of the following kinds of property.

Any property installed on a motor vehicle (including installation costs) to enable it to be propelled by a clean-burning fuel

1. The property is an engine (or modification of an engine) that can use a clean-burning fuel, or
2. The property is used to store or deliver that fuel to the engine or to exhaust gases from the combustion of that fuel.

For vehicles that may be propelled by both a clean-burning fuel and any other fuel, your deduction is generally the additional cost of permitting the use of the clean-burning fuel.

Following are excerpts from IRS Publication 535 viewable at http://www.irs.gov/publications/p535/ch12.html#d0e10094.