Will my SE still quality for tax credit

The tax lawyer is going to be extremely giddy because Diana Ross & the Supremes will have a decade long tax shelter reunion tour!

 

The question is, was the "binding contract" bit politically motivated to wipe out all existing pre-orders, or not?

 

@Tommm, I have to say that my MA experience has been completely the opposite, and having had five Mini's has given me a lot of experience. All of the MA's I've dealt with have been knowledgeable, exceedingly helpful, and more than willing to say when my questions exceeded their immediate knowledge. Maybe I've just been lucky, but I'll take it.

 

You’d think it was…but YMMV as far as whether Congress should get credit for knowing enough about what the purchase agreements look like in order to design legislation to invalidate them, let alone what constitutes a binding contract on a state-by-state basis.

 

I asked this yesterday and it slipped through the cracks. Is "binding" supposed to bind the buyer or seller? Think about it.

If you have the VIN, etc, is the dealer bound to sell that car to you?

 

Per https://contracts.uslegal.com/elements-of-a-contract/mutuality-of-obligation/:

Closely related to the concept of consideration is the mutuality of obligation doctrine. Under this doctrine, both parties must be bound to perform their obligations or the law will treat the agreement as if neither party is bound to perform.​

Googling for “binding contract Virginia” (my state) yields various results that suggest that mutuality of contract/mutuality of obligation is a commonly applied doctrine in Virginia courts.

Another link I stumbled into had a nice breakdown of the various elements of a contract, including mutuality, for which it said this (bold italics for emphasis):

Mutuality
As part of any contract there has to be mutuality. What that means is that both parties are bound. Where both parties are not bound then that means that neither party is bound. If neither party is bound, there is no contract. If one party can simply walk away from the deal without being responsible for contract damages, then there is no mutuality.​

I emphasize the above language as a callback to what I wrote in an earlier post (#127):

If this refundable $250 deposit/agreement to purchase were a binding contract to purchase, what would a breach of that contract look like? And, in that case, what might the remedies be? If the remedies were simply to restore all parties to their original circumstances, and nobody owes anyone anything, then I would argue that the original agreement didn’t bind the parties to anything or each other.
​

If, pursuant to the terms of your various sales agreement documents, any of you are liable to your dealers for anything should you choose not to buy your SE, I’d think that’d be a pretty important factor that would argue in favor of a binding contract.

 

Parties back out of binding contracts all the time. Binding just means legally enforceable; they can absolutely spell out dissolution terms, escape clauses, penalties for breaking the contract, etc.

For example, one part of the agreement I've signed with my dealer says that they'll hold the vehicle for 4 days after arrival, in which time I need to complete the purchase. If I don't, they can sell it to someone else. That's an 'out' written into the contract, but the contract is still binding, as I could pursue them in court if they didn't hold it for the 4 days... possibly for more than my deposit, too, if I'd sold my existing vehicle already in expectation of them holding up their end of the deal and was now deprived of transportation.

 

Sounds good, but there is more to it.

Does the fact that you can walk and get your $250 back mean there is no contract? That's what "you" said above. If yes, why bother with the contract in the first place?

Does your $250 bind the dealer to sell the car to you before they sell it to someone else? If yes, does that satisfy the definition for the7500?

 

Effectively, yes. If either party can walk away without consequence, there is no binding contract (in my state). So, then why bother with the [sales agreement], then? I reckon the purpose of the agreement could be merely to document the specifics of the vehicle being ordered (color, trim level, wheels selection, accessories). Maybe some argument can be made that the sales agreement amounts to a binding contract for the dealer to order a vehicle with specific attributes, but this doesn’t amount to a binding contract to buy/sell a vehicle.

Maybe? I imagine it all hinges on what your sales agreement says and how (if at all) if would be enforced in your state.

All told, I was just trying to answer your original question about whether “binding” is supposed to bind the buyer or the seller — in some states (including mine), a binding contract requires both to be bound in some fashion.

 

No.
Getting your $250 back would be an exit clause of the binding contract, not an indication that there wasn't a binding contract to begin with. Let's say you walk, but don't get your $250 back ... that's a violation of the contract (assuming the $250 was refundable per the agreement). And, as I pointed out a while ago in one of these threads (maybe this one; maybe not), deposits aren't even a required element of a binding contract in the first place.

"Binding" just means legally enforceable.
You back out and don't get your refundable $250 back... possible legal action.
The dealer sells the car you ordered to someone else... possible legal action.
The dealer changes the price upon arrival... possible legal action.

 

I have to believe that this is the only correct interpretation. Otherwise nobody with an existing order has a "binding contract," and they could have just used a simple cutoff date in the bill & guidance.

 

I’ve greatly enjoyed the banter here. I was going to express my simple, respectful disagreement with both of you, but I’ve come to terms with the fact that there are many possible outcomes on the question about whether there are binding contracts due to each of: 1) different sales agreements (I can certainly say that my forms look entirely different than fishbert’s); 2) different circumstances (some have made non-refundable deposits and/or are far enough along in the sales fulfillment process that they have a VIN); and 3) different state laws as to what constitutes a binding contract. Also, frankly, the legal question of whether any of the sales agreements amount to binding contracts might just get obviated by any number of DC Beltway shenanigans.

Either way, I’m just going to revert to my previous thoughts on this — if your ability to afford the SE (or whatever EV) depends on the $7500 tax credit, rely on the advice of internet randos at your own peril. Consult legal and/or tax professionals on the basis of your specific facts and the laws of your jurisdiction.

 

+1 for sure ... we're all basically just guessing at this point. Even the professionals are just guessing at this point.

 

Yep, even the professionals are guessing at this point.
Nope, there is no definite answer, so everyone in this thread is giving "arguments" that can be used to defend a position. Since there is no definite answer, and the IRS would be coming at anyone who takes the credit with the same lack of a definite answer, the arguments laid out here are more than just guesses.

I am pretty sure 99.44% of competent tax professionals (CPA or attorney) out there would give advice that is no different than the arguments laid out above.

I am also pretty sure the same could be said for competent attorneys that specialize in contact law since the application of the tax code as it pertains to this issue is dependent on the interpretation of contact law.

I'd the IRS agent, someone who has accounting credits, that examines someone's tax return for this issue an expert in contract law? Tax law?

 

The agent is probably under the small business and self employed division, but the tax law will probably go to the Treasury General Counsel.

What really makes things interesting is if a backdoor IRA is initiated prior to the $7,500 transitional tax credit. It opens up a whole new can of worms.

 

While awaiting delivery for my June SE order, my old S was showing signs it might not make it so I leased a new Hardtop. My thought was that with the federal and state EV credits and overall demand for cars, I could turn in the lease early when the SE arrived. Dealer confirmed this option. But with the loss of the federal credit, the compromise on range and cost no longer make sense. I’m going to take chance on the next gen electric model in a couple years. Anyone else make this decision?

 

What MINI do (or did) you have and what was going on with it?

I have an 06 R53 which we LOVE. But not as a daily driver because I'm too scared of the potential drivetrain issues that could arise if it was driven daily. It's our collector car that I love to take to shows and cars & coffee.

That's what excites me so much about our SE. We finally get to have a MINI that should excel as a daily car. And I still believe will be collectable. Plus like dogs, MINIs are happiest with a sibling.

 

I had a 2013 S with 90k mikes on it. Exhaust system needed replacement at a minimum right away. It had accumulated lots of parking lot dings. As it approached 100k who knows what else was going to go? And in comparison to my 2023 Hardtop it of course did not have nearly the bells and whistles and safety features. The 2023 Hardtop Iconic trim that I leased is very very spiffy and a blast to drive.