Solar panels and batteries that a utility plans to install in some customer homes as part of an experiment to test different approaches to energy conservation do not have to be reported by the homeowners as income, the IRS said.

The customers will be given the equipment to own.

The utility will also install smart meters to help customers monitor how they are running up charges for electricity.

Normally when someone is given something of value by someone else, he must report it as income. However, a special provision in section 136 of the US tax code spares homeowners from having to report utility rebates to reduce electricity or natural gas usage in a home. The IRS said in a private ruling released in late November that the solar equipment in this case is covered by that section.

The ruling is Private Letter Ruling 201046013.

Keith Martin