Opinion ID: 3050656
Heading Depth: 3
Heading Rank: 3

Heading: Operation of Mercury Solar and HEH

Text: During the years at issue, HEH purported to sell to customers solar energy produced by solar water heating components on the customer’s property. It would purchase this equipment from Mercury Solar PTO, and hire Mercury Solar to install it. In addition to the solar service energy contract with HEH, each customer also received a “beneficiary certificate” entitling him to a beneficial ownership interest in HEH. The HEH 16174 SPARKMAN v. CIR trustee would thereby have the discretion to pass through solar energy tax credits to the customer, and such credits would be reflected on Schedules K-1 distributed to its “beneficiary”-customers. See generally Hvidding v. Comm’r, T.C. Memo 2003-151 (describing more fully the transaction in the case of a customer claiming a tax credit for the energy purchased); Richter v. Comm’r, T.C. Memo. 2002-90 (same). As Thompson testified: Mercury Solar is really just a contractor, it’s a solar contractor. It basically was contacted to put solar panels and hot water heaters in homes and that kind of thing. So that’s what our function was. HEH had another function of contracting Mercury Solar to do that for the purposes of selling energy and things like that. HEH had no employees and shared a common office space with Mercury Solar. Mercury Solar did not have a solar contractor’s license in its own name, but rather used Sparkman’s.