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August 2009

July 2009

IRS Invites Comments Concerning Low-Income Housing Tax Credit Recapture Form

IRS The IRS is inviting comments concerning Form 8611, Recapture of Low-Income Housing Credit. All written comments must be received by the IRS on or before July 28, 2009 for consideration. The owner must recapture on Form 8611 some or all of the low-income housing credits taken in prior years if the property fails to meet certain requirements over the 15-year compliance period and a bond is not posted or if the project is disposed of. Comments are specifically invited on the following: 1) Whether the collection of information is necessary for the proper performance of the functions of the agency, 2) the accuracy of the agency’s estimate of the burden of the collection of information, 3) ways to enhance the quality, utility, and clarity of the information to be collected, 4) ways to minimize the burden of collecting information from respondents, and 5) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

We hope you never have a need for IRS Form 8611!  If you have experience with recapture (or even if you don't) and would like to comment on the form, don't miss your chance!

IRS Private Letter Ruling Allows Offsite Improvements in Tax Credit Eligible Basis

Calculator The IRS released a private letter ruling in April of 2009 that allows for the inclusion of offsite improvements in tax credit eligible basis. The project that received the ruling is a multiple building project with some of the buildings located more than six hundred feet from existing streets and infrastructure of the city in which it is located. The city required that the owner of the project construct streets, including curbs, sidewalks, storm water drainage, and domestic water in-flow as well as the necessary infrastructure needed by utility companies to install underground utilities and that these improvements be dedicated to the city upon their completion. The current IRS treatment of these "offsite improvements" is to capitalize them as land costs of the project.

The owner requested a ruling from the IRS allowing the cost of these offsite improvements which were necessary for the completion and operation of the project to be included in the tax credit eligible basis of the project. Private Letter Ruling 200916007 says that the cost of the streets and infrastructure required by the city for this project are includable in tax credit eligible basis.

Will this be the start of a new direction by the IRS on the treatment of costs of offsite improvements? Only time will tell, but it is a change from the past.