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IRS Clarifies Rules on Investments in CDEs

Thursday, November 29, 2001 - 1:45AM

On November 26 the Internal Revenue Service (IRS) clarified that some investments in qualified community development entities (CDEs) may be eligible for the New Markets Tax Credit (NMTC), even if made prior to the formal issue of a credit allocation to the qualified CDE. IRS Notice 2001-75 responded to questions as to whether an equity investment in an entity could be eligible for designation as a qualified investment if it is made prior to the CDE's certification and before it is allocated credits. The IRS has said that while the investments may be eligible for the tax credits, those credits cannot be claimed until the CDE has entered a formal agreement with the government. More information about the NMTC program and IRS Notice 2001-75 can be found at www.newmarketscredits.com.

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