IRS Issues Section 50(d) Regulations

Thursday, July 21, 2016 - 10:00AM

The Internal Revenue Service (IRS) in tomorrow’s Federal Register will issue temporary regulations relating to the income inclusion rules under Internal Revenue Code Section 50(d)(5) that apply to a lessee of investment credit property when the lessor elects to treat the lessee as having acquired the property. Under the regulations, the IRS amends the Income Tax Regulations (26 CFR part 1) under section 50(d)(5) to provide that, among other things: Section 50(d) income is a partner item not a partnership item, Section 50(d) income goes to the partner in the lessee that used the tax credits, and partners are not entitled to increase their bases in their partnership interests as a result of the Section 50(d) income inclusion. Written comments are due 90 days after publication in the Federal Register. The IRS also published a withdrawal notice of previous proposed rulemaking on the subject.

This guidance will be discussed in the Notes from Novogradac blog, at the Novogradac 2016 Historic Tax Credit Conference September 21-22 in Cleveland, Ohio, and in the September issue of the Novogradac Journal of Tax Credits

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