EITF Could Rule Thursday on Tax Credit Accounting Changes

Published by Michael Novogradac on Monday, November 11, 2013 - 12:00am

The Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force (EITF) will meet this Thursday and is scheduled to discuss how to account for investments in qualified affordable housing developments and, we hope, issue and approve revised accounting standards that could increase the investor pool for low-income housing tax credit (LIHTC) investments.

The EITF first instructed staff to draft updated low-income housing tax credit GAAP guidance at its March meeting. The task force released draft guidance in April and accepted comments on the draft until June 17. The task force discussed draft guidance and the comments received at its Sept. 13 meeting. The industry had hoped that the EITF would approve the guidance at that meeting.

Yet, the EITF deferred approval of the guidance and decided to discuss it again at the Nov. 14 meeting. The task force is scheduled to discuss affordable housing investments from 1 p.m. to 2:30 p.m. ET on Thursday.

The EITF staff has posted its recommendations, which are:

  1. Do not classify low-income housing tax credit investments as deferred tax assets.
  2. Allow other tax credit investments to follow the same proposed conditions.
  3. Calculate the proportional amortization using tax credits only.

Assuming the first recommendation is upheld, the EITF will not need to issue a new exposure draft. This means that the EITF could essentially approve the guidance Thursday.

If the guidance is approved, it could have a dramatic effect on the investment tax credit industry. The changes would expand the investor pool for the low-income housing tax credit, as well as the new markets tax credit, historic tax credit and renewable energy tax credits.

We at Novogradac will be watching Thursday’s meeting and will send out tweets about any decision or deferral of a decision at the meeting.