Historic Tax Credits News Briefs - April 2017

Friday, April 7, 2017

Six senators and 18 members of the House of Representatives Feb. 16 introduced the Historic Tax Credit Improvement Act of 2017. The bill would increase the historic tax credit (HTC) for certain small projects, allow credit transfer for certain small projects, lower the expenditure threshold from 100 percent to 50 percent of the adjusted basis to qualify for the HTC, reduce the depreciable basis adjustment for HTC property and modify certain tax-exempt property rules. S. 425 was referred to the Finance Committee, while H.R. 1158, which had seven additional cosponsors at press time, was referred to the Ways and Means Committee. Both bills are posted at www.historictaxcredits.com.

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On Feb. 13, the Internal Revenue Service (IRS) released Treasury Decision 9811, final regulations on the application of modified carryover basis to general basis rules of Section 1022 of the Internal Revenue Code (IRC). The regulations address technical requirements for the HTC where some rehabilitation work was done by the now-deceased former owner, and will affect property transferred from certain decedents who died in 2010. Under Treasury Decision 9811, the last sentence of paragraph (b)(2)(vii)(B) of Treasury Regulation 1.48-12 is revised to clarify changes to basis for purposes of the substantial rehabilitation test where a portion of the basis for qualified rehabilitation expenditures is determined under IRC Section 1022. The regulations were effective Jan. 19 and reflect changes to the law made by the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

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Leadership of the Geva Theatre Center in Rochester, N.Y., announced in early February that it will receive $700,000 in federal HTCs for the renovation of the former New York State Arsenal and Rochester Convention Hall. The center, which opened in September 2016, was a $11 million development. The renovations included roof replacement, masonry restoration and new seating. The development received HTCs for renovations to the building, but not for the artist housing.

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A bill was introduced in the West Virginia House of Delegates to increase the state HTC from 10 percent to 25 percent, effective July 1. HB 2545 had 11 cosponsors when it was introduced Feb. 20 and assigned to the House Finance Committee. Neighboring states Ohio, Virginia and Pennsylvania all have 25 percent HTCs.

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Nebraska state Sen. Paul Schumacher introduced a bill in January to terminate the state’s Job Creation and Mainstreet Revitalization Act, which has a sunset date of Dec. 31, 2022. Schumacher’s bill, LB 475, was discussed by the Revenue Committee March 3. It would end the state HTC effective immediately. The Nebraska Job Creation and Mainstreet Revitalization Act provides a 20 percent credit on qualified expenditures of $5 million or less. There is a $1 million transaction cap and a $15 million annual state cap.

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