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Historic Tax Credits News Briefs - November 2013

In T.C. Memo 2013-224; No. 9530-09, the U.S. Tax Court reversed a decision made by the Internal Revenue Service (IRS) in the case of Barry S. Friedberg and Charlotte Moss v. Commissioner of Internal Revenue stating that a façade easement appraisal wasn’t qualified for tax credits. The tax court granted the taxpayers’ motion to reconsider its argument that an appraisal was not a qualified appraisal, and concluded that the appraisal was qualified and that the taxpayers shouldn’t have been denied a charitable contribution deduction for a façade easement solely on the ground that they failed to submit a qualified appraisal. In 2002, the taxpayer purchased a residential townhouse in New York City, deciding to donate a façade easement and all of the development rights to the National Architectural Trust (NAT). He had the property appraised. The IRS issued a statutory notice of deficiency and opposed the motion for reconsideration contending that taxpayers misstated the proper standard, that the appraisal was not qualified and failed to include a specific basis for valuation. The tax court disagreed with all three of the IRS’s claims and agreed with taxpayers. Consequently, the tax court concluded that the appraisal was a qualified appraisal with respect to the façade easement. The Tax Court’s ruling means that the reliability and accuracy of the methodology and specific basis of valuation in the appraisal will be decided at trial.

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Greg Phillips, Main Street Arkansas director, was appointed to the National Main Street coordinators’ executive council. The council, which is comprised of a small group of representatives from various Main Street coordinating programs, works on providing communication and input to support the partnership between the Main Street Coordinating programs across the United States and the National Main Street Center. Phillips has 15 years of experience in the main street downtown development program, a program of the Arkansas historic preservation program that provides technical assistance and design services to help foster economic development in the state’s downtown area. Phillips has been assistant director of the Main Street Arkansas program since 1997. He has worked with the 17 Main Street Arkansas communities and the 12 cities in the Arkansas Downtown Network. Before joining Main Street Arkansas, he worked with the Arkansas symphony orchestra.

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In an effort to reduce the number of errors in calculating Historic and Enterprise Zone Tax Credits, Baltimore Mayor Stephanie Rawlings-Blake and senior leadership of the administration’s finance department released an outline on Oct. 7 for a series of reforms. To reduce errors, a new automated system will be implemented and protocols for allocating the credits will be developed. The administration has also started an internal review of all tax credit accounts to identify errors, while the city council is considering resolutions for the privatization of tax collections and to audit of the city’s tax programs. The finance department has also created a billing integrity unit, which will oversee the tax calculation function form instead of the state of Maryland. The department expects that the new automated system will be fully functioning and available to the public by March 2014.

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The Alabama Historical Commission on Oct. 2 released the results of its first historic tax credit (HTC) application lottery. A total of 21 developments were listed. The historical commission will review the applications based on the lottery rankings. Tax credit reservations will be distributed based on the building’s eligibility as a certified historic structure and upon the completeness of the rehabilitation plan. The total allocation request for a commercial and income-producing project is $5 million; The total allocation request for a residential project is $50,000. If invoice fees are not received within a specified time frame, the rehabilitation work does not meet the U.S. Secretary of the Interior’s standards for the rehabilitation of historic properties or any section of the application is incomplete, then the reservations can be withdrawn. If the application is returned, then the project loses its placement on the reservation priority list. Some of the properties on the review list included the Federal Reserve Bank of Atlanta, Birmingham Branch (Birmingham); Redmont Hotel (Birmingham); Hunter House (Mobile); First National Bank of Tuscaloosa (Tuscaloosa); and DeBrier Building (Mobile).

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Douglas R. Banghart, Jeffrey D. Gaulin and John D. Kelley, real estate finance and federal and state tax credit law practitioners, have joined global law firm Jones Day as partners. Previously partners at Holland & Knight LLP, the three will work in the company’s Boston office. Banghart has experience in state and federal tax credit syndication, and graduated from Washington and Lee University School of Law and the University of Florida in taxation. Gaulin has experience on structuring transactions in HTCs, new markets tax credits (NMTCs) and state tax credits. He was also previously a member of the tax advisory group at Ernst & Young LLP. Gaulin graduated from the Boston College Law School. Kelly works on tax and business transactions, specifically on real estate syndication. Kelly graduated from the Boston College Law School. Also joining the three are associates Patrick J. Cronin, Sameer Patel and Brian D. Hern.

Journal Category:

Historic Tax Credits

Authors:

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