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Novogradac Journal of Tax Credits Volume 1 Issue 5

The May 2010 issue of the Novogradac Journal of Tax Credits.

Journal cover May 2010


Michael J. Novogradac

Saturday, May 1, 2010

Several recent studies have shown that state tax credits have generated considerable economic activity resulting in new and retained jobs that are often high-paying and sustainable, as well as new state and local sales and tax revenue and increases in investment. One of those studies, authored by researchers from the Center for Urban Policy Research at Rutgers University and released by the Historic Tax Credit Coalition, found that the federal historic tax credit (HTC) is a highly efficient job creator, accounting for the creation of 1.8 million new jobs over the life of the program. Thirty-one states have HTC programs and supporters are quick to remind us that historic rehabilitation generates jobs in the construction trades at a time when employment in this sector is needed desperately. (To read more about the Rutgers report, please see page 61 of the April issue of the Novogradac Journal of Tax Credits.)

Forrest D. Milder

Saturday, May 1, 2010

Over the years, the courts have applied several theories as to why a transaction should not be “respected” as a matter of federal income tax law. For example, a court might conclude some or all of the following: that the taxpayer’s participation lacked economic motivation other than tax considerations, that the taxpayer was not able to demonstrate a non-tax “business purpose” for undertaking the transaction, or that the taxpayer could not demonstrate a reasonable prospect of making a profit from the transaction.

Jeff Nishita

Saturday, May 1, 2010

On March 17, 2010, the Internal Revenue Service (IRS) released greatly anticipated guidance regarding issues stemming from sections 1404 and 1602 of the American Recovery and Reinvestment Act of 2009 (Recovery Act). In Notice 2010-18 the IRS clarifies how a grant under Section 1602, otherwise known as the tax credit exchange program, is taken into account when calculating a state’s housing credit ceiling. It also discusses whether a subaward under Section 1602 is taxable to the recipient and if it decreases depreciable or eligible basis. This notice helps clear some of the major roadblocks that were holding up the closing of many Section 1602 projects.

Brad Elphick

Saturday, May 1, 2010

On April 7, the Community Development Financial Institutions (CDFI) Fund opened the 2010 round of the New Markets Tax Credit (NMTC) program by announcing the notice of allocation availability (NOAA) and releasing a copy of the application. I’m not sure there has been any NMTC application round that has been waited on with such anticipation. First, there is the delay in the start of the round due to the NMTC program not being extended by the end of 2009. Second, the CDFI Fund also accepted public comments on the application and was expected to make changes that were more substantial than in years past. Now the waiting is over and CDEs can begin the grueling process of assembling their applications. To help NMTC Working Group members with this task, they received the benefit of several tools to assist them with their application. These tools included a QEI issuance requirement calculator, a Word version of the application as well as an Excel version of the application tables, a Word comparison document of the 2009 and 2010 applications, a summary of the changes made to the 2010 application and an application checklist.

Jennifer Hill

Saturday, May 1, 2010

Affordable rental housing survived the tax reform war of 2017, though not unscathed. Now it needs to stabilize and prepare to rebuild–and it took a first step to do so in March.Tax credits and private activity bonds (PABs) were all under significant threat during 2017’s yearlong battle over tax reform, which resulted in the passage of H.R. 1 in December 2017. The legislation preserved the low-income housing tax credit (LIHTC), PABs, the new markets tax credit (NMTC) and renewable energy investment tax credit (ITC) and production tax credit (PTC); while preserving but changing the historic tax credit (HTC). Considering that the House version of tax reform included the elimination of the tax-exemption  of PABs, which help fund more than half of LIHTC developments every year, things could have been considerably worse.However, merely preserving these incentives doesn’t mean they escaped unharmed–particularly the LIHTC. The damage to affordable housing from the tax legislation is steep, primarily because the reduction of the top corporate tax rate from 35 percent to 21 percent.That means the value of the tax losses that accompany LIHTC investments is reduced. A Novogradac & Company analysis found that the 14 percent lower corporate tax rate likely reduces the amount of LIHTC equity that can be raised by about 14 percent. In dollar value, that’s roughly $1.7 billion each year.Year after year after year.Combined with another significant reform in tax law–the change in the annual

News Briefs

Friday, April 5, 2019

Applications for funds through Preserve New York, a grant program administered by the Preservation League of New York State and the New York State Council on the Arts (NYSCA), are now available to eligible municipalities and not-for-profit organizations...

Saturday, May 1, 2010

The National Multi Housing Council (NMHC) last month released its annual rankings of the 50 largest apartment owners and 50 largest apartment managers. The country’s five largest apartment owners are, in order, Boston Capital, with 162,677 units; SunAmerica Affordable Housing Partners, with 147,087 units; Equity Residential...

Saturday, May 1, 2010

Boston Capital will invest in a to-be-built Section 202 affordable housing development for seniors in Staten Island, N.Y. Lafayette Manor will feature 24 studios, 35 one-bedroom units and one two-bedroom manager’s unit in a five-story building. Equipped with emergency call systems...

Saturday, May 1, 2010

Sen. Maria Cantwell, D-Wash., in April called for an extension of the one-year Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program under the American Recovery and Reinvestment Act (Recovery Act). The program gives states easier access to capital so they can jump-start stalled housing developments...

Saturday, May 1, 2010

The Community Development Financial Institutions (CDFI) Fund has released its fiscal year 2009 Performance and Accountability Report, an annual publication that provides a comprehensive assessment of its operations. The CDFI Fund reported that as a result of the American Recovery and Reinvestment Act...

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