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Novogradac Journal of Tax Credits Volume 2 Issue 5

The May 2011 issue of the Novogradac Journal of Tax Credits.

Journal cover May 2011

Articles

Michael J. Novogradac

Sunday, May 1, 2011

Shortly before midnight on April 8, lawmakers cut a deal that slashed $38.5 billion from fiscal year (FY) 2010 funding levels—the largest annual spending cut in history. A week later, on April 15, the House voted 235 to 193 in favor of the 2012 budget resolution written by House Budget Committee Chairman Paul Ryan, R-Wis. The bill, pronounced dead on arrival in the Senate, is one of the first salvos in the next round of debate over federal spending.

Jennifer Hill

Sunday, May 1, 2011

On a sunny, brisk March day in Clare, Mich., Rep. Dave Camp, chairman of the Ways and Means Committee, took a tour of ClareCastle Senior Apartments, a low-income housing tax credit (LIHTC) financed property in his district. The tallest building in downtown Clare, the apartment community stands on the former site of Thayer’s Dairy, an old ice cream factory with which the chairman was familiar. Camp, along with a handful of representatives from the Michigan Housing Council (MHC), a representative from Mid Michigan Community Action Agency and the property manager, among others, toured the grounds and talked about the property’s positive impact on Clare, including new shops that cater to residents. Talking about the building’s merits led to a broader discussion about the LIHTC program and how developments like ClareCastle can boost local economies.

Jennifer Dockery

Sunday, May 1, 2011

The Internal Revenue Service (IRS) on March 25 released an updated version of its Guide for Completing Form 8823: Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition (8823 Guide). The guide provides standardized definitions for the noncompliance categories listed on Form 8823, so that the state agencies can act consistently in interpreting and applying Section 42 of the Internal Revenue Code (IRC) and in its reporting of noncompliance. The updated guide corrects typographical errors, clarifies requirements and provides additional discussions and examples.

Neil D. Kimmelfield

Sunday, May 1, 2011

Part One of this article explained that when a new markets tax credit (NMTC) investor exercises a put option (the exit transaction) in a leveraged transaction at the end of the seven-year compliance period, it is possible that the qualified active low-income community business (QALICB) will not recognize any cancellation of indebtedness (COD) income. Part One also explained that if COD income is recognized, the amount of income should be the difference between the issue price of the “B loan” and the fair market value of the B loan when the put is exercised.

John Leith-Tetrault

Sunday, May 1, 2011

By now you may have read and heard more than you ever wanted to know about the legal and accounting implications of the March 29 4th U.S. Circuit Court of Appeals reversal of December 2009 Tax Court decision in Virginia Tax Credit Fund v. Commissioner 2001. This column will focus instead on the possible market impacts of this decision in terms of state historic tax credit (HTC) supply, pricing and the net value of these credits to historic rehabilitation transactions.


News Briefs

Sunday, May 1, 2011

Tax credit syndicators are now the largest owners of apartments in the United States, according to the National Multi Housing Council's (NMHC's) 2011 NMHC 50, an annual ranking of the 50 largest apartment owners and 50 largest managers.

Sunday, May 1, 2011

The National Affordable Housing Management Association (NAHMA) launched an online database of Communities of Quality (COQ), multifamily affordable properties that have received NAHMA recognition for their physical, financial and social conditions.

Sunday, May 1, 2011

The U.S. Department of Housing and Urban Development (HUD) announced the fiscal year 2011 Contract Rent Annual Adjustment Factors (AAFs) in a March 16 Federal Register notice.

Sunday, May 1, 2011

New York's Independent Democratic Conference (IDC) called for the reinstatement of the state's Historic Rehabilitation Tax Credit (HRTC) program.

Sunday, May 1, 2011

Advantage Capital Partners invested $5.7 million in manufacturing company Barton Nelson through the federal new markets tax credit (NMTC) and Missouri New Markets Development programs.

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