Tax Credit Tuesday Podcasts
Each Tax Credit Tuesday, Novogradac & Company LLP's audio broadcast offers an in-depth weekly look at tax credit topics. A new episode is posted here and on the RSS Feed by 1 p.m. Pacific Time every Tuesday.
How have capitalization rates changed over the past 12 months of rising inflation? Michael Novogradac, CPA, and Novogradac partner Lindsey Sutton discuss the effects of high inflation on observed market capitalization rates, as well as long-term debt financing.
Michael Novogradac, CPA, and Novogradac partner Frank Buss, CPA, help listeners answer three key questions regarding the new lease guidance, ASC 842: 1. What are the new operating lease accounting requirements? 2. How will the new standard affect various tax credit property partnerships? 3. What do you need to know about complying with the new lease guidance?
More than 130 nations are working toward an agreement to ensure that multinational corporations pay a minimum level of income taxes. The second of two “pillars” in this framework would ensure that the world’s largest and most profitable companies are taxed in each jurisdiction in which they do business at an effective rate of 15%. Since any rate less than 15% would make the corporation subject to a top-up tax to reach that level, there are concerns about how U.S. general business credits–including the low-income housing tax credit (LIHTC), historic tax credit (HTC), new markets tax credit (NMTC) and renewable energy tax credits (RETCs)–would contribute to lowering effective tax rates below 15%. In this podcast, Michael Novogradac, CPA, and Novogradac partner Brad Elphick, CPA, discuss the global minimum tax and issues associated with it concerning tax credit equity. They discuss how and when potential guidance would affect tax equity investments, potential approaches to mitigate the damage to tax equity investments, how the equity investment exclusion approach would work, how the proportional amortization and HLBV approaches fit, the joint venture rule and portfolio shareholdings. The conclude with the next steps that stakeholders in community development tax incentives should take.
The vast majority of business and nonprofits that receive new markets tax credit (NMTC) financing serve low-income communities that are physically located in a low-income census tract. However, there’s another underutilized method for businesses and nonprofits to qualify for NMTC financing that is not geography based. It’s called the targeted populations approach. Michael Novogradac, CPA, and Novogradac partner Bryan Hung, CPA, discuss the potential benefits of the targeted populations method, how to meet the targeted populations criteria, compliance considerations and more.
The definition of qualified rehabilitation expenditures (QREs) is important not just for purposes of satisfying the substantial rehabilitation test. The amount of QREs determines the amount of historic tax credits a project is eligible for, meaning every additional dollar of QREs results in 20 cents more in tax credits. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Tom Fantin, CPA, discuss commonly overlooked QREs and costs that some developers may assume are QREs but are not.
The historic tax credit (HTC) substantial rehabilitation test may seem simple on the surface, but there are some important nuances that even experienced developers may not be fully aware of. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Roy Chou, CPA, discuss what developers need to know about meeting the substantial rehabilitation test and planning their qualified rehabilitation expenditures so they can optimize the amount of HTC equity they can raise.
With much competition for 9% low-income housing tax credits (LIHTCs), more developers are turning to 4% LIHTCs to fund affordable housing–at the very time that competition for 4% LIHTCs (which are available to properties financed with tax-exempt private-activity bonds) is increasing. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Tabitha Jones, CPA, discuss the key differences between 4% LIHTC-financed transactions and developments financed by 9% LIHTCs. They also discuss various pitfalls that those new to the 4% LIHTC should be careful to avoid, including problems with bond arbitrage, Form 8709 and the 50% financed-by test. They wrap up with information on the 9% LIHTC that developers unaccustomed to that world should know.
Many solar energy developers do early stage work to get a property ready for construction, then they sell the property to a developer who takes control, raises equity to fund the development and begins construction. However, more early stage solar developers are considering the option of maintaining control of the property and handling the construction, including receiving funding through equity from investment tax credits. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Rob Bryant, CPA, discuss the options and considerations for such developers. They examine the typical life cycle for a solar property and then look at the issues that developers should address when considering a long-term hold of the property. After that, they look at typical financing options, as well as tax and equity structuring issues for a developer who maintains control of a solar property as well as tools developers should consider while making a decision.
The U.S. Department of Housing and Urban Development (HUD) last week posted income limits for fiscal year 2022 to determine eligibility for HUD-assisted programs as well as for low-income housing tax credit (LIHTC) and tax-exempt bond financed properties. The national median income was a 12.5% increase over 2021, but HUD set the cap on increases at 11.89%. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Thomas Stagg, CPA, discuss the income limits, including the major storylines. They also examine how inflation affects income limits and how it will impact future income limits, then provide insight into implementing new rent and income limits and also discuss how issues with the 2020 American Community Survey will affect income limits. They conclude with some suggestions for how HUD could approach those issues and what LIHTC stakeholders should be considering.
Unlike other community development incentives that typically have seasoned developers and investors, renewable energy transactions often have developers and/or investors who are new to tax incentives. It’s critically important that investors and developers understand the book accounting or generally accepted accounting principles (GAAP) and implications of their proposed and existing investments. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Alvin Lee, CPA, discuss how an understanding of these issues can help a developer of a renewable energy project raise the optimum amount of cash for equity and help both the developer and investor avoid any unwanted accounting surprises.
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