Rehabilitation Tax Credit (Portfolio 586)

Description

Bloomberg Tax Portfolio 586 T.M., Rehabilitation Tax Credit, provides an in-depth analysis of the §47 tax credit (Credit) for the rehabilitation of certified historic structures and certain other buildings originally placed in service before 1936. A 20% credit is available for qualified rehabilitation expenditures incurred in connection with the rehabilitation of a certified historic structure, and a 10% credit may be taken for qualified rehabilitation expenditures incurred with respect to rehabilitation of certain other buildings placed in service before 1936. To qualify for the Credit, a qualified rehabilitated building must have been substantially rehabilitated and initially placed in service before the beginning of the rehabilitation. In addition, buildings qualifying for the 10% credit must meet certain external and internal wall requirements. A certified historic structure must either be listed in the National Register of Historic Places (National Register) or be located in a registered historic district.

This Portfolio discusses in detail the definitions and technical requirements to qualify for and claim the Credit. It discusses the pass-through election that permits a lessee to claim the Credit, and required basis reductions (or fictional income) for property for which a Credit is claimed.

In addition, it discusses limitations on the use of the Credit and recapture. Finally, the Portfolio discusses typical transaction structures and use of the Credit in conjunction with other tax benefits, as well as analyzes the important case of Historic Boardwalk, LLC v. Commissioner, which has dramatically changed the way in which Credit transactions are structured.

This Portfolio may be cited as Mount, 586 T.M., Rehabilitation Tax Credit.

Table of Contents

I. Introduction
II. Definitions
III. Amount and Timing of Credit
IV. Pass-Through of Credit to Lessee
V. Basis Adjustment and §50(d) Income
VI. Limitations on Use of Credit
VII. Recapture and Audit Procedure
VIII. Credit Investor
IX. Typical Credit Structures
X. Boardwalk Case and Guidance
XI. Combining the Rehabilitation Credit with Other Tax Benefits