Understanding rehabilitation tax credits – What you need to know about partnership allocations
Abstract: In late 2013, the IRS released Revenue Procedure 2014-12, which established a safe harbor clarifying how the agency will treat allocations of rehabilitation tax credits among partners. The procedure lays out circumstances under which the IRS won’t challenge a partnership’s allocation of credits to an investor/partner. This article discusses eligibility requirements for the safe harbor. However, a sidebar explains that it isn’t available if anyone in the rehabilitation project has entered into certain guarantee or insurance arrangements to protect the investor’s minimum contribution against losses.