PLR 1338010: IRS grants more time to elect a later low-income housing credit period

Plain-English summary

A taxpayer intended to begin the low-income housing credit period for a newly constructed building in the year after the building was placed in service. An accountant mistakenly selected the earlier start date on Form 8609. The IRS granted the taxpayer 120 days to file an amended Form 8609 making the intended election under IRC § 42(f)(1). The taxpayer also had to make corresponding adjustments to its return documents. The ruling did not decide whether the building otherwise qualified for the credit.

Ruling snapshot

• Question: May the taxpayer receive more time to elect a later start date for the low-income housing credit period?
• Outcome: Approved, subject to filing an amended Form 8609 within 120 days.
• Key authorities: IRC § 42(f)(1); Treas. Reg. §§ 1.42-1(h), 301.9100-1, and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201338010 Third Party Communication: None
Release Date: 9/20/2013 Date of Communication: Not Applicable
Index Number: 9100.01-00, 42.00-00
Person To Contact:
---------------------------------- ----------------------------, ID No. --------------
----------------------------------------------- ---------------
-------------------- Telephone Number:
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Refer Reply To:
CC:PSI:B05
PLR-104073-13
Date:
June 18, 2013

LEGEND:

Taxpayer = -----------------------------------------------

b = ----

Address = ----------------------------------

date a = -------------------

BIN = ----------------

Agency = -----------------------------------------------------------------------

date b = --------------------------

c = ------------

CPA = ----------------------------

Year 2 = -------

Year 1 = -------

Dear ------------------:

  This letter responds to a letter dated January 14, 2013, and subsequent

correspondence, submitted on behalf of Taxpayer requesting an extension of time to
PLR-104073-13 2

make an election under § 42(f)(1) of the Internal Revenue Code pursuant to
§ 301.9100-3 of the Procedure and Administration Regulations.

    According to the information submitted, Taxpayer owns and operates a b-unit

low-income housing building located at Address. The building, a newly-constructed
building, was placed in service on date a, and was assigned BIN by Agency. On date b
Taxpayer received from Agency one Form 8609, Low-Income Housing Credit Allocation
Certification, reflecting a maximum allowable housing credit dollar amount of $c,
sourced from tax-exempt bond financing.

   Taxpayer provided the Form 8609 to its accountant, CPA, for purposes of

completing Part II of the form. Taxpayer intended to start the credit period for the
building in Year 2, the year following the year the building was placed in service.
However, CPA inadvertently checked the “No” box on line 10a of Form
8609, indicating that the credit period for the building was to begin in Year 1, the year
the building was placed in service.

    Section 42(f)(1) defines “credit period” to mean, with respect to any building, the

period of 10 taxable years beginning with the taxable year in which the building is
placed in service, or at the election of the taxpayer, the succeeding taxable year, but in
either case only if the building is a qualified low-income building as of the close of the
first year of such period. The election, once made, is irrevocable.

   Section 301.9100-8(b) provides that the election under § 42(f)(1) generally must

be made for the taxable year in which the building is placed in service, or the
succeeding taxable year if the § 42(f)(1) election is made to defer the start of the credit
period, and must be made in the certification required to be filed pursuant to § 42(l)(1)
and (2). Section 301.9100-8(a)(4)(i) provides that the election under § 42(f)(1) is
irrevocable.

   Section 1.42-1(h) provides, in part, that unless otherwise provided in forms or

instructions, a completed Form 8609 (or any successor form) must be filed by the
building owner with the IRS. The requirements for completing the Form 8609 are
provided in the instructions to the form.

   Sections 301.9100-1 through 301.9100-3 provide the standards the

Commissioner will use to determine whether to grant an extension of time to make an
election.

   Section 301.9100-1(b) defines the term “regulatory election” as including an

election whose due date is prescribed by a regulation published in the Federal Register,
or a revenue ruling, revenue procedure, notice, or announcement published in the
Internal Revenue Bulletin.
PLR-104073-13 3

   Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable

extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of a taxpayer who is abroad), under all subtitles of the Code, except E, G, H, and I.

   Section 301.9100-2 provides automatic extensions of time for making certain

elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.

   Requests for relief under § 301.9100-3(a) will be granted when the taxpayer

provides evidence (including affidavits described in § 301.9100-3(e)) to establish that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government.

   In the instant case, based solely on the facts submitted and the representations

made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been
met. Accordingly, Taxpayer is granted an extension of time to make the § 42(f)(1)
election on Form 8609 to treat the credit period for the building identified by BIN and
located at Address as beginning in Year 2. The election must be made by filing within
120 days from the date of this letter an amended Form 8609 that includes this intended
election. The amended Form 8609 (along with a copy of this letter) is to be sent to the
following address:

          Department of the Treasury
          Internal Revenue Service Center
          Philadelphia, PA 19255-0549

   A copy of this letter is enclosed for this purpose.

   Consistent with any submitted affidavits, Taxpayer must make necessary

adjustments to any Year 1 and Year 2 return documents to reflect the credit period for
the building as beginning in Year 2.

   No opinion is expressed or implied regarding the application of any other

provisions of the Code or regulations. Specifically, we express no opinion on whether
Building otherwise qualifies for credit under § 42.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.

  The ruling contained in this letter is based upon information and representations

submitted by Taxpayer and accompanied by a penalty of perjury statement executed by
an appropriate party. While this office has not verified any of the material submitted in
support of the request for rulings, it is subject to verification on examination.
PLR-104073-13 4

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representatives.

                                               Sincerely,
                                               Associate Chief Counsel
                                               (Passthroughs & Special Industries)


                                               By: Christopher J. Wilson
                                               CHRISTOPHER J. WILSON
                                               Senior Counsel, Branch 5
                                               Office of Associate Chief Counsel
                                               (Passthroughs & Special Industries)

Enclosures (2): Copy of this letter
Copy for § 6110 purposes

cc: