Late election may defer low-income housing credit period

Plain-English summary

The owner of a single-building low-income housing project intended to begin its ten-year credit period in the year after the building was placed in service. Its return preparer mistakenly checked the Form 8609 box indicating that the credit period began in the placed-in-service year. The IRS found that the taxpayer met the requirements for discretionary election relief under the section 9100 regulations. It granted 120 days to file an amended Form 8609 making the intended section 42(f)(1) election. The ruling did not decide whether the building otherwise qualified for the low-income housing credit.

Ruling snapshot

• Question: May the taxpayer make a late section 42(f)(1) election to begin the building's credit period in the year after it was placed in service?
• Outcome: Approved.
• Key authorities: IRC § 42(f)(1); Treas. Reg. §§ 1.42-1(h), 301.9100-1, 301.9100-3, and 301.9100-8.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201518011 Third Party Communication: None
Release Date: 5/1/2015 Date of Communication: Not Applicable
Index Number: 42.00-00, 9100.01-00
Person To Contact:
------------------------------------------------------------ -----------, ID No. -----------------
--------------- Telephone Number:
------------------------------------------------------------ ---------------------
------------------------------------------------------------ Refer Reply To:
---------- CC:PSI:B05
---------------------------------- PLR-133911-14
------------------------ Date:
January 12, 2015

LEGEND

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

State = --------------------

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

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

Year 1 = ------

Year 2 = ------

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

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

   This letter responds to a letter dated September 2, 2014, and related

correspondence, submitted on behalf of Taxpayer, requesting an extension of time
pursuant to § 301.9100-1 of the Procedure and Administration Regulations to make an
election under § 42(f)(1) of the Internal Revenue Code.
PLR-133911-14 2

    The information submitted states that Taxpayer owns and operates a single-

building low-income housing project in State. The project is located at Address and
identified by BIN. Taxpayer placed the building in service in Year 1. In Year 2, Agency
issued Taxpayer a Form 8609, Low-Income Housing Credit Allocation and Certification,
for the building. 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, the person
preparing Taxpayer’s return for Year 2 inadvertently checked the “No” box on line 10a of
the Form 8609 for the building, thus erroneously indicating that the credit period for the
building was to begin in Year 1, the year the building was placed in service. Consistent
with its intent, Taxpayer seeks an extension of time to make an election under § 42(f)(1)
to start the credit period for the building in Year 2.

    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(b) 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.

   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.
PLR-133911-14 3

   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 located at Address and
identified by BIN, 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.

   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
the building located at Address and identified by BIN 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-133911-14 4

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

letter are being sent to your authorized representatives.

                                       Sincerely,

                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)



                                       By: _______________________
                                           CHRISTOPHER J. WILSON
                                           Senior Counsel, Branch 5
                                           Office of Associate Chief Counsel

Enclosures (2)

   Copy of this letter
   Copy for § 6110 purposes

cc: