Partnership may make late low-income housing credit elections

Plain-English summary

A partnership placed several buildings in service but inadvertently failed to elect to begin their low-income housing credit periods in the following year. The IRS found that the partnership met the standards for discretionary filing relief. It granted 120 days to file amended Forms 8609 making the elections under IRC § 42(f)(1). The partnership also had to file its tax returns, Forms 8609-A, and Schedules K-1 consistently with the elected credit periods, but the ruling did not decide whether the buildings otherwise qualified for the credit.

Ruling snapshot

• Question: May the partnership make late elections to begin the buildings' low-income housing credit periods in the following year?
• Outcome: Approved
• Key authorities: IRC § 42(f)(1), (l); Treas. Reg. §§ 1.42-1(h), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201552012 Third Party Communication: None
Release Date: 12/24/2015 Date of Communication: Not Applicable
Index Number: 9100.01-00, 42.00-00
Person To Contact:
-------------------------- -----------------------------, ID No. -------------
---------------------------------------- -----------------
---------------------------------------------- Telephone Number:
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In Re: Refer Reply To:
--------------------------------------------- CC:PSI:B05
PLR-125732-15
Date:
September 16, 2015

LEGEND:

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

BINs = -----------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

Year 1 = ------------------------------------------------------

Year 2 = ------------------------------------------------------

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

   This letter responds to Taxpayer’s letter dated July 17, 2015, and subsequent

correspondence, requesting an extension of time to make elections under § 42(f)(1) of
the Internal Revenue Code pursuant to § 301.9100-1 of the Procedure and
Administration Regulations.

    According to the information submitted, Taxpayer, a partnership for federal

income tax purposes, placed buildings identified by BINs in service in Year 1. Taxpayer
inadvertently failed to make timely elections under § 42(f)(1) to begin the credit periods
for the buildings identified by BINs in Year 2.

    Section 42(f)(1) defines the credit period of any building as the period of 10

taxable years beginning with the taxable year in which the building is placed in service,
or at the taxpayer’s irrevocable election, the succeeding taxable year, but in either case
PLR-125732-15 2

only if the building is a qualified low-income building at the close of the first year of the
credit period.

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

be made for the taxable year in which the project 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.

   Specifically, the election under § 42(f)(1) is made pursuant to the certification

requirement of § 42(l)(1)(E), which provides that following the close of the first taxable
year in the credit period with respect to any qualified low-income building, the taxpayer
shall certify to the Secretary (at such time and in such form and in such manner as the
Secretary prescribes) such other information as the Secretary may require.

   Section 1.42-1(h) of the Income Tax Regulations provides that a completed Form

8609, Low-Income Housing Credit Allocation and Certification, must be filed by the
building owner with the IRS. The requirements for completing and filing Form 8609 are
addressed in the instructions to the form. Completion of the relevant portions of Form
8609 satisfy the certification requirement of § 42(l)(1) and (2).

   The instructions to Form 8609 provide that the building owner must make a one-

time submission of Form 8609 to the Low-Income Housing Credit (LIHC) Unit at the IRS
Philadelphia campus. The building owner must file the original of the Form 8609 with
the LIHC Unit no later than the due date (including extensions) of its first tax return with
which it is filing Form 8609-A, Annual Statement for Low-Income Housing Credit.

   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, 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 subtitles 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.
PLR-125732-15 3

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

provides evidence to establish that the taxpayer acted reasonably and in good faith, and
the grant of 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 elections under
§ 42(f)(1) for the buildings identified by BINs by filing within 120 days from the date of
this letter amended Forms 8609 that include the intended elections. The amended
Forms 8609 (along with a copy of this letter) must be filed with the LIHC Unit at the
following address provided in the instructions to Form 8609:

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

  By making the elections under § 42(f)(1) for the buildings identified by BINs,

Taxpayer is electing to begin the credit periods for the buildings identified by BINs in
Year 2. Accordingly, Taxpayer must file its Federal income tax returns, including the
Forms 8609-A and the Schedules K-1, for Year 1 and all subsequent years as is
necessary to reflect the proper amount of § 42 credits.

   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 buildings identified by BINs otherwise qualify for the low-income housing credit
under § 42.
PLR-125732-15 4

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

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

                                     Sincerely,

                                     Associate Chief Counsel
                                     (Passthroughs & Special Industries)



                                     By: _______________________
                                         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: