Fillable Form 8586 - Low-Income Housing Credit (Page 2 of 2) in pdf

Form 8586 (Rev. 12-2016)

Page

General Instructions

If the reduction in qualified basis at the close of the tax year also

results in a violation of the minimum set-aside requirement, then no

Section references are to the Internal Revenue Code unless

credit is allowable for the year.

otherwise noted.

Line 3. The credit for the year is figured on Form 8609-A for each

Future developments. For the latest information about

building. Attach a copy of each Form 8609-A you completed for the

developments related to Form 8586 and its instructions, such as

tax year to Form 8586. Enter on line 3 the total credit from attached

legislation enacted after they were published, go to

Form(s) 8609-A for buildings placed in service before 2008.

Line 6. Estates or trusts. Allocate the low-income housing credit

Purpose of Form

on line 5 between the estate or trust and the beneficiaries in the

same proportion as income was allocated and enter the

Use Form 8586 to claim the low-income housing credit. This general

beneficiaries’ share on line 6.

business credit is allowed for each new qualified low-income

building placed in service after 1986. Generally, it is taken over a

If the estate or trust is subject to the passive activity rules, include

10-year credit period.

on line 4 any low-income housing credits attributable to buildings

placed in service before 2008 from passive activities disallowed for

The portion of the low-income housing credit attributable to

prior years and carried forward to this year. Complete Form 8582-

buildings placed in service after 2007 is not limited by tentative

CR, Passive Activity Credit Limitations, to determine the allowed

minimum tax.

credit that must be allocated between the estate or trust and the

Taxpayers, other than partnerships, S corporations, estates, or

beneficiaries. For details, see the Instructions for Form 8582-CR.

trusts, whose only source of this credit is from those pass-through

Line 9. A decrease in qualified basis will result in recapture if the

entities, are not required to complete or file this form. Instead, they

qualified basis at the close of the tax year is less than the qualified

can report this credit directly on Form 3800.

basis at the close of the first year of the credit period.

Qualified Low-Income Housing Project

If the reduction in qualified basis at the close of the tax year also

The credit cannot exceed the amount allocated to the building. See

results in a violation of the minimum set-aside requirement, then no

section 42(h)(1) for details.

credit is allowable for the year.

The low-income housing credit can only be claimed for residential

Line 10. The credit for the year is figured on Form 8609-A for each

rental buildings in low-income housing projects that meet one of the

building. Attach a copy of each Form 8609-A you completed for the

minimum set-aside tests. For details, see the Instructions for Form

tax year to Form 8586. Enter on line 10 the total credit for attached

8609, Part II, line 10c.

Form(s) 8609-A for buildings placed in service after 2007.

Except for buildings financed with certain tax-exempt bonds, you

Line 13. Estates or trusts. Allocate the low-income housing credit

may not take a low-income housing credit on a building if it has not

on line 12 between the estate or trust and the beneficiaries in the

received an allocation from the housing credit agency. No allocation

same proportion as income was allocated and enter the

is needed when 50% or more of the aggregate basis of the building

beneficiaries’ share on line 13.

and the land on which the building is located is financed with

If the estate or trust is subject to the passive activity rules, include

certain tax-exempt bonds. The owner still must get a Form 8609

on line 11 any low-income housing credits attributable to buildings

from the appropriate housing credit agency (with the applicable

placed in service after 2007 from passive activities disallowed for

items completed, including an assigned BIN). “Land on which the

prior years and carried forward to this year. Complete Form 8582-

building is located” includes only land that is functionally related

CR, Passive Activity Credit Limitations, to determine the allowed

and subordinate to the qualified low-income building (see

credit that must be allocated between the estate or trust and the

Regulations sections 1.103-8(a)(3) and 1.103-8(b)(4)(iii)).

beneficiaries. For details, see the Instructions for Form 8582-CR.

Recapture of Credit

Paperwork Reduction Act Notice. We ask for the information on

There is a 15-year compliance period during which the residential

this form to carry out the Internal Revenue laws of the United

rental building must continue to meet certain requirements. If, as of

States. You are required to give us the information. We need it to

the close of any tax year in this period, there is a reduction in the

ensure that you are complying with these laws and to allow us to

qualified basis of the building from the previous year, you may have

figure and collect the right amount of tax.

to recapture a part of the credit you have taken. Similarly, you may

You are not required to provide the information requested on a

have to recapture part of the credits taken in previous years upon

form that is subject to the Paperwork Reduction Act unless the form

certain dispositions of the building or interests therein, unless you

displays a valid OMB control number. Books or records relating to a

follow the procedures to prevent recapture. See Recapture and

form or its instructions must be retained as long as their contents

building dispositions in the Instructions for Form 8609-A, Annual

may become material in the administration of any Internal Revenue

Statement for Low-Income Housing Credit, for details. If you must

law. Generally, tax returns and return information are confidential,

recapture credits, use Form 8611, Recapture of Low-Income

as required by section 6103.

Housing Credit. See section 42(j) for details.

The time needed to complete and file this form will vary

Recordkeeping

depending on individual circumstances. The estimated burden for

Keep a copy of this Form 8586 together with all Forms 8609,

individual taxpayers filing this form is approved under OMB control

Schedules A (Form 8609) (and successor Forms 8609-A), and

number 1545-0074 and is included in the estimates shown in the

Forms 8611 for 3 years after the 15-year compliance period ends.

instructions for their individual income tax return. The estimated

burden for all other taxpayers who file this form is shown below.

Specific Instructions

Recordkeeping .

. 5 hr., 44 min.

Line 2. A decrease in qualified basis will result in recapture if the

Learning about the law or the form

. 52 min.

qualified basis at the close of the tax year is less than the qualified

Preparing and sending the form to the IRS .

. 2 hr., 11 min.

basis at the close of the first year of the credit period.

If you have comments concerning the accuracy of these time

estimates or suggestions for making this form simpler, we would be

happy to hear from you. See the instructions for the tax return with

which this form is filed.

Form 8586 - Low-Income Housing Credit Page 2

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