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

Form 8586 (Rev. 8-2014)

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. The IRS has created a page on IRS.gov for

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

information about Form 8586 and its instructions, at

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

form8586. Information about any future developments affecting

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

Form 8586 (such as legislation enacted after we release it) will be

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

posted on that page.

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

Purpose of Form

same proportion as income was allocated and enter the

beneficiaries’ share on line 6.

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

business credit is allowed for each new qualified low-income

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

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

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

10-year credit period.

placed in service before 2008 from passive activities disallowed for

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

The portion of the low-income housing credit attributable to

CR, Passive Activity Credit Limitations, to determine the allowed

buildings placed in service after 2007 is not limited by tentative

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

minimum tax.

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

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

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

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

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

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

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

can report this credit directly on Form 3800.

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

Qualified Low-Income Housing Project

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

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

credit is allowable for the year.

section 42(h)(1) for details.

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

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

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

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

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

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

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

8609, Part II, line 10c.

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

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

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

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

same proportion as income was allocated and enter the

received an allocation from the housing credit agency. No allocation

beneficiaries’ share on line 13.

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

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

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

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

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

placed in service after 2007 from passive activities disallowed for

from the appropriate housing credit agency (with the applicable

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

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

CR, Passive Activity Credit Limitations, to determine the allowed

building is located” includes only land that is functionally related

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

and subordinate to the qualified low-income building (see

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

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

Recapture of Credit

Paperwork Reduction Act Notice. We ask for the information on

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

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

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

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

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

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

figure and collect the right amount of tax.

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

You are not required to provide the information requested on a

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

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

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

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

certain dispositions of the building or interests therein, unless you

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

follow the procedures to prevent recapture. See Recapture and

may become material in the administration of any Internal Revenue

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

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

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

as required by section 6103.

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

The time needed to complete and file this form will vary

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

depending on individual circumstances. The estimated burden for

Recordkeeping

individual taxpayers filing this form is approved under OMB control

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

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

instructions for their individual income tax return. The estimated

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

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

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

Recordkeeping .

. 4 hr., 18 min.

Specific Instructions

Learning about the law or the form

. 1 hr., 37 min.

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

Preparing and sending the form to the IRS .

.4 hr., 9 min.

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

If you have comments concerning the accuracy of these time

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

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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