Fillable Form 8874 - New Markets Credit (Page 3 of 3) in pdf

Form 8874 (Rev. 12-2012)

Page

Specific Instructions

Exception. If a CDE fails to use substantially all of the

proceeds of a qualified equity investment to make qualified

low-income community investments, the CDE may avoid

Line 1

recapture of the credit if it corrects the failure within 6 months

Enter the information requested for each qualified equity

after the date it becomes aware (or reasonably should have

investment held directly by you on a credit allowance date in

become aware) of the failure. Only one correction is permitted

the current tax year. In column (e), enter the credit rate. For the

for each qualified equity investment during the 7-year credit

first, second, or third year of the 7-year credit period, enter “5.”

period.

For any later year, enter “6.”

See section 45D(g) and Regulations section 1.45D-1(e) for

If you need more space, attach a statement showing all the

details, including how to figure the credit recapture amount.

information requested for each qualified equity investment. On

Generally, include the credit recapture amount on the line for

the last row on line 1, write “See attached” in column (a) and

recapture taxes on your income tax return for the year in which

enter the total of the credit amounts from the attached

the recapture event occurs. For example, the credit recapture

statement in column (f).

amount on a 2012 Form 1040 is reported on line 60 (Other

taxes) and the amount on a 2012 Form 1120 is reported on

Paperwork Reduction Act Notice. We ask for the information

Schedule J, line 9f (Other taxes).

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

You are not subject to recapture of the credit solely because

United States. You are required to give us the information. We

you sell or otherwise dispose of your investment. However, you

need it to ensure that you are complying with these laws and to

cannot claim the credit for any credit allowance date after the

allow us to figure and collect the right amount of tax.

disposition.

You are not required to provide the information requested on

Qualified CDEs must provide taxpayers holding a

a form that is subject to the Paperwork Reduction Act unless

qualified equity investment with a completed Form

the form displays a valid OMB control number. Books or

TIP

8874-B when a recapture event occurs.

records relating to a form or its instructions must be retained as

long as their contents may become material in the

administration of any Internal Revenue law. Generally, returns

Basis Reduction

and return information are confidential, as required by section

You must reduce your basis in your qualified equity investment

6103.

by the amount of the new markets credits allowed (even if part

The time needed to complete and file this form will vary

or all of the credit is not allowed for the current year and is

depending on individual circumstances. The estimated burden

carried forward). However, do not reduce your basis for

for individual taxpayers filing this form is approved under OMB

purposes of figuring the exclusion of gain for:

control number 1545-0074 and is included in the estimates

• Qualified small business stock under section 1202,

shown in the instructions for their individual income tax return.

The estimated burden for all other taxpayers who file this form

• Certain DC zone assets under section 1400B, or

is shown below.

• Certain qualified community assets under section 1400F.

Recordkeeping

. 6 hr., 13 min.

Additional Information

Learning about the

For more details, see section 45D, Regulations section 1.45D-1,

law or the form

. 1 hr., 12 min.

Preparing and sending

the form to the IRS

. 1 hr., 20 min.

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 of the tax return

with which this form is filed.

Form 8874 - New Markets Credit Page 3

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