Form 8693 - Low-Income Housing Credit Disposition Bond Page 2
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Form 8693 (Rev. 2-97)
Page
The bond ensures payment of the
Period of Bond
When and Where To File
recapture tax imposed under section 42(j).
Submit the original and one copy of Form
The liability stated on the bond must be for
The conditions of the bond are that the
8693 to the Internal Revenue Service Center,
the period of years remaining in the 15-year
principal (i.e., taxpayer):
Philadelphia, PA 19255, within 60 days after
compliance period of the building plus an
Does not attempt to defraud the United
the date of disposition of the building or
additional 58 months. The compliance period
States of any tax under section 42(j);
interest therein. The completed form may be
begins with the tax year the building was
submitted by either the taxpayer or the
placed in service or the succeeding tax year if
Files all returns and statements as required
surety.
the election under section 42(f)(1) is made.
by law or regulations;
When the IRS returns a copy of the
Pays all taxes including any penalties and
Recordkeeping
approved form, attach a copy of it to your
interest charges; and
income tax return for the year in which the
Keep a copy of this Form 8693 together with
Complies with all other requirements of the
disposition occurred. Write “FORM 8693
all Forms 8586, 8609, Schedule(s) A (Form
law and regulations under section 42.
ATTACHED” to the left of the entry space on
8609), and 8611 for 58 months after the
your income tax return for reporting the
15-year compliance period ends.
Qualifying Sureties
recapture of the low-income housing credit.
The company acting as surety must hold a
Who Must File
Specific Instructions
Certificate of Authority from the Department
Taxpayers who claimed a low-income
of the Treasury, Financial Management
Line 2. Building Identification Number
housing credit on a residential rental building
Service. These companies are listed in
(BIN).—This is the number assigned to the
and later (in a tax year during the 15-year
Treasury Circular 570. You may get a copy of
building by the housing credit agency on Part
compliance period) disposed of the building
this circular by writing to the Department of
I, item E, of Form 8609, Low-Income Housing
or an ownership interest in it must file this
the Treasury, Financial Management Service,
Credit Allocation Certification.
form to avoid recapture of the credit claimed.
Surety Bond Branch, 3700 East West Hwy.,
A de minimis rule may apply to certain
Hyattsville, MD 20782, or by calling (202)
Line 7b. Amount of Bond.—Use the
dispositions of interests in partnerships that
874-6850 (not a toll-free number).
worksheet below to calculate the bond
own buildings in which a credit was claimed.
amount. See Rev. Rul. 90-60 for additional
A taxpayer may not be a surety for itself,
See Rev. Rul. 90-60, 1990-2 C.B. 3, for
information on the methodology for
nor may a member of a firm or a partner in a
additional information.
determining the bond amount.
partnership be a surety for the firm or
partnership of which he or she is a member
If the amount is not an even multiple of
Partnerships
or a partner.
$100, increase the bond amount to the next
higher multiple of $100.
Section 42(j)(5) partnerships.—Any person
Surety Termination
holding a power of attorney in a section
Part III. Certificate of Corporate
42(j)(5) partnership (a partnership with 35 or
Principal.—If the principal is a corporation,
If a surety’s certificate of authority is
more partners that has not elected out of the
the authority of the person posting the bond
terminated, the surety may be relieved of
section 42(j)(5) provisions) may post bond as
must be certified by the secretary of the
liability under the bond provided it notifies the
principal on behalf of the partnership. A bond
corporation by completing Part III. Or the
principal and the IRS by the date the
posted on behalf of a partnership must be
corporation may attach copies of records that
termination announcement is published in the
posted in the partnership’s name, with the
will show the authority of the officer signing if
Federal Register. The notice must be sent by
name of the authorized representative of the
the copies are certified by the secretary to be
certified mail and must state that the principal
partnership posting the bond appearing
true copies.
has 60 days from the date the termination
immediately below the partnership’s name.
announcement is published in the Federal
Part IV. Approval by the IRS.—The IRS will
Partnerships that elected out of the section
Register to get an adequate strengthening or
notify you of the approval or rejection of the
42(j)(5) provisions or have fewer than 35
superseding bond with another surety listed
bond. If approved, the IRS will send a copy of
partners.—If partners in partnerships to which
in Treasury Circular 570. If notice is given, the
the approved Form 8693 to the principal
section 42(j)(5) does not apply want to post
principal’s rights under the bond will end 60
shown in Part I. If rejected, the owner must
bond, the partners must post bond in their
days after the date the termination
recapture the allowed low-income housing
individual capacity as principals.
announcement is published in the Federal
credit. Use Form 8611, Recapture of
Register.
Low-Income Housing Credit.
A qualified surety (or coinsuring surety)
may terminate its liability on a bond only if
the surety notifies the principal and the IRS at
Worksheet for Computing Bond Amount
least 60 days before the date the surety
wants to terminate its liability. The notice
1
Total credits taken by you in previous years and any additional credits
must state that the principal has 60 days
you anticipate claiming for any year or portion thereof preceding the
from the termination date to obtain an
$
date of disposition
adequate superseding or strengthening bond
%
2
Bond factor amount
from another qualified surety (or coinsuring
surety).
3 Percentage of taxpayer’s total interest in the qualified low-income
If the surety does not provide this notice, it
%
building disposed of
remains liable for the amount posted on the
4 Bond amount required to be posted (line 1
line 2
line 3). Enter
bond. If the surety gives notice but does not
here and on line 7b
$
meet the 60-day notification requirement or
fails to include a termination date in the
Instructions for Worksheet
Line 2. Bond Factor Amount.—Enter the
notice, the surety’s liability will terminate 60
bond factor amount corresponding to the
days after the postmark date on the notice.
Line 1.—Enter the total amount of the credits
month in the compliance period in which the
claimed on the building. See Part I of Forms
Send the IRS copy of the notice to the
disposition occurred and the first year of the
8586 you have filed. Include any additional
Internal Revenue Service Center, Philadelphia,
building’s credit period. The IRS announces
credits you anticipate claiming for any period
PA 19255.
the monthly bond factor amounts quarterly in
preceding the date of disposition. Do not
If the principal fails to post a strengthening
a revenue ruling published in the Internal
include credit amounts previously recaptured,
or superseding bond within 60 days from the
Revenue Bulletin.
credit amounts for which a bond was
date (a) the termination announcement is
Line 3.—Enter the ownership interest in the
previously posted, or credits claimed on
published in the Federal Register or (b) on
qualified low-income building that you have
additions to qualified basis as determined
which a surety’s liability on a bond
disposed of. Include ownership interests held
under section 42(f)(3).
terminates, recapture under section 42(j) is
both directly and indirectly (e.g., through a
required.
partnership).
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