Fillable Form N-587 - Low-Income Housing Credit Disposition Bond (Page 2 of 2) in pdf

PAGE 2

FORM N-587

(REv. 2009)

Who Must File

When the Department of Taxation returns

874-6850 (not a toll-free number).

The

a copy of the approved form, attach a copy

circular is also available on the Internet at

Taxpayers who claimed a low-income

of it to your income tax return for the year in

housing credit on a residential rental building

which the disposition occurred.

and later (in a tax year during the 15-year

A taxpayer may not be a surety for itself,

Specific Instructions

compliance period) disposed of the building

nor may a member of a firm or a partner

or an ownership interest in it before August

line 2. Building Identification Number

in a partnership be a surety for the firm or

1, 2008 must file this form to avoid recapture

partnership of which he or she is a member

(BIN). –– This is the number assigned to

or a partner.

of the credit claimed. A de minimis rule may

the building by the housing credit agency

apply to certain dispositions of interest in

on Part I, item E of federal Form 8609,

Surety Termination

partnerships that own buildings in which a

Low-Income Housing Credit Allocation

If a surety’s certificate of authority is

credit was claimed. See Rev. Rul. 90-60,

Certification.

terminated, the surety may be relieved of

1990-2 C.B. 3, for additional information.

line 7b. Amount of Bond. –– Use the

liability under the bond provided it notifies

Partnerships

worksheet below to calculate the bond

the principal and the Hawaii Department

amount. See Rev. Rul. 90-60 for additional

Section 42(j)(5) partnerships. –– Any

of Taxation by the date the termination

information

the

methodology

for

person holding a power of attorney in a section

announcement is published in the Federal

determining the bond amount.

42(j)(5) partnership (a partnership with 35 or

The notice must be sent by

more partners that has not elected out of the

If the amount is not an even multiple of

certified mail and must state that the

section 42(j)(5) provisions) may post bond

$100, increase the bond amount to the next

principal has 60 days from the date the

as principal on behalf of the partnership. A

higher multiple of $100.

termination announcement is published in

bond posted on behalf of a partnership must

the Federal Register to get an adequate

Part III. Certificate of Corporate Principal.

be posted in the partnership’s name, with

strengthening or superseding bond with

the name of the authorized representative of

–– If the principal is a corporation, the

another surety listed in Treasury circular

the partnership posting the bond appearing

authority of the person posting the bond

immediately below the partnership’s name.

570. If notice is given, the principal’s rights

must be certified by the secretary of the

under the bond will end 60 days after the

corporation by completing Part III. Or the

Partnerships that elected out of the

date the termination announcement is

section 42(j)(5) provisions or have fewer than

corporation may attach copies of records

published in the Federal Register.

35 partners. –– If partners in partnerships to

that will show the authority of the officer

which section 42(j)(5) does not apply want

signing if the copies are certified by the

A qualified surety (or coinsuring surety)

to post bond, the partners must post bond in

secretary to be true copies.

may terminate its liability on a bond only if the

their individual capacity as principals.

surety notifies the principal and the Hawaii

Part Iv. Approval by the Hawaii Department

Department of Taxation at least 60 days

When and Where to File

of Taxation. –– The Department of Taxation

before the date the surety wants to terminate

will notify you of the approval or rejection of

Submit the original and one copy of Form

its liability. The notice must state that the

the bond. If approved, the Department will

N-587 to the Hawaii Department of Taxation

principal has 60 days from the termination

send a copy of the approved Form N-587

date to obtain an adequate superseding or

at P.O. Box 259, Honolulu, HI 96809-0259,

strengthening bond from another qualified

to the principal shown in Part I. If rejected,

within 60 days after the date the termination

surety (or coinsuring surety).

the owner must recapture the allowed low-

announcement is published in the Federal

income housing credit using Part III of Form

The completed form may be

If the surety does not provide this notice,

N-586.

it remains liable for the amount posted on

submitted by either the taxpayer or the

the bond. If the surety gives notice but does

surety. When the IRS returns a copy of the

not meet the 60-day notification requirement

approved Form 8693, submit a copy to the

or fails to include a termination date in the

Hawaii Department of Taxation at the above

notice, the surety’s liability will terminate 60

address.

days after the postmark date on the notice.

Send the State of Hawaii copy of the

notice to the Hawaii Department of Taxation

Worksheet for Computing Bond Amount

at P.O. Box 259, Honolulu, HI 96809-0259.

If the principal fails to post a strengthening

Total Hawaii credits taken by you in previous years and any additional

or superseding bond within 60 days from the

Hawaii credits you anticipate claiming for any year or portion thereof

date (a) the termination announcement is

preceding the date of disposition. ............................................................ $

published in the Federal Register or (b) on

which a surety’s liability on a bond terminates,

Bond factor amount. ...............................................................................

recapture under section 42(j) is required.

Line 1 multiplied by line 2. ....................................................................... $

Period of Bond

Percentage of taxpayer’s total interest in the qualified low-income

building disposed of .................................................................................

The liability stated on the bond must be for

the period of years remaining in the 15-

Bond amount required to be posted (line 3 X line 4). Enter

year compliance period of the building plus

here and on line 7b .................................................................................. $

an additional 58 months. The compliance

line 2. Bond Factor Amount. –– Enter the

Instructions for Worksheet

period begins with the tax year the building

bond factor amount corresponding to the month

was placed in service or the succeeding tax

line 1. –– Enter the total amount of the credits

in the compliance period in which the disposition

claimed on the building. See Part II of Forms

year if the election under section 42(f)(1) is

occurred and the first year of the building’s credit

N-586 you have filed. Include any additional credits

period. The IRS announces the monthly bond

made.

you anticipate claiming for any period preceding the

factor amounts quarterly in a revenue ruling

date of disposition. Do not include credit amounts

Recordkeeping

published in the Internal Revenue Bulletin.

previously recaptured, credit amounts for which a

line 4. –– Enter the ownership interest in

Keep a copy of all forms relating to the Low-

bond was previously posted, or credits claimed on

the qualified low-income building that you have

additions to qualified basis as determined under

Income Housing Credit for 58 months after

disposed of. Include ownership interests held both

section 42(f)(3).

the 15-year compliance period ends.

directly and indirectly (e.g., through a partnership).

FORM N-587

Form N-587 - Low-Income Housing Credit Disposition Bond Page 2

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