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Guide for Completing Form 8823 - page 146 / 197

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146 / 197

Back in Compliance

Once the Available Unit Rule has been triggered, *the noncompliance can be corrected by* renting any combination of market rate units, over-income units, and out of compliance low-income units *as rent restricted units* to *income-qualified* households until the applicable fraction upon which the credit amount is based is restored. The applicable fraction can also be restored if:

  • 1.

    The tenant’s income decreases to an amount below 140 percent of the income limit in place, or

  • 2.

    The AMGI increases to an amount, such that 140 percent of the income limit is more than the tenant’s income.

The date of correction is the date the last household, which restores the applicable fraction, moves into the building or the income of an existing household falls below the current income limit.

References

  • 1.

    IRC §42(g)(2)(D)(ii).

  • 2.

    Treas. Reg. §1.42-5(c)(1)(x).

  • 3.

    IRC §42(d)(3)(B).

  • 4.

    Treas. Reg. §1.42-15.

  • 5.

    Rev. Rul. 94-57, 1994-2 C.B. 5.

  • 6.

    Rev. Rul. 2004-82, 2004-2 C.B. 350.

14- 7

Revised October 2009

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