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Guide for Completing Form 8823 - page 154 / 197





154 / 197

Chapter 17 Category 11l Low-Income Units Occupied by Nonqualified Full-Time Students


*Until further guidance is provided through administrative ruling or regulation, the IRS will evaluate an owner’s compliance with the rules for low-income unit occupied entirely by full-time students as explained here.*


This category is used to report LIHC units occupied by nonqualified full-time student households. A unit is not considered to be occupied by low-income individuals if all the occupants of such unit are *full-time* students, no one of whom is entitled to file a joint return. 1

Defining “Student”

*IRC §152(f)(2)* defines, in part, a “student” as an individual, who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins, is a full-time student at an educational organization described in IRC §170(b)(1)(A)(ii) *or is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in IR §170(b)(1)(A)(ii) or of a state or political subdivision of a state.* Treas. Reg. §1.151-3(b) further provides that the five calendar months need not be consecutive.

Units Comprised Entirely of Full-Time Students

The determination of student status as full or part-time should be based on the criteria used by the educational institution the student is attending.

An educational organization, as defined by IRC §170(b)(1)(A)(ii), is one that normally maintains a regular faculty and curriculum, and normally has an enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. The term “educational organization” includes elementary schools, junior and senior high schools, colleges, universities, and technical, trade and mechanical schools. It does not include on-the-job training courses.

Units comprised of full-time students (no one of whom is entitled to file a joint return) do not qualify as low-income units. However, there are exceptions as outlined in IRC §42(i)(3)(D). This section provides that a unit shall not fail to be treated as a low- income unit merely because it is occupied

  • 1.

    by an individual who is:

    • I.

      a student receiving assistance under Title IV of the Social Security Act,

    • II.

      *a student who was previously under the care and placement responsibility of the State agency responsible for administering a plan under part B or part E of title IV of the Social Security Act2,* or

1 2 H.R. Conf. Rep. No. 841, 99th Cong., 2d Sess. II-89 (1986), 1986-3 (Vol. 4) C.B. 89. *IRC §42(i)(3)(D)(i), as added by the Housing Assistance Tax Act of 2008. The amendment applies to determinations made after July 30, 2008.*


Revised October 2009

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