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