Fill - Free fillable Recapture of Low-Income Housing Credit Form 8611 December 2013 PDF form

Form 8611

(Rev. December 2013)

Department of the Treasury

Internal Revenue Service

Recapture of Low-Income Housing Credit

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Attach to your return.

Note: Complete a separate Form 8611 for each building to which recapture applies.

OMB No. 1545-1035

Attachment

Sequence No.

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Information about Form 8611 and its instructions is at www.irs.gov/form8611.

A Name(s) shown on return B Identifying number

C Address of building (as shown on Form 8609) D Building identification

number (BIN)

E Date placed in service (from

Form 8609)

F If building is financed in whole or part with tax-exempt bonds, see instructions and furnish:

(1) Issuer’s name

(2) Date of issue

(3) Name of issue (4) CUSIP number

Note: Skip lines 1–7 and go to line 8 if recapture is passed through from a flow-through entity (partnership, S corporation, estate, or

trust). However, section 42(j)(5) partnerships must complete lines 1 through 7.

1 Enter total credits reported on Form 8586 in prior years for this building . . . . . . . .

2 Credits included on line 1 attributable to additions to qualified basis (see instructions) . . . 2

3 Credits subject to recapture. Subtract line 2 from line 1 . . . . . . . . . . . . . . 3

4 Credit recapture percentage (see instructions) . . . . . . . . . . . . . . . . . 4 .

5 Accelerated portion of credit. Multiply line 3 by line 4 . . . . . . . . . . . . . .

6 Percentage decrease in qualified basis. Express as a decimal amount carried out to at least 3

places (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .

Amount of accelerated portion recaptured (see instructions if prior recapture on building).

Multiply line 5 by line 6. Section 42(j)(5) partnerships, go to line 16. All other flow-through

entities (except electing large partnerships), enter the result here and enter each recipient’s

share in the appropriate box of Schedule K-1. Generally, flow-through entities other than

electing large partnerships will stop here. (Note: An estate or trust enters on line 8 only its share

of recapture amount attributable to the credit amount reported on its Form 8586.) . . . . .

8 Enter recapture amount from flow-through entity (see Note above) . . . . . . . . . . 8

9 Enter the unused portion of the accelerated amount from line 7 (see instructions) . . . . . 9

10 Net recapture. Subtract line 9 from line 7 or line 8. If less than zero, enter -0- . . . . . . 10

11 Enter interest on the line 10 recapture amount (see instructions) . . . . . . . . . . . 11

12 Total amount subject to recapture. Add lines 10 and 11 . . . . . . . . . . . . . 12

13 Unused credits attributable to this building reduced by the accelerated portion included on line 9

(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . .

Recapture tax. Subtract line 13 from line 12. If zero or less, enter -0-. Enter the result here and

on the appropriate line of your tax return (see instructions). If more than one Form 8611 is filed,

add the line 14 amounts from all forms and enter the total on the appropriate line of your return.

Electing large partnerships, see instructions . . . . . . . . . . . . . . . . .

15 Carryforward of the low-income housing credit attributable to this building. Subtract line 12

from line 13. If zero or less, enter -0- (see instructions) . . . . . . . . . . . . . .

Only Section 42(j)(5) partnerships need to complete lines 16 and 17.

16 Enter interest on the line 7 recapture amount (see instructions) . . . . . . . . . . . 16

17 Total recapture. Add lines 7 and 16 (see instructions) . . . . . . . . . . . . . .

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 63983Q

Form 8611 (Rev. 12-2013)

dd mmm yyyy

Form 8611 (Rev. 12-2013)

Page 2

General Instructions

Section references are to the Internal

Revenue Code.

Future Developments

For the latest information about

developments related to Form 8611 and

its instructions, such as legislation

enacted after they were published, go to

www.irs.gov/form8611.

Purpose of Form

Use this form if you must recapture part

of the low-income housing credit you

claimed in previous years because the

qualified basis decreased from one year

to the next or you disposed of a building,

or your interest therein, and you did not

follow the procedures that would have

prevented recapture of the credit.

Decrease in qualified basis. The

decrease may result from a change in

the eligible basis or the applicable

fraction. For example, a decrease in

qualified basis may exist when units are

not occupied by income-qualified

tenants under section 42(i)(3)(A)(ii), units

are not rent restricted under section

42(g)(2), units are not suitable for

occupancy as described in section 42(i)

(3)(B)(ii), or the project no longer meets

the minimum set aside requirements of

section 42(g)(1).

Building dispositions. Disposing of a

building or an interest therein will

generate a credit recapture, unless it is

reasonably expected that the building

will continue to be operated as a

qualified low-income building for the

remainder of the building’s compliance

period.

See section 42(j) for more information.

Note. If the decrease in qualified basis is

because of a change in the amount for

which you are financially at risk on the

building, then you must first recalculate

the amount of credit taken in prior years

under section 42(k) before you calculate

the recapture amount on this form.

To complete this form you will need

copies of the following forms that you

have filed:

• Form 8586, Low-Income Housing

Credit (and Form 3800, General

Business Credit, if applicable);

• Form 8609, Low-Income Housing

Credit Allocation and Certification (or

predecessor, Form 8609, Low-Income

Housing Credit Allocation Certification);

• Form 8609-A, Annual Statement for

Low-Income Housing Credit (or

predecessor, Schedule A (Form 8609),

Annual Statement); and

• Form 8611.

Note. Flow-through entities must give

partners, shareholders, and beneficiaries

the information that is reported in items

C, D, E, and F of Form 8611.

Recapture does not apply if:

• You disposed of the building or an

ownership interest in it and you satisfy

the requirements for avoiding recapture

as outlined earlier under Building

dispositions;

• You disposed of not more than

/3% in the aggregate of your

ownership interest in a building you held

through a partnership, or you disposed

of an ownership interest in a building you

held through a partnership to which

section 42(j)(5) applies or through an

electing large partnership;

• The decrease in qualified basis does

not exceed the additions to qualified

basis for which credits were allowable in

years after the year the building was

placed in service; or

• The qualified basis is reduced because

of a casualty loss, provided the property

is restored or replaced within a

reasonable period.

Recordkeeping

In order to verify changes in qualified

basis from year to year, keep a copy of

all Forms 8586, 8609, 8609-A (or

predecessor, Schedule A (Form 8609)),

8611, and 8693 for 3 years after the

15-year compliance period ends.

Specific Instructions

Note. If recapture is passed through

from a flow-through entity (partnership,

S corporation, estate, or trust), skip lines

1–7 and go to line 8. However, section

42(j)(5) partnerships must complete lines

1 through 7.

Item F. If the building is financed with

tax-exempt bonds, furnish the following

information: (1) name of the entity that

issued the bond (not the name of the

entity receiving the benefit of the

financing); (2) date of issue, generally the

first date there is a physical exchange of

the bonds for the purchase price;

(3) name of the issue, or if not named,

other identification of the issue; and

(4) CUSIP number of the bond with the

latest maturity date. If the issue does not

have a CUSIP number, enter “None.”

Line 1. Enter the total credits claimed on

the building for all prior years from all

Forms 8586 (before reduction due to the

tax liability limit) you have filed. Prior to

the December 2006 revision of Form

8586, the credits (before reduction due

to the tax liability limit) were reported in

Part I. Do not include credits taken by a

previous owner.

Line 2 Worksheet (*Line reference is to Form 8609-A (or predecessor, Schedule A (Form 8609)).)

a Enter the amount from line 10* . . . . . . . . . . . . . . . . . . . . . . . . . a

b Multiply a by 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b

c Enter the amount from line 11* . . . . . . . . . . . . . . . . . . . . . . . . . c

d Subtract c from b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d

e Enter decimal amount figured in step 1 of the instructions for line 14*. If line 14* does not apply to you,

enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f Multiply d by e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . f

g Subtract f from d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . g

h Divide line 16* by line 15*. Enter the result here . . . . . . . . . . . . . . . . . . . h

i Multiply g by h. Enter this amount on line 2. (If more than one worksheet is completed, add the amounts

on i from all worksheets and enter the total on line 2.) . . . . . . . . . . . . . . . . .

Form 8611 (Rev. 12-2013)

Page 3

Line 2. Determine the amount to enter

on this line by completing a separate

Line 2 Worksheet for each prior year for

which line 7 of Form 8609-A (or

predecessor, Schedule A (Form 8609))

was completed.

Line 4. Enter the credit recapture

percentage, expressed as a decimal

carried to at least 3 places, from the

table below:

IF the recapture

event occurs

in . . .

THEN

enter on

line 4 . . .

Years 2 through 11 . . . . . .333

Year 12 . . . . . . . . . .267

Year 13 . . . . . . . . . .200

Year 14 . . . . . . . . . .133

Year 15 . . . . . . . . . .067

Line 6. Enter the percentage decrease in

qualified basis during the current year.

For this purpose, figure qualified basis

without regard to any additions to

qualified basis after the first year of the

credit period. Compare any decrease in

qualified basis first to additions to

qualified basis. Recapture applies only if

the decrease in qualified basis exceeds

additions to qualified basis after the first

year of the credit period.

If you disposed of the building or an

ownership interest in it and did not

satisfy the requirements for avoiding

recapture as outlined earlier under

Building dispositions, you must

recapture all of the accelerated portion

shown on line 5. Enter 1.000 on line 6.

Note. If the decrease causes the

qualified basis to fall below the minimum

set-aside requirements of section 42(g)

(1) (the 20-50 test or the 40-60 test), then

100% of the amount shown on line 5

must be recaptured. Enter 1.000 on line

6. If you elected the 40-60 test for this

building and the decrease causes you to

fall below 40%, you cannot switch to the

20-50 test to meet the set-aside

requirements. You must recapture the

entire amount shown on line 5.

Line 7. If there was a prior recapture of

accelerated credits on the building, do

not recapture that amount again as the

result of the current reduction in qualified

basis. The example below demonstrates

how to incorporate into the current (Year

4) recapture the first year (Year 1)

accelerated portion as a result of a prior

year (Year 2) recapture event.

Line 9. Figure the unused portion of the

accelerated amount on line 7 by:

Step 1. Totaling the credits

attributable to the building that you

could not use in prior years.*

Step 2. Reducing the result of step 1

by any unused credits attributable to

additions to qualified basis.

Step 3. Multiplying the result of step 2

by the decimal amount on line 4.

Step 4. Multiplying the result of step 3

by the decimal amount on line 6.

Step 5. Enter the result of step 4 on

line 9.

*Generally, this is the amount of credit reported on

line 1 of this Form 8611 reduced by the total low-

income housing credits allowed on Form 8586 or

Form 3800 for each year.

Special rule for electing large

partnerships. Enter zero on line 9. An

electing large partnership (defined in

section 775) is treated as having fully

used all prior year credits.

Line 11. Figure the interest separately

for each prior tax year for which a credit

is being recaptured. Interest must be

figured at the overpayment rate

determined under section 6621(a)(1) and

compounded on a daily basis from the

due date (not including extensions) of

the return for the prior year until the

earlier of (a) the due date (not including

extensions) of the return for the

recapture year, or (b) the date the return

for the recapture year is filed and any

income tax due for that year has been

fully paid.

Tables of interest factors to figure daily

compound interest were published in

Rev. Proc. 95-17, 1995-1 C.B. 556. The

interest rate in effect through December

31, 2013, is shown in Rev. Rul. 2013-16,

2013-40 I.R.B. 275. For periods after

December 31, 2013, use the

overpayment rate under section 6621(a)

(1) in the revenue rulings published

quarterly in the Internal Revenue Bulletin.

Note. If the line 8 recapture amount is

from a section 42(j)(5) partnership, the

partnership will figure the interest and

include it in the recapture amount

reported to you. Enter “-0-” on line 11

and write “Section 42(j)(5)” to the left of

the entry space for line 11.

Line 13. Subtract the amount on line 9

from the total of all prior year unused

credits attributable to the building (Step

1 of the line 9 instruction above). Enter

the result on line 13.

Line 14. For information on how to

report the recapture tax on Form 1040,

see the instructions for line 60 (other

taxes) in the Instructions for Form 1040.

Form 1120 filers report the recapture tax

on Form 1120, Schedule J, line 9b.

Special rule for electing large

partnerships. Subtract the credit shown

on Form 8586 from the total of the line

14 amounts from all Forms 8611. Enter

the result (but not less than zero) on

Form 1065-B, Part I, line 26.

Note. You must also reduce the current

year low-income housing credit, before

entering it on Schedules K and K-1, by

the amount of the reduction to the total

of the recapture amounts.

Line 15. Carry forward the low-income

housing credit attributable to this

building to the next tax year. See the

Instructions for Form 3800 for details on

how to report the carryforward of unused

credits.

Line 7— Example. $2,700 of accelerated portion of low-income housing credit spread over a 10-year period and not falling below

the minimum set-asides for the building. Also, there was a 20% reduction in qualified basis in Year 2 and 30% in Year 4.

Year 1 Year 2 Year 3 Year 4*

Low-income housing

credit

$270 $216 ($270 × .8 (20%

reduction in qualified

basis))

$270 $189 ($270 × .7 (30%

reduction in qualified

basis))

Recapture of Year 1

low-income housing

credit

$18 ($270 × .333 × .2

(20% reduction in

qualified basis))

$9 ($27 ($270 × .333 ×

.3 (30% reduction in

qualified basis) minus

$18 Year 2 recapture))

* You will have to complete the rest of the form to figure the recapture as the result of the current year reduction in basis as it affects the Year 2 and Year 3 credit.

Form 8611 (Rev. 12-2013)

Page 4

Lines 16 and 17. Only section 42(j)(5)

partnerships complete these lines. This

is a partnership (other than an electing

large partnership) that has at least 35

partners, unless the partnership elects

(or has previously elected) not to be

treated as a section 42(j)(5) partnership.

For purposes of this definition, an

individual and his or her spouse (and

their estates) are treated as one partner.

For purposes of determining the credit

recapture amount, a section 42(j)(5)

partnership is treated as the taxpayer to

which the low-income housing credit

was allowed and as if the amount of

credit allowed was the entire amount

allowable under section 42(a).

See the instructions for line 11 to

figure the interest on line 16. The

partnership must attach Form 8611 to its

Form 1065 and allocate this amount to

each partner on Schedule K-1 (Form

1065) in the same manner as the

partnership’s taxable income is allocated

to each partner.

Paperwork Reduction Act Notice. We

ask for the information on this form to

carry out the Internal Revenue laws of

the United States. You are required to

give us the information. We need it to

ensure that you are complying with these

laws and to allow us to figure and collect

the right amount of tax.

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB

control number. Books or records

relating to a form or its instructions must

be retained as long as their contents

may become material in the

administration of any Internal Revenue

law. Generally, tax returns and return

information are confidential, as required

by section 6103.

The time needed to complete and file

this form will vary depending on

individual circumstances. The estimated

burden for individual taxpayers filing this

form is approved under OMB control

number 1545-0074 and is included in the

estimates shown in the instructions for

their individual income tax return. The

estimated burden for all other taxpayers

who file this form is shown below.

Recordkeeping . . . . 8 hr., 21 min.

Learning about the

law or the form . . . . . . . 1 hr.

Preparing and sending

the form to the IRS . . 1 hr., 10 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form

simpler, we would be happy to hear from

you. You can write to the IRS at the

address listed in the instructions for the

tax return with which this form is filed.

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