Form 8586 Low-Income Housing Credit

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I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
FORM 8586, PAGE 1 of 2
MARGINS: TOP 13 mm (1⁄2 "), CENTER SIDES.
PAPER: WHITE WRITING, SUB. 20.
FLAT SIZE: 216 mm (81⁄2 ")
279 mm (11")
PERFORATE: (NONE)

PRINTS: HEAD to HEAD
INK: BLACK

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Form

8586

Action

Date

O.K. to print
Revised proofs
requested

OMB No. 1545-0984

Low-Income Housing Credit
䊳

Department of the Treasury
Internal Revenue Service (99)

䊳

2005

See instructions on back.
Attach to your tax return.

Attachment
Sequence No.

Name(s) shown on return

Part I

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Current Year Credit

If you are a—

Then enter the total of the current year credits from—

a Shareholder
b Partner

Schedule K-1 (Form 1120S), box 13, codes A and B
Schedule K-1 (Form 1065), box 15, codes A and B; or
Schedule K-1 (Form 1065-B), box 8
Schedule K-1 (Form 1041), box 13, code C

c Beneficiary

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Allowable Credit

Regular tax before credits:
Individuals. Enter the amount from Form 1040, line 44
Corporations. Enter the amount from Form 1120, Schedule J, line 3; Form 1120-A,
Part I, line 1; or the applicable line of your return
Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a
and 1b, or the amount from the applicable line of your return
Alternative minimum tax:
Individuals. Enter the amount from Form 6251, line 35
Corporations. Enter the amount from Form 4626, line 14
Estates and trusts. Enter the amount from Form 1041, Schedule I, line 56
Add lines 7 and 8
10a
Foreign tax credit
10b
Credits from Form 1040, lines 48 through 54
10c
Possessions tax credit (Form 5735, line 17 or 27)
10d
Nonconventional source fuel credit (Form 8907, line 23)
10e
Other specified credits (see instructions)





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10a
b
c
d
e
f Add lines 10a through 10e
11 Net income tax. Subtract line 10f from line 9. If zero, skip lines 12 through 15 and enter -0- on
line 16
12 Net regular tax. Subtract line 10f from line 7. If zero or less, enter -0- 12
13 Enter 25% (.25) of the excess, if any, of line 12 over $25,000 (see
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instructions)
14 Tentative minimum tax (see instructions):
● Individuals. Enter the amount from Form 6251, line 33
● Corporations. Enter the amount from Form 4626, line 12
● Estates and trusts. Enter the amount from Form 1041,
14
Schedule I, line 54
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16
17

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EIN of pass-through entity

Add lines 3 and 4. See instructions to find out if you complete lines 6 through 17 or file Form 3800
Current year credit or passive activity credit (see instructions)

Part II

36a

Identifying number

䊳
Number of Forms 8609-A attached
Has there been a decrease in the qualified basis of any buildings since the close of the preceding
tax year?
Yes
No If “Yes,” enter the building identification numbers (BINs) of the
buildings that had a decreased basis. If you need more space, attach a schedule.
(i)
(ii)
(iii)
(iv)
Current year credit from attached Form(s) 8609-A (see instructions)
Low-income housing credits from pass-through entities (if more than one entity, see instructions):

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2

Signature



Enter the greater of line 13 or line 14
Subtract line 15 from line 11. If zero or less, enter -0Credit allowed for the current year. Enter the smaller of line 6 or line 16 here and on Form
1040, line 55; Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 2; Form 1041, Schedule
G, line 2c; or the applicable line of your return. If line 16 is smaller than line 6, see instructions

For Paperwork Reduction Act Notice, see back of form.

Cat. No. 63987I

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Form

8586

(2005)

5
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8586, PAGE 2 of 2
MARGINS: TOP 13 mm (1⁄2 "), CENTER SIDES.
PRINTS: HEAD to HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216 mm (81⁄2 ")
279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Page

Form 8586 (2005)

General Instructions
Section references are to the Internal Revenue
Code unless otherwise noted.

Purpose of Form
Use Form 8586 to claim the low-income
housing credit. This general business credit is
allowed for each new qualified low-income
building placed in service after 1986; it is
taken over a 10-year credit period. The
present value of the 10 annual credit amounts
equals 70% of the building’s qualified basis
(30% for certain federally subsidized new
buildings or existing buildings).

S Corporations, Partnerships,
Estates, and Trusts
Complete Part I to figure the credit to pass
through to the shareholders, partners, or
beneficiaries. Attach Form 8586 to the
pass-through income tax return along with
Form 8609-A, Annual Statement for
Low-Income Housing Credit, for each
building. An electing large partnership treats
the part of the credit attributable to property
placed in service before 1990 as a
“rehabilitation credit” when reporting the
credit to its partners.

Qualified Low-Income Housing
Project
The low-income housing credit can only be
claimed for residential rental buildings in
low-income housing projects that meet one of
the minimum set-aside tests. For details, see
the instructions for Form 8609, Part II,
line 10c.
Except for buildings financed with certain
tax-exempt bonds, you may not take a
low-income housing credit on a building if it
has not received an allocation from the
housing credit agency. Also, the credit cannot
exceed the amount allocated to the building.
See section 42(h)(1) for details. No allocation
is needed when (a) 50% or more of the
aggregate basis of the building and the land
on which the building is located is financed
with certain tax-exempt bonds issued after
1989 for buildings placed in service after
1989 or (b) 70% or more of the aggregate
basis of the building and land is financed with
certain tax-exempt bonds issued before 1990.
“Land on which the building is located”
includes only land that is functionally related
and subordinate to the qualified low-income
building (see Regulations sections
1.103-8(a)(3) and 1.103-8(b)(4)(iii)).

Recapture of Credit
There is a 15-year compliance period during
which the residential rental building must
continue to meet certain requirements. If, as
of the close of any tax year in this period,
there is a reduction in the qualified basis of
the building from the previous year, you may
have to recapture a part of the credit you
have taken. Similarly, you may have to
recapture part of the credits taken in previous
years upon certain dispositions of the building
or interests therein. If you must recapture
credits, use Form 8611, Recapture of
Low-Income Housing Credit. See section 42(j)
for details.

Caution. If you are subject to recapture, go
to Form 8611 before computing the amount
of any carryforward of the low-income
housing credit. The recapture may reduce the
amount of any carryforward of the credit to
Form 3800, General Business Credit. See the
instructions for line 5.

Recordkeeping
Keep a copy of this Form 8586 together with
all Forms 8609, Schedules A (Form 8609)
(and successor Forms 8609-A), and Forms
8611 for 3 years after the 15-year compliance
period ends.

Specific Instructions
Unless you are claiming the credit from a
pass-through entity (such as an
S Corporation, partnership, estate, or trust),
you must have a properly signed and
completed Form 8609, and you must also
complete Form 8609-A, in order to claim the
credit. If all your credits are from
pass-through entities, skip lines 1 through 3.
Line 1. If any of the attached Forms 8609-A
are for buildings that are part of a multiple
building project (defined in instructions for
Part II of Form 8609), attach a schedule
listing for each project (a) the name and
address of the project and each building in
the project, (b) the building identification
number (BIN) of each building, (c) the
aggregate credit dollar amount for the project,
and (d) the credit allocated to each building.
Line 2. A decrease in qualified basis will
result in recapture if the qualified basis at the
close of the tax year is less than the qualified
basis at the close of the first year of the
credit period.
If the reduction in qualified basis at the
close of the tax year also results in a violation
of the minimum set-aside requirement, then
no credit is allowable for the year.
Line 3. The credit for the year is figured on
Form 8609-A for each building. Attach a copy
of each Form 8609-A you completed for the
tax year to Form 8586. Enter on line 3 the
total credit from attached Form(s) 8609-A.
For a pass-through entity with a line 3
credit attributable to more than one building,
attach a schedule to Form 8586 that shows
each shareholder’s, partner’s, or beneficiary’s
name, identifying number, and share of the
line 3 credit and the BIN for each building.
Line 4. If you have a credit from a
pass-through entity, enter the entity’s
employer identification number (EIN) and the
credit amount on line 4. If you have credits
from more than one pass-through entity,
attach a statement that shows the EIN and
credit amount for each entity. Enter the total
credit on line 4.
Line 5. The credit allowed for the current year
may be limited based on your tax liability.
Complete line 6 and Part II to figure the
allowable credit unless you must file Form
3800. You must file Form 3800 if you have (a)
more than one credit included in the general
business credit (other than a credit from Form
8844, Form 6478, or Section B of Form 8835)
or (b) a carryback or carryforward of any of
those credits. See the instructions for Form
3800 to find out which credits are included in
the general business credit.

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Line 6. The line 5 credit may be subject to
the passive activity credit limitation.
Individuals, estates, and trusts figure the limit
on Form 8582-CR, Passive Activity Credit
Limitations. Personal service and closely held
corporations figure the limit on Form 8810,
Corporate Passive Activity Loss and Credit
Limitations. If this limitation applies, enter the
allowable credit from Form 8582-CR or 8810
on line 6. If line 6 is zero, skip Part II. If you
are not subject to the passive activity
limitation, enter the line 5 amount on line 6.
Line 10e. Include on line 10e any amounts
claimed on:
● Form 8834, Qualified Electric Vehicle
Credit, line 20,
● Form 8910, Alternative Motor Vehicle
Credit, line 18, and
● Form 8911, Alternative Fuel Vehicle
Refueling Property Credit, line 19.
Line 13. See section 38(c)(5) for special rules
that apply to married couples filing separate
returns, controlled corporate groups,
regulated investment companies, real estate
investment trusts, and estates and trusts.
Line 14. Although you may not owe alternative
minimum tax (AMT), you generally must still
compute the tentative minimum tax (TMT) to
figure your credit. For a small corporation
exempt from the AMT under section 55(e),
enter zero. Otherwise, complete and attach the
applicable AMT form or schedule.
Line 17. If you cannot use all of the credit
because of the tax liability limit (line 16 is
smaller than line 6), carry the unused credit
back 1 year and then forward up to 20 years.
See the instructions for Form 3800 for details.
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: Recordkeeping,
5 hr., 44 min.; Learning about the law or the
form, 1 hr., 37 min.; Preparing the form, 3 hr.,
39 min.; Copying, assembling, and sending
the form to the IRS, 32 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. See the
instructions for the tax return with which this
form is filed.