8815 Exclusion of Interest From Series EE and I U.S. Savings

SCHEDULE A
(Form 8609)

OMB No. 1545-0988

Annual Statement

(Rev. November 2003)
Department of the Treasury
Internal Revenue Service

A Building owner’s name

B Identifying number

E
F
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C Building identification number

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Attachment
Sequence No.

Attach to Form 8609 and file with owner’s Federal income tax return.

Do you have in your records the original Form 8609 issued by the housing credit agency (or a copy thereof) for the above
building?
Yes
No. If “No,” see instructions.
Did the above building qualify as a part of a qualified low-income housing project and meet the requirements of section 42
as of the end of your tax year?
Yes
No. If “No,” see instructions and stop here.
Was there a decrease in the qualified basis of the above building for this tax year?
Yes
No. If “Yes,” see
instructions. If “No” and the entire credit has been claimed in prior tax years, stop here.
1
Eligible basis of building
Low-income portion (smaller of unit fraction or floor-space fraction) (if first year of the credit
period, see instructions)
Qualified basis of low-income building. Multiply line 1 by line 2 (see instructions for exceptions)
Part-year adjustment for disposition or acquisition during the tax year
Credit percentage
Multiply line 3 or line 4 by the percentage on line 5
Additions to qualified basis, if any
Part-year adjustment for disposition or acquisition during the tax year
Credit percentage. Enter one-third of the percentage on line 5
Multiply line 7 or line 8 by the percentage on line 9
Section 42(f)(3)(B) modification
Add lines 10 and 11
Credit for building before line 14 reduction. Subtract line 12 from line 6
Disallowed credit due to Federal grants (see instructions)
Credit allowed for building for tax year. Subtract line 14 from line 13, but do not enter more than
the amount shown on Form 8609, Part I, line 1b
Taxpayer’s proportionate share of credit for the year (see instructions)
Adjustments for deferred first-year credit (see instructions)
Taxpayer’s credit. Combine lines 16 and 17. Enter here and in Part I of Form 8586

General Instructions

Recapture of Credit

Section references are to the Internal
Revenue Code unless otherwise noted.
Note: Some of the line numbers on the
November 2003, December 1988, and
March 1991 revisions of Form 8609 differ
from other revisions. In these cases, the
line references are shown in parentheses in
these instructions.

If the qualified basis of the building has
decreased from the qualified basis at the
close of the previous tax year, you may
have to recapture parts of the credits
allowed in previous years. See Form 8611,
Recapture of Low-Income Housing Credit.

Purpose of Schedule
Schedule A (Form 8609) must be filed by
the building owner each year of the
15-year compliance period.
Note: Any building owner claiming credit
without receiving a Part I of Form 8609
that is completed, signed, and dated by an
authorized official of the housing credit
agency may have all credits disallowed.
For a building receiving separate
allocations for the existing building and for
rehabilitation expenditures, file a separate
Schedule A for each credit claimed.
If the owner is a partnership, S corporation,
estate, or trust (pass-through entity), the
entity will complete and attach Form 8609
and Schedule A to its tax return. If you are a
partner, shareholder, or beneficiary in the
pass-through entity that owns the building,
file only Form 8586, Low-Income Housing
Credit, to claim the credit using the
information that the entity furnishes you on
Schedule K-1.

Specific Instructions
Item B. If you are an individual, enter your
social security number. All others, enter your
employer identification number.
Item C. Enter the building identification
number (BIN) from Part I, item E, of
Form 8609.
Item D. You must have an original, signed
Form 8609 (or copy thereof) issued by a
housing credit agency assigning a BIN for
the building in order to claim the credit,
even if no allocation is required (in the
case of a building financed with
tax-exempt bonds). If filing electronically,
you must check “Yes” to certify that you
have the required Form 8609 in your
records. If filing on paper and attaching a
copy of the required Form 8609, please
also answer “Yes.”
Item E. If “No,” stop here and see Form
8611 to find out if you have to recapture
part of the credit allowed in prior years.
Item F. If “Yes,” see the instructions for
line 2 to figure the reduced qualified basis.
Also, see Form 8611 to find out if you have

For Paperwork Reduction Act Notice, see instructions for Form 8609.

Cat No. 10614Q

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to recapture part of the credit allowed in
prior years.
If “No” and the entire credit has been
claimed in prior tax years (generally this
can occur after the 11th year for which the
credit has been claimed for the building),
do not complete lines 1 through 18.
Line 1. Generally, the eligible basis of a
building for its entire 15-year compliance
period is the amount of eligible basis
entered on Form 8609, line 7b (Part II, line
1b, on the 1988 and 1991 revisions); line 7
on the 2003 revision.
Basis increases for buildings in certain
high-cost areas. In order to increase the
allocated credit for buildings in certain
high-cost areas, the housing credit agency
may increase the eligible basis of buildings
located in these areas (after adjustments, if
any, for Federal subsidies and grants). The
agency may make this increase under the
high-cost-area provisions of section
42(d)(5)(C).
The agency shows the increased
percentage of the eligible basis in Part I,
line 3b, of Form 8609. The eligible basis
entered on Form 8609 should reflect the
percentage increase.
If the agency used an earlier revision of
Form 8609 that did not have line 3b in Part
I to issue a 1990 credit allocation to which
the high-cost-area provisions were applied,
it should have notified you of the Part I
percentage increase in a separate
statement. Based on this statement,
Schedule A (Form 8609) (Rev. 11-2003)

Schedule A (Form 8609) (Rev. 11-2003)

increase the eligible basis of the building
reported in Part II of the Form 8609 you
file.
Note: This increase cannot cause the
credit on line 15 of Schedule A to exceed
the credit amount allocated on line 1b,
Part I, of Form 8609.
Basis reductions. The amount of eligible
basis entered on Form 8609 does not
include the cost of land, the amount of any
Federal grant received for the building
during the first year of the credit period, or
any portion of a building’s adjusted basis
for which an election was made prior to
November 5, 1990, under section 167(k).
Do not reduce the eligible basis on line 1
of Schedule A by the amounts of any
Federal grants received after the first year
of the credit period. The calculation for line
14 of Schedule A will reduce the credit by
the amount of any Federal grants received
during the compliance period that did not
reduce the eligible basis during the first
year of the credit period.
For more details on determining eligible
basis, see the instructions for Form 8609,
line 7b (Part II, line 1b, on the 1988 and
1991 revisions; line 7 on the 2003 revision).
Line 2. Only the portion of the basis on
line 1 attributable to the low-income rental
units in the building at the close of the tax
year qualifies for the credit. This is the
smaller of (a) the fractional amount of
low-income units to all residential rental
units (the “unit fraction”) or (b) the
fractional amount of floor space of the
low-income units to the floor space of all
residential rental units (the “floor space
fraction”). This fraction must be shown on
line 2 as a decimal carried out to at least
four places (e.g., 50⁄100 = .5000).
Low-income units are units occupied by
qualifying tenants, while residential rental
units are all units, whether or not occupied.
Generally, a unit is not treated as a lowincome unit unless it is suitable for
occupancy and is used other than on a
transient basis. Section 42(i)(3) provides for
certain exceptions (e.g., units that provide
transitional housing for the homeless may
qualify as low-income units). See section
42(i)(3) for more details.
If you dispose of the building, or your
entire interest in the building, before the
close of the tax year, the low-income
portion must be determined on the date
you disposed of the building. If you
dispose of less than your entire interest in
the building, the low-income portion must
be determined at the close of the tax year.
First-year modified percentage. For the
first year of the credit period, you must use
a modified percentage on line 2 to reflect
the average portion of a 12-month period
that the units in a building were occupied
by low-income individuals. Find the
low-income portion as of the end of each
full month that the building was in service
during the year. Add these percentages
together and divide by 12. Enter the result
on line 2. For example, if a building was in
service for the last 3 full months of your
tax year, and was half occupied by
low-income tenants as of the end of each
of those 3 months, then assuming the
smaller fractional amount was the unit

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fraction, you would enter .1250 on line 2
(i.e., [.5 .5  .5]  12 = .1250).
This first year adjustment does not affect
the amount of qualified basis on which the
credit is claimed in the next 9 tax years. In
general, the credit is claimed in those
years by reference to the qualified basis at
the close of each tax year.
Because the first year credit is not
determined solely by reference to the
qualified basis at the close of the year, any
reduction in credit resulting from the
application of the first year adjustment may
be claimed in the 11th year. See the
instructions for line 17 on page 4.
Line 3. Generally, multiply line 1 by line 2
to figure the portion of the eligible basis of
the building attributable to the low-income
residential rental units.
Imputed qualified basis of zero. However,
the qualified basis of the building (line 3) is
zero if any of the following conditions
apply.
1. The minimum set-aside requirement
elected for the project on Form 8609, line
10c (Part II, line 5c, on the earlier
revisions), is not met.
2. The deep-rent-skewed test (15-40
Test) elected for the project on Form 8609,
line 10d (Part II, line 5c, on the 1988
revision; Part II, line 5d, on the 1991
revision), is violated. The 15-40 Test is not
an additional test for satisfying the
minimum set-aside requirements of section
42(g). The 15-40 Test is an election that
relates to the determination of a
low-income tenant’s income. If this test is
elected, at least 15% of all low-income
units in the project must be occupied at all
times during the compliance period by
tenants whose income is 40% or less of
the area median gross income.
3. You disposed of the building or your
entire interest therein during the tax year. If
you did not post a bond or pledge
securities under section 42(j)(6), in addition
to using an imputed basis of zero on line
3, you may have to recapture a portion of
credits previously taken. File Form 8611 to
figure and report the recapture amount.
This paragraph affects only those
taxpayers who dispose of the building or
their entire interest therein. Those acquiring
the building (or any interest therein) are not
affected and, if the minimum set-aside
requirements are otherwise satisfied, they
may take a credit for the fraction of the
year the building is owned by them,
regardless of whether or not the seller
posted a bond or pledged securities.
4. This is the 12th or later year of the
compliance period, and the entire credit
has been claimed in prior years.
Note: If the qualified basis of the building
is zero, or if the building has an imputed
qualified basis of zero, you may not claim a
credit for the building for the tax year. You
must enter zero on lines 3 and 16, and skip
lines 4 through 15, 17, and 18.
At-risk limitation for individuals and
closely held corporations. The basis of
property may be limited if you borrowed
against the property and are protected
against loss, or if you borrowed money
from a person who has other than a

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creditor interest in the property. See
section 42(k).
Line 4. If you disposed of a building or
your entire interest therein during the tax
year and you posted a bond or pledged
securities under section 42(j)(6), you may
claim a credit based only on the number of
months during the tax year for which you
owned the building or an interest therein.
Similarly, if you previously had no interest
in the building, but you acquired the
building or an interest therein during the
tax year, you may claim a credit based
only on the number of months during the
tax year for which you owned the building
or an interest therein.
If the building is owned by a
pass-through entity, the entity does not
need to make any adjustment on line 4,
unless the entity either disposes of the
building or its entire interest therein, or
acquires the building or an interest therein
during the tax year (and the entity
previously had no interest in the building).
Do not make an adjustment on line 4 for
changes in the interests of the members of
the pass-through entity during the tax year.
Instead, the entity must reflect these
changes in the amount of credit it passes
through to its members.
The owner who has owned the building
for the longest period during the month in
which the change in ownership occurs is
deemed to have owned the building for
that month. If the seller and new owner
have owned the building for the same
amount of time during the month of
disposition, the seller is deemed to have
owned the building for that month.
If you owned the building, or an interest
therein, for the entire year (i.e., the full 12
months in your tax year), enter zero on line
4 and go to line 5. If, for a portion of the
tax year, you had no ownership interest in
the building, multiply the qualified basis on
line 3 by a fraction, the numerator of which
is the number of months during the tax
year that you owned the building and the
denominator of which is 12 (e.g., if line 3 is
$100,000 and the building was owned for
9 months, then line 4 would be $75,000
(9/12
$100,000)). Enter the result on
line 4.
Note: Upon a change of ownership, the
seller must give the new owner a copy of
Form 8609 with Parts I and II completed.
The buyer and seller must retain copies of
Form 8609 for recordkeeping purposes.
The new owner must follow the Schedule
A instructions and the instructions for Form
8609 to claim any credits.
Line 5. If the agency has made an
allocation on Form 8609, enter on line 5
the credit percentage shown on Form
8609, Part I, line 2. This percentage must
be shown on line 5 as a decimal carried
out to at least four places (e.g., 8.13%
would be shown on line 5 as .0813).
Note: If you were allocated a 70% present
value credit percentage for a building that
was not federally subsidized and the
building later receives a Federal subsidy,
your credit percentage is reduced to the
30% present value credit that was in effect
during the month the building was placed
in service or for the month elected under

Schedule A (Form 8609) (Rev. 11-2003)

section 42(b)(2)(A)(ii), whichever applies.
The 30% present value credit applies to
the building for the year the Federal
subsidy was received and for the remainder
of the compliance period, whether or not
the Federal subsidy is repaid. See section
42(i)(2).
Line 6. If you owned the building, or had
an interest therein, for the entire tax year,
multiply line 3 by line 5. If you had no
ownership interest in the building for a
portion of the tax year, multiply line 4 by
line 5.

Lines 7 Through 12
If you are not claiming a credit for
additions to qualified basis on line 7, skip
lines 7 through 12 and go to line 13.
You may claim a credit for an
addition to qualified basis only
if credit amounts have been
allocated by the housing credit
agency to cover these
additions.
Line 7. An addition to qualified basis results
when there is an increase in the number of
low-income units or an increase in the floor
space of the low-income units over that
which existed at the close of the first year
of the credit period (before application of
the modified percentage calculation).
Credits for an addition to qualified basis are
claimed at the reduced credit percentage of
two-thirds of the credit percentage
(expressed as a decimal carried out to at
least four places) on line 5 through the end
of the 15-year compliance period.
If you are claiming a credit for additions
to qualified basis, you must subtract the
original qualified basis of the building at
the close of the first year of the credit
period (see Form 8609, line 8a (Part II, line
2a, on the 1988 and 1991 revisions)) from
the building’s qualified basis entered on
line 3 of Schedule A. Enter the result on
line 7. If the result is zero or less, skip lines
8 through 12 and enter the credit from line
6 on line 13.
Line 8. Similar to the instructions for line 4,
if you disposed of a building or your entire
interest therein during the tax year and you
posted a bond or pledged securities, your
credit for the year is adjusted to reflect the
number of months during the tax year that
you owned the building or an interest
therein. Similarly, if you previously had no
interest in the building, but you acquired
the building or an interest therein during
the tax year, your credit for the year is
adjusted to reflect the number of months
during the tax year you owned the building
or an interest therein.
If the building is owned by a
pass-through entity, the entity does not
need to make any adjustment on line 8,
unless the entity either (a) disposes of the
building or its entire interest therein or
(b) acquires the building or an interest
therein during the tax year (and the entity
previously had no interest in the building).
Do not make an adjustment on line 8 for
changes in the interests of the members of
the pass-through entity during the tax year.
Instead, the entity must reflect these
changes in the amount of credit it passes
through to its members.

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If you owned the building, or an interest
therein, for the entire tax year, enter zero
on line 8 and go to line 9. If you had no
ownership interest in the building for a
portion of the tax year, multiply the
additions to qualified basis on line 7 by a
fraction, the numerator of which is the
number of months during the tax year you
owned the building and the denominator of
which is 12. Enter the result on line 8.
Line 9. The credit for additions to the
building’s qualified basis is determined
using two-thirds of the credit percentage
allowable for the building’s original
qualified basis. Therefore, one-third of the
credit percentage (expressed as a decimal
carried out to at least four places) on line 5
is not allowed. Enter on line 9 one-third of
the amount shown on line 5. This amount
must be reported on line 9 as a decimal
carried out to at least four places (e.g., if
the credit percentage entered on line 5 is
.0813, one-third of that percentage would
be expressed as .0271). See section
42(f)(3).
Line 10. If you owned the building, or had
an interest therein, for the entire tax year,
multiply line 7 by line 9. If you had no
ownership interest in the building for a
portion of the tax year, multiply line 8 by
line 9.
Line 11. Additions to qualified basis must
be adjusted to reflect the average portion
of the year that the low-income units
relating to the increase were occupied.
This adjustment is required if there is an
increase in the qualified basis of the
building from the previous tax year. To
determine this adjustment amount,
complete the worksheet on page 4.
Line 14. The eligible basis must be
reduced by the amount of any Federal
grant for the building or the operation
thereof during the 15-year compliance
period. If this reduction does not apply,
enter zero on line 14. Otherwise, figure the
reduction as follows.
1. Divide the total amount of all Federal
grants received for the building during the
compliance period that did not already
reduce the amount of the eligible basis
(reported on line 1 of Schedule A) by the
eligible basis on line 1 of this Schedule A.
Express the result as a decimal carried out
to at least four places.
Note: If the eligible basis on line 1 of this
Schedule A was increased by a percentage
allowable under section 42(d)(5)(C) (and
reflected either in Part I, line 3b, of Form
8609 or in a separate statement issued to
you by the housing credit agency), then
increase the total amount of all Federal
grants in 1 by this percentage increase and
divide this amount by the eligible basis on
line 1 of this Schedule A. For example, if
the percentage increase is 130% and all
Federal grants total $11,000, multiply
$11,000 by 1.3000 and divide the result
($14,300) by the eligible basis on line 1.
2. Multiply the decimal amount
determined in 1 by the credit on line 13.
Enter this result on line 14.
Line 16. To determine the amount to enter
on line 16, you must take into account the
applicable rules listed in paragraphs 1, 2,
3, and the Special rules below.

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1. If the building is owned completely by
one taxpayer, enter the line 15 credit (after
adjustment for any applicable special rule
below) on line 16.
2. If the building is owned by more than
one taxpayer, and those taxpayers are not
members of a pass-through entity, then
the line 15 credit (after adjustment for any
applicable special rule below) must be
distributed according to each taxpayer’s
respective ownership interest in the
building. For example, if a building is
owned by individuals A and B (60% by A
and 40% by B), each would complete a
separate Schedule A as follows. Lines 1
through 15 would be the same for each,
assuming no part-year adjustments are
necessary. However, A would enter 60% of
line 15 on line 16, and B would enter 40%
of line 15 on line 16. Therefore, enter on
line 16 your share of the line 15 credit for
the building that relates to your interest in
the building. If your interest increases or
decreases during the tax year, the change
must be taken into account in determining
your share of the line 15 credit.
Note: The aggregate credit claimed by the
owners of the building cannot exceed the
line 15 credit amount for the building.
3. If a pass-through entity is completing
Schedule A as the sole owner of the
building, enter the line 15 credit (after
adjustment for any applicable special rule
below) on line 16.
Special rules. If a taxpayer is subject to
recapture because of failure to post a
bond or pledge securities upon the
disposition of a building or interest therein
(see De minimis recapture rule below), no
credit is allowed to the taxpayer for that
percentage of the interest disposed of by
the taxpayer. The credit allowed to the
taxpayer for the tax year is determined by
reference to the taxpayer’s remaining
interest in the building at the close of the
tax year. For example, assume that a
taxpayer owns 100% of a building for 9
months of the tax year and 40% of the
building for the last 3 months of the tax
year. (The taxpayer disposed of a 60%
interest at the close of the ninth month.) If
the taxpayer does not post a bond or
pledge securities, the taxpayer’s credit on
line 16 would be based on 40% of the line
15 credit for the building. Similarly,
although a taxpayer might not be subject
to recapture upon a disposition of a de
minimis portion (explained below) of the
taxpayer’s interest in the building, no credit
is allowed to the taxpayer for the
percentage of the interest disposed of by
the taxpayer. The credit allowed to the
taxpayer for the tax year is determined by
reference to the taxpayer’s remaining
interest in the building at the close of the
tax year.
If the taxpayer posts a bond or pledges
securities upon the disposition of the
building or an interest therein, the taxpayer
is allowed credit for the year both with
respect to the ownership interest disposed
of by the taxpayer and the interest retained
by the taxpayer. For example, again
assume that a taxpayer owns 100% of a
building for 9 months of the tax year and
40% of the building for the last 3 months
of the tax year. After posting a bond or

Schedule A (Form 8609) (Rev. 11-2003)

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pledging securities, the taxpayer’s credit
on line 16 would be based upon 9⁄12 of
100% (or 75%) of the line 15 credit for the
building plus 3⁄12 of 40% (or 10%) of the
line 15 credit amount.
If a taxpayer posts a bond or pledges
securities upon the disposition of the
building or upon a disposition of the
taxpayer’s entire interest in the building,
the taxpayer’s line 16 credit amount is
determined by multiplying the line 15 credit
amount by the percentage interest in the
building disposed of by the taxpayer. For
example, if a building is owned by
individuals A and B (60% by A and 40%
by B) and at the close of the fifth month of
the tax year, C buys A’s 60% interest in
the building and A posts a bond or
pledges securities, then A would enter
60% of line 15 on line 16. (Lines 4 and 8

have already taken into account the 5
months of the tax year that A held an
interest in the building.)
De minimis recapture rule. For
administrative purposes, the Service has
adopted a de minimis rule that applies to
partners in partnerships (other than
partnerships described in section
42(j)(5)(B)) owning interests in qualified
low-income buildings. The rule allows a
partner to elect to avoid or defer recapture
resulting from a disposition of interest in a
partnership without posting bond until the
partner has disposed of more than 331⁄3%
of the partner’s greatest total interest in
the qualified low-income building through
the partnership. See Rev. Rul. 90-60,
1990-2 C.B. 3, for more information on the
de minimis rule.

Upon application by the building owner,
the IRS may waive any recapture of the
low-income housing credit for any
de minimis error in complying with the
minimum set-aside requirements.
Line 17. Deferred first-year credit. The
first-year credit may have been reduced
based on the number of full months the
building was in service. The deferred
balance of the credit for the first year is
allowed in the 11th year. Include it on line
17 as a positive amount.
For example, see the example under
First-year modified percentage on page
2. If this is the 11th year, enter .8750 times
the eligible basis of the building (line 1)
times the low-income portion (line 2) times
the credit percentage (line 5). The factor
.8750 is 1.0000 minus .1250, the modified
percentage figured for year one in the
example.

Line 11 Worksheet (Keep for Your Records)
1

Enter the qualified basis of the building from line 3 of this tax year’s Schedule A

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2

Multiply the amount on line 1 of the previous year’s Schedule A by the amount on line 2 of that
Schedule A

2

3

Increased qualified basis. Subtract line 2 above from line 1 above. But if line 2 above is more
than zero but less than the original qualified basis of the building entered on Form 8609, line 8a
(Part II, line 2a on the 1988 and 1991 revisions), then enter the amount from line 7 of this Schedule
A instead
Note: If line 3 above is zero or less, do not complete the rest of this worksheet. Instead, enter
-0- on line 11 of Schedule A and go to line 12.

3

Modified percentage. For each month during the tax year, figure the increase, if any, in the
low-income portion of the building for that month over the low-income portion of the building at
the close of the previous tax year (the amount on line 2 of the previous tax year’s Schedule A).
For example, if the previous tax year’s low-income portion of .5000 remained at .5000 for the
first 9 months of this tax year and then increased to .7500 for October, November, and December,
then subtract .5000 from .7500 to get an increase of .2500 for each month. Add these amounts
together, divide by 12, and enter the result. (This amount must be shown as a decimal carried
out to at least four places (e.g., .2500  .2500  .2500 = .7500, divided by 12 = .0625.))

4

5

Increased qualified basis entitled to reduced credit. Multiply line 4 above by Schedule A, line 1

5

6

Increased qualified basis not entitled to reduced credit. Subtract line 5 above from line 3 above

6

7

Line 11 modification. Multiply line 6 above by two-thirds of the amount on line 5 of Schedule A.
Enter the result here and on line 11 of Schedule A

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4

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