U.S. Individual Income Tax Return

Form

8586

Department of the Treasury
Internal Revenue Service (99)

OMB No. 1545-0984

Low-Income Housing Credit
©

2008

Attachment
Sequence No.

Attach to your tax return.

Name(s) shown on return

Part I

Buildings Placed in Service Before January 1, 2008

1

Number of Forms 8609-A attached for buildings placed in service before
©
January 1, 2008

2

Has there been a decrease in the qualified basis of any buildings accounted for on line 1 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.

3
4
5

(i)
(ii)
(iii)
(iv)
Current year credit from attached Form(s) 8609-A for buildings placed in service before
January 1, 2008 (see instructions)
Part I low-income housing credit for buildings placed in service before January 1, 2008, from
partnerships, S corporations, estates, and trusts
Add lines 3 and 4. Estates and trusts, go to line 6; partnerships and S corporations, report this
amount on Schedule K; all others, report this amount on Form 3800, line 1d

3
4
5

6

Amount allocated to beneficiaries of the estate or trust (see instructions)

6

7

Estates and trusts. Subtract line 6 from line 5. Report this amount on Form 3800, line 1d

7

Part II

Buildings Placed in Service After December 31, 2007

8

Number of Forms 8609-A attached for buildings placed in service after
©
December 31, 2007

9

Has there been a decrease in the qualified basis of any buildings accounted for on line 8 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.

10
11
12

36a

Identifying number

(i)
(ii)
(iii)
(iv)
Current year credit from attached Form(s) 8609-A for buildings placed in service after
December 31, 2007 (see instructions)
Part II low-income housing credit for buildings placed in service after December 31, 2007, from
partnerships, S corporations, estates, and trusts
Add lines 10 and 11. Partnerships and S corporations, report this amount on Schedule K; all
others, continue to line 13

10
11
12

13

Low-income housing credit included on line 12 from passive activities (see instructions)

13

14

Subtract line 13 from line 12

14

15

Low-income housing credit allowed for 2008 from a passive activity (see instructions)

15

16

Carryforward of low-income housing credit for 2007 fiscal-year filers (see instructions)

16

17
18

Carryback of low-income housing credit from 2009 (see instructions)
Add lines 14 through 17. Estates and trusts, go to line 19; all others, report this amount on
Form 3800, line 29d

17

19

Amount allocated to beneficiaries of the estate or trust (see instructions)

19

20

Estates and trusts. Subtract line 19 from line 18. Report this amount on Form 3800, line 29d

20

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 63987I

18

Form

8586

(2008)

Page

Form 8586 (2008)

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

What’s New
The portion of the low-income housing credit attributable to buildings
placed in service after 2007 is not limited by tentative minimum tax
and cannot be reported on page 1 of Form 3800. Part II was added
to the form to figure this portion of the credit. Report any
carryforward of the credit from 2007 to 2008 on Form 3800, line 6.
Report any carryback of the credit from 2008 to 2007 on the 2007
Form 6478, Credit for Alcohol Used as Fuel, line 10, and enter
“LIHC” to the left of the entry space.
In certain situations, it is possible to prevent the recapture of
credits taken in previous years upon certain dispositions of the
building or your interest therein. See Recapture of Credit below.

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. Generally, it is taken over a 10-year
credit period.
Taxpayers that are not partnerships, S corporations, estates, or
trusts, and whose only source of this credit is from buildings placed
in service before 2008 from those pass-through entities, are not
required to complete or file this form. Instead, they can report this
credit directly on line 1d of Form 3800.

2

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 buildings placed in service before 2008.
Line 6. Allocate the amount on line 5 between the estate or trust and
the beneficiaries in the same proportion as income was allocated
and enter the beneficiaries’ share on line 6.
Line 9. 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 10. 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 10 the total credit for attached
Form(s) 8609-A for buildings placed in service after 2007.

Qualified Low-Income Housing Project

Line 13. Enter the amount included on line 12 that is from a passive
activity. Generally, a passive activity is a trade or business in which
you did not materially participate. Rental activities are generally
considered passive activities, whether or not you materially
participate. For details, see Form 8582-CR, Passive Activity Credit
Limitations (for individuals, estates, and trusts), or Form 8810,
Corporate Passive Activity Loss and Credit Limitations (for
corporations).

The credit cannot exceed the amount allocated to the building. See
section 42(h)(1) for details.

Line 15. Enter the passive activity low-income housing credit
allowed for 2008 from Form 8582-CR or Form 8810.

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.

Line 16. Enter any carryforward of the credit from 2007 to 2008
attributable to buildings placed in service after 2007. Enter any
carryforward of the credit from 2007 to 2008 attributable to buildings
placed in service before 2008 on Form 3800, line 6.

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. No allocation
is needed when 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. The owner still must get a Form 8609 from the
appropriate housing credit agency (with the applicable items
completed, including an assigned BIN). “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)).

Line 17. Enter any carryback if you amend your 2008 return to carry
back an unused low-income housing credit from 2009. Report any
carryback of the credit from 2008 to 2007 on the 2007 Form 6478,
Credit for Alcohol Used as Fuel, line 10, and enter “LIHC” to the left
of the entry space.

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, unless you
follow the procedures to prevent recapture. See Recapture and
building dispositions in the Instructions for Form 8609-A, Annual
Statement for Low-Income Housing Credit, for details. If you must
recapture credits, use Form 8611, Recapture of Low-Income
Housing Credit. See section 42(j) for details.

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
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.

Line 19. Allocate the amount on line 18 between the estate or trust
and the beneficiaries in the same proportion as income was
allocated and enter the beneficiaries’ share on line 19.

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, 52 min.;
Preparing the form, 1 hr., 55 min.; Copying, assembling, and
sending the form to the IRS, 16 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.