Form 8586 Low-Income Housing Credit

Form

8586

OMB No. 1545-0984

Low-Income Housing Credit

Department of the Treasury
Internal Revenue Service (99)

▶

2010

Attach to your tax return.

Attachment
Sequence No. 36a
Identifying number

Name(s) shown on return

Part I
1
2

3
4
5

Buildings Placed in Service Before 2008

Number of Forms 8609-A attached for buildings placed in service before
2008 . . . . . . . . . . . . . . . . . . . . . . ▶
Has there been a decrease in the qualified basis of any buildings accounted for on line 1 since
Yes
No
If “Yes,” enter the building
the close of the preceding tax year?
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 for buildings placed in service before 2008
(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . .
Low-income housing credit for buildings placed in service before 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 . . . . . . .

6

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

7

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

Part II
8
9

11
12

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4
5

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6

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7

Buildings Placed in Service After 2007

Number of Forms 8609-A attached for buildings placed in service after
2007 . . . . . . . . . . . . . . . . . . . . . . ▶
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.
(i)

10

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3

(ii)

(iii)

(iv)

Current year credit from attached Form(s) 8609-A for buildings placed in service after 2007
(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . .
Low-income housing credit for buildings placed in service after 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) .

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13

14

Subtract line 13 from line 12

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14

15

Low-income housing credit allowed for 2010 from a passive activity (see instructions)

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15

16

Carryforward of low-income housing credit to 2010 (see instructions) .

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16

17
18

Carryback of low-income housing credit from 2011 (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) .

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19

20

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

20

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For Paperwork Reduction Act Notice, see instructions.

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Cat. No. 63987I

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18

Form 8586 (2010)

Page 2

Form 8586 (2010)

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. Generally, it is taken over a 10-year credit
period.
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 is used to figure this
portion of the credit.
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, General Business Credit.

Qualified Low-Income Housing Project
The credit cannot exceed the amount allocated to the building. See
section 42(h)(1) for details.
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 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.
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).
Line 15. Enter the passive activity low-income housing credit allowed
for 2010 from Form 8582-CR or Form 8810.

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. 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 16. Enter any carryforward of the credit to 2010 attributable to
buildings placed in service after 2007. Enter any carryforward of the
credit to 2010 attributable to buildings placed in service before 2008 on
Form 3800, line 6.

Recapture of Credit

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.

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.
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 17. Enter any carryback if you amend your 2010 return to carry
back an unused low-income housing credit from 2011.
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.

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

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. 5 hr., 44 min.

Learning about the law or the form .

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Preparing the form .

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. 1 hr., 55 min.

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Copying, assembling, and sending the form to the IRS .

52 min.
. 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.