Late election to defer a low-income housing credit period

Plain-English summary

A partnership placed a single-building low-income housing project in service but inadvertently failed to elect to begin its 10-year credit period in the following taxable year. It asked the IRS for an extension under the Section 301.9100 relief rules to make the election required by Section 42(f)(1). The IRS concluded that the partnership met the requirements for relief. It gave the partnership 120 days from the letter date to file an amended Form 8609 making the intended election. The ruling does not decide whether the building otherwise qualifies for the low-income housing credit under Section 42.

Ruling snapshot

• Question: May the partnership make a late Section 42(f)(1) election to begin the building's credit period in the taxable year after it was placed in service?
• Outcome: approved
• Key authorities: IRC § 42(f)(1), (l)(1); Treas. Reg. §§ 1.42-1(h), 301.9100-1, 301.9100-3, 301.9100-8

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201832002 Third Party Communication: None
Release Date: 8/10/2018 Date of Communication: Not Applicable
Index Number: 42.00-00, 9100.01-00
Person To Contact:
---------------------------------- -----------------------------, ID No. -------------
-------------------------------------------- -----------------
------------------------------ Telephone Number:
------------ ----------------------
------------------------------- Refer Reply To:
In Re: CC:PSI:B05
---------------------------------- PLR-131662-17
Date:
February 21, 2018

LEGEND

Taxpayer = -------------------------------------------------------------------------------------------------
-----------------------------
State = ----------
BIN = ------------------
Address = --------------------------------------------------------------------------------------
Year 1 = -------
Year 2 = -------

Dear -------------:

   This letter responds to Taxpayer’s authorized representative’s letter dated

October 16, 2017, and subsequent correspondence, requesting an extension of time to
make an election under § 42(f)(1) of the Internal Revenue Code pursuant to
§ 301.9100-1 of the Procedure and Administration Regulations.

    According to the information submitted, Taxpayer, a partnership for federal

income tax purposes, owns and operates a single-building low-income housing project
in State. The building identified by BIN is located at Address. Taxpayer placed the
building identified by BIN in service in Year 1. Taxpayer inadvertently failed to make a
timely election under § 42(f)(1) to begin the credit period for the building identified by
BIN in Year 2.

     Section 42(f)(1) defines the credit period of any building as the period of 10

taxable years beginning with the taxable year in which the building is placed in service,
or at the taxpayer’s irrevocable election, the succeeding taxable year, but in either case
only if the building is a qualified low-income building at the close of the first year of the
credit period.
PLR-131662-17 2

    Section 301.9100-8(b) provides that the election under § 42(f)(1) generally must

be made for the taxable year in which the building is placed in service, or the
succeeding taxable year if the § 42(f)(1) election is made to defer the start of the credit
period, and must be made in the certification required to be filed pursuant to § 42(l)(1)
and (2). Section 301.9100-8(a)(4)(i) provides that the election under § 42(f)(1) is
irrevocable.

    Specifically, the election under § 42(f)(1) is made pursuant to the certification

requirement of § 42(l)(1)(E), which provides that following the close of the first taxable
year in the credit period with respect to any qualified low-income building, the taxpayer
shall certify to the Secretary (at such time and in such form and in such manner as the
Secretary prescribes) such other information as the Secretary may require.

    Section 1.42-1(h) of the Income Tax Regulations provides that a completed Form

8609, Low-Income Housing Credit Allocation and Certification, must be filed by the
building owner with the IRS. The requirements for completing and filing Form 8609 are
addressed in the instructions to the form.

    The instructions to Form 8609 provide that the building owner must make a one-

time submission of Form 8609 to the Low-Income Housing Credit (LIHC) Unit at the IRS
Philadelphia campus. The building owner must file the original of the Form 8609 with
the LIHC Unit no later than the due date (including extensions) of its first tax return with
which it is filing Form 8609-A, Annual Statement for Low-Income Housing Credit.

    Sections 301.9100-1 through 301.9100-3 provide the standards the

Commissioner will use to determine whether to grant an extension of time to make an
election.

    Section 301.9100-1(b) defines the term “regulatory election” as including an

election whose due date is prescribed by a regulation published in the Federal Register,
or a revenue ruling, revenue procedure, notice, or announcement published in the
Internal Revenue Bulletin.

    Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable

extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of a taxpayer who is abroad), under all subtitles of the Code except subtitles E, G,
H, and I.

    Section 301.9100-2 provides automatic extensions of time for making certain

elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.
PLR-131662-17 3

    Requests for relief under § 301.9100-3(a) will be granted when the taxpayer

provides evidence (including affidavits described in § 301.9100-3(e)) to establish that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government.

    In the instant case, based solely on the facts submitted and the representations

made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been
met. Accordingly, Taxpayer is granted an extension of time to make the election under
§ 42(f)(1) for the building identified by BIN to begin the credit period in Year 2. The
election must be made by filing within 120 days from the date of this letter an amended
Form 8609 that includes the intended election. The amended Form 8609 (along with a
copy of this letter) must be filed with the LIHC Unit at the following address provided in
the instructions to Form 8609:

    Department of the Treasury
    Internal Revenue Service Center
    Philadelphia, PA 19255-0549

    A copy of this letter is enclosed for this purpose.

    No opinion is expressed or implied regarding the application of any other

provisions of the Code or regulations. Specifically, we express no opinion on whether
the building identified by BIN otherwise qualifies for the low-income housing credit under
§ 42.

   This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.

   The ruling contained in this letter is based upon information and representations

submitted by Taxpayer and accompanied by a penalty of perjury statement executed by
an appropriate party. While this office has not verified any of the material submitted in
support of the request for rulings, it is subject to verification on examination.
PLR-131662-17 4

   In accordance with a Power of Attorney on file with this office, we are sending a

copy of this letter to Taxpayer’s authorized representative.

                                        Sincerely,

                                        Associate Chief Counsel
                                        (Passthroughs and Special Industries)



                                  By:
                                        JIAN H. GRANT
                                        Senior Technician Reviewer, Branch 5
                                        Office of Associate Chief Counsel
                                        (Passthroughs and Special Industries)

Enclosures (2):
Copy of this letter
Copy for § 6110 purposes