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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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I have about $30,000 in unused low income housing tax credits.

Resolved Question:

I have about $30,000 in unused low income housing tax credits. I owned the property individually so my credits could not be used each year due to my high income. I met all the requirements. Form 3800 business credit instructions say that the accumulated remaining unused "QUALIFIED business credists" can be taken after the 15 year period. My question is: Can I take these remaining credits now in year 16? Or, do I lose them entirely because these credits are not "QUALIFIED."?
Submitted: 3 years ago.
Category: Tax
Expert:  MequonCPA replied 3 years ago.
Dear XXXXX66123 -

Below is a link to the instructions for Form 3800. The instructions state that the credits can be carried forward for 20 years following the year the credit arose. If the qualified credits have not been allowed within that 20 year period, they are allowed in the following tax year.

The "Qualified" business credits are defined in IRC 192(c) (link below). They include many credits, but the low income housing credit under IRC 42 (link below) is not one of them.

http://www.irs.gov/pub/irs-pdf/i3800.pdf

http://vlex.com/vid/deduction-certain-unused-business-credits-19210029

http://recovery.mt.gov/content/Commerce/TCEP/docs/Sec42
Customer: replied 3 years ago.
OK.. Thank you. It appears that I will not be able to use these credits since they are not "qualified" business credits. Are they worthless, or can they be sold to someone with a lower income or a "C" corporation that could use them? Any ideas? Thank you. Mike
Expert:  MequonCPA replied 3 years ago.

Dear XXXXX -

 

First, you earned the credits over a 10 year period so you have between 5 and 15 years to use at least a portion of the credits.

 

These credits are not transferable and must used by the recipient. Without knowing your complete tax situation it is difficult to provide answers. A discussion with a tax professional may assist you in your planning.

 

For example, you may be able to defer or accelerate certain income or deductions that may change your tax position and allow a partial benefit of the credits. Also, as you know, tax laws are always changing so all may not be lost.

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2323
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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