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A. J. Johnson

A. J. Johnson

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Computing Adjustments to the Allowable Annual Credit for LIHTC Properties

December 6, 2015

At the conclusion of an audit of a Low-Income Housing Tax Credit (LIHTC) taxpayer, the IRS will determine whether any adjustments to the amount of annual credit are appropriate. This will be done after auditing the eligible basis, applicable…

Amendment to the HUD Definition of Tuition, Notice H 2015-12

December 2, 2015

A. J. Johnson

Amendment to the HUD Definition of Tuition, Notice H 2015-12 HUD published Notice H 2015-12 on November 18, 2015, amending the definition of tuition as it relates to both HUD Multifamily Housing programs and Public and Indian Housing (PIH)…

HUD Notice on Designation of Difficult Development Areas and Qualified Census Tracts for 2016

December 1, 2015

A. J. Johnson

On November 24, 2015, HUD issued a Notice in the Federal Register designating “Difficult Development Areas” (DDAs) and “Qualified Census Tracts” (QCTs) for purposes of the Low-Income Housing Tax Credit Program (LIHTC). For the first time, HUD is using…

Developer Fees – How They are Viewed by the IRS

November 29, 2015

A. J. Johnson

Developer fees represent payment for a developer’s services and are (at least partly) includable in eligible basis for a Low-Income Housing Tax Credit (LIHTC) project. There are three basic types of developer fees. Turnkey Project Fee The…

HUD Notice Regarding Exclusion of Use of Arrest Records for Housing Decisions, Notice 2015-10

November 29, 2015

A. J. Johnson

On November 2, 2015, HUD issued Notice H 2015-10, Guidance for Public Housing Agencies (PHAs) and Owners of Federally-Assisted Housing on Excluding the Use of Arrest Records in Housing Decisions. The purpose of this Notice is to inform PHAs…

Understanding the Applicable Percentage for a Section 42 Property

November 28, 2015

A. J. Johnson

The amount of annual Low-Income Housing Tax Credit (LIHTC) a building may receive is dependent on four factors: (1) Eligible Basis; (2) the Applicable Fraction; (3) qualified basis; and (4) the Applicable Percentage. Of these four elements, the “Applicable Percentage”…

Satellite Dishes – Rights of Landlords and Residents

November 28, 2015

A. J. Johnson

Federal rules published by the Federal Communications Commission (FCC) give residents of apartment communities the right to install satellite dishes at an apartment community, subject to FCC limits. Many landlords are still unsure of exactly what the rules permit residents…

The Determination of Qualified Basis for LIHTC Projects

November 27, 2015

A. J. Johnson

The Determination of Qualified Basis for LIHTC Projects Qualified basis is a portion of a low-income building’s eligible basis associated with the low-income units. In simplest terms, it represents the amount of money spent on the construction of a building…

Smoke Free Public Housing – HUD Proposed Rule

November 25, 2015

A. J. Johnson

Smoke Free Public Housing – HUD Proposed Rule, November 17, 2015 On November 17, 2015, HUD published a proposed rule in the Federal Register that would require all public housing agencies (PHAs) that administer public housing to implement a…

Unauthorized Distribution of Project Funds – HUD Announcement, November 2015

November 23, 2015

A. J. Johnson

The Department of Housing & Urban Development (HUD) recently sent a series of emails and published newsletters issuing announcements regarding restrictions on the distribution of project assets. The announcements were sent at the request of the HUD Office of Inspector…

Local Ordinances and Assistance Animals

November 15, 2015

A. J. Johnson

Apartment owners and managers are well aware that when required due to the disability of an applicant or a resident, no matter what a property’s policy on pets may be, fair housing law requires that individuals with disabilities be permitted…

LIHTC Requirements Regarding Common Areas, Required Facilities, and Provision of Services

November 9, 2015

A. J. Johnson

Section 42(d)(4)(B) of the Internal Revenue Code reads: “The adjusted basis of any building shall be determined by taking into account the adjusted basis of property (of a character subject to the allowance for depreciation) used in common areas or…

Quid Pro Quo and Hostile Environment HUD Proposed Rule, October 21, 2015

October 26, 2015

A. J. Johnson

HUD has published a proposed rule in the October 21, 2015 Federal Register titled, “Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices Under the Fair Housing Act.” This proposed rule will formalize standards for use…

Eligible Basis: IRS Reconciliation of Allowable Costs

October 24, 2015

A. J. Johnson

During an audit, a primary point of examination by the IRS will be the reconciliation of eligible basis, and identification of large, unusual or questionable items. Reconciliation of Eligible Basis The eligible basis shown on Line 7 of…

Short Term Rental Fees for Vouchers

October 19, 2015

A. J. Johnson

In Velez v. Cuyahoga Metropolitan Housing Authority, 2015 U.S. App. Lexis 13265 (6th Cir. July 30, 2015), an appeals court ruled that fees for short-term rentals are considered rent and must be paid as part of the rent under the…

Costs Included In Eligible Basis

October 18, 2015

A. J. Johnson

The next few articles in this series of articles on the IRS Audit Guide will focus on the important issue of Eligible Basis, the beginning point for the calculation of credits. This first article will discuss the costs that…

No Increase in 2016 Social Security Rates

October 15, 2015

A. J. Johnson

The federal government announced today that the Social Security Cost of Living Adjustment (COLA) for 2016 will be zero. This means that there will be no change in the Social Security income of SS recipients for the upcoming year. Owners…

Taxpayer Removal from the Program – The Section 42 Death Penalty

October 4, 2015

A. J. Johnson

Taxpayer Removal from the Program – The Section 42 Death Penalty IRS Treasury Regulation §1.42-5(e)(3) provides authority for the state agency to report to the IRS that a building is “no longer in compliance nor participating in the IRC…

Allocations Under the Nonprofit Set-Aside – IRS Requirements

September 28, 2015

A. J. Johnson

IRC Section 42(h)(5) requires that a portion of each states annual credit ceiling be set aside for allocation to projects involving qualified nonprofit organizations. Specifically, the Code requires that not more than 90% of the state housing credit ceiling for…

Revisions to Public Housing Flat Rents – Interim Rule, September 8, 2015

September 26, 2015

A. J. Johnson

The Department of Housing and Urban Development (HUD) published in Interim Rule in the September 8, 2015 Federal Register, titled “ Streamlining Administrative Regulations for Public Housing: Revisions to Public Housing Flat Rents.” This interim rule amends HUD regulations…

Children For Whom Custody is Being Sought – To Count or Not to Count

September 21, 2015

A. J. Johnson

Children for Whom Custody is Being Obtained – To Count or Not to Count When determining income eligibility for Section 8 or Low-Income Housing Tax Credit (LIHTC) properties, HUD Section 8 rules must be followed. The basic HUD guidance…

The IRS and Extended Use Agreements

September 20, 2015

A. J. Johnson

The IRS and Extended Use Agreements As outlined in §42 (h) (6), all LIHTC properties allocated credits after 1989 must have an extended use agreement (EUA). The agreement is entered into by the taxpayer and the Housing Credit Agency…

HUD Clarifications Regarding Completion of Utility Allowances

September 19, 2015

A. J. Johnson

I sent a memo to clients on June 29, 2015, regarding HUD Notice H 2015-04, which was published by HUD on June 22, 2015. This Notice outlined revised HUD requirements relative to the Methodology for Completing a Multifamily Housing Utility…

Definition of a Parent for the Section 42 Student Rule

September 16, 2015

A. J. Johnson

Section 42 (i) (3) (D) states that certain students do not disqualify a unit from being low-income for LIHTC purposes. Five exceptions are outlined in the Code, one of which states “A unit shall not fail to be treated as…

HUD Clarification on HOME Rental Requirements

September 10, 2015

A. J. Johnson

HUD recently provided guidance on components of the HOME program that have raised questions. Following are the clarifications that apply to the use of HOME funds with multifamily housing. HOME funds cannot be used in public housing units that receive…

Determining the Cash Value of and Income from Annuities

September 8, 2015

A. J. Johnson

Determining the Cash Value of and Income from Annuities There is some confusion among managers of affordable rental housing regarding how to determine the value of and income from annuities. Part of the confusion is the result of a…

Claiming Credits without an IRS Form 8609 – Guidance from the IRS Audit Guide

September 6, 2015

A. J. Johnson

Claiming Credits without an IRS Form 8609 – Guidance from the Audit Guide IRC §42(l)(1) requires that taxpayers complete a certification with respect to the first year of the credit period. This certification is made by completing Part II…

HUD Final Rule on Streamlining the Portability of the Voucher Program, August 20, 2015

September 2, 2015

A. J. Johnson

On August 20, 2015, HUD published a Final Rule in the Federal Register titled, “Housing Choice Voucher Program: Streamlining the Portability Process.” This final rule amends HUD’s regulations governing portability in the Housing Choice Voucher (HCV) program. Portability is a…

Section 42 Audit Guide- Techniques Used During Audit

September 2, 2015

A. J. Johnson

Audit Guide Chapter 3- Techniques Used During Audit The IRS audit process includes the accumulation of evidence for evaluating the accuracy of a taxpayer’s tax return. Evidence includes taxpayer testimony, books and records, examiner observations, and third party documents.…

The IRS Section 42 Audit Guide: How Tax Returns for LIHTC Properties are Analyzed for Audit Potential

August 23, 2015

A. J. Johnson

How Tax Returns for LIHTC Properties are Analyzed for Audit Potential The IRS §42 Audit Guide provides guidance for analyzing tax returns before contacting taxpayers to determine the specific tax credit issues that should be audited. Prior to any…

Posts by A. J. Johnson

Computing Adjustments to the Allowable Annual Credit for LIHTC Properties

Amendment to the HUD Definition of Tuition, Notice H 2015-12

HUD Notice on Designation of Difficult Development Areas and Qualified Census Tracts for 2016

Developer Fees – How They are Viewed by the IRS

HUD Notice Regarding Exclusion of Use of Arrest Records for Housing Decisions, Notice 2015-10

Understanding the Applicable Percentage for a Section 42 Property

Satellite Dishes – Rights of Landlords and Residents

The Determination of Qualified Basis for LIHTC Projects

Smoke Free Public Housing – HUD Proposed Rule

Unauthorized Distribution of Project Funds – HUD Announcement, November 2015

Local Ordinances and Assistance Animals

LIHTC Requirements Regarding Common Areas, Required Facilities, and Provision of Services

Quid Pro Quo and Hostile Environment HUD Proposed Rule, October 21, 2015

Eligible Basis: IRS Reconciliation of Allowable Costs

Short Term Rental Fees for Vouchers

Costs Included In Eligible Basis

No Increase in 2016 Social Security Rates

Taxpayer Removal from the Program – The Section 42 Death Penalty

Allocations Under the Nonprofit Set-Aside – IRS Requirements

Revisions to Public Housing Flat Rents – Interim Rule, September 8, 2015

Children For Whom Custody is Being Sought – To Count or Not to Count

The IRS and Extended Use Agreements

HUD Clarifications Regarding Completion of Utility Allowances

Definition of a Parent for the Section 42 Student Rule

HUD Clarification on HOME Rental Requirements

Determining the Cash Value of and Income from Annuities

Claiming Credits without an IRS Form 8609 – Guidance from the IRS Audit Guide

HUD Final Rule on Streamlining the Portability of the Voucher Program, August 20, 2015

Section 42 Audit Guide- Techniques Used During Audit

The IRS Section 42 Audit Guide: How Tax Returns for LIHTC Properties are Analyzed for Audit Potential

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