Tax Issue 1: Avoiding Tax-Exempt Use Property in Credit Deals

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Some federal tax credits and some state tax credits can be negatively impacted if the assets that the credits are based on are characterized as “tax-exempt use property” as defined in the Internal Revenue Code and regulations.

It is important for taxpayers to know what causes assets to be designated as tax-exempt use property, the impact to historic tax credits and depreciation, and how transactions can be structured to avoid or mitigate the impact of tax-exempt use property.

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