Tax Issue 2: Partnership Allocations for Low-Income Housing Tax Credit Deals

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This paper will be of interest to you if you are involved in Low-Income Housing Tax Credit deals and some or all of the following applies to your deal:

• High operating losses in excess of original projections

• A large deferred developer fee that remains unpaid after construction completion

• The investor limited partner’s tax capital account is decreasing each year faster than originally projected

• The partnership agreement calls for equity adjusters or other penalties for failing to provide the projected amount of low-income tax credit or tax losses to the investor limited partner

• You would like clarity on the partnership tax rules that impact the allocation of tax losses and credits to partners.

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