Cat. No. 63987I

OMB No. 1545-0984

Form 8586 Low-Income Housing Credit

Department of the Treasury

Internal Revenue Service

Attachment

 Attach to your tax return. Sequence No. 36b

Name(s) shown on return Identifying number

Current Year Credit

1 Number of Forms 8609 attached 

2 Eligible basis of buildings (total from attached Schedules A (Form 8609), line 1) 2

3a Qualified basis of low-income buildings (total from attached Schedules A (Form 8609), line 3) 3a

b Has there been a decrease in the qualified basis of any buildings since the close of the preceding

(i) (ii) (iii) (iv)

4 Current year credit from attached Schedules A (Form 8609) (see instructions) 4

If you are a— Then enter the total of the current year credits from—

a Shareholder Schedule K-1 (Form 1120S), box 13, codes A and B

5 Low-income housing credits from pass-through entities (if more than one entity, see instructions):

5

6 Add lines 4 and 5. See instructions to find out if you complete lines 7 through 18 or file Form 3800 6

Allowable Credit

Form 8586 (2004)

Part I

EIN of pass-through entity

–

7 Current year credit or passive activity credit (see instructions) 7

tax year?

buildings that had a decreased basis. If you need more space, attach a schedule.

Yes No If “Yes,” enter the building identification numbers (BINs) of the

Part II

For Paperwork Reduction Act Notice, see back of form.

b Partner

c Beneficiary

Schedule K-1 (Form 1065), box 15, codes A and B, or

Schedule K-1 (Form 1065-B), box 8

Schedule K-1 (Form 1041), line 14

● Individuals. Enter the amount from Form 1040, line 43

8

Corporations. Enter the amount from Form 1120, Schedule J, line 3; Form 1120-A,

Part I, line 1; or the applicable line of your return

●

●

11a 11a

b Credits from Form 1040, lines 47 through 53 11b

Foreign tax credit

Possessions tax credit (Form 5735, line 17 or 27)

Credit for fuel from a nonconventional source

Qualified electric vehicle credit (Form 8834, line 20)

Add lines 11a through 11e 11f

12 Net income tax. Subtract line 11f from line 10. If zero, skip lines 13 through 16 and enter -0- on line 17 12

9 Alternative minimum tax:

● Individuals. Enter the amount from Form 6251, line 35

● Corporations. Enter the amount from Form 4626, line 14 9

● Estates and trusts. Enter the amount from Form 1041, Schedule I, line 56

15 Tentative minimum tax (see instructions):

15

13

Enter 25% (.25) of the excess, if any, of line 13 over $25,000 (see instructions)

16

Subtract line 16 from line 12. If zero or less, enter -0-

16

17

Credit allowed for the current year. Enter the smaller of line 7 or line 17 here and on Form

1040, line 54; Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 2; Form 1041, Schedule

G, line 2c; or the applicable line of your return. If line 17 is smaller than line 7, see instructions 18



8 Regular tax before credits:

10 Add lines 8 and 9 10

14

Enter the greater of line 14 or line 15

c

d

e

11c

11d

Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a

and 1b, or the amount from the applicable line of your return

Net regular tax. Subtract line 11f from line 8. If zero or less, enter -0-

18

17



(99)

11e

f

13

14

 See instructions on back.

● Individuals. Enter the amount from Form 6251, line 33

● Corporations. Enter the amount from Form 4626, line 12

● Estates and trusts. Enter the amount from Form 1041,

Schedule I, line 54

2004

Form 8586 (2004) Page 2

Qualified Low-Income Housing

Project

Except as noted in the Specific Instructions,

you must have a Form 8609 (with Part I

completed) from the state or local housing credit

agency for each building for which you are

claiming a credit. You must file a Form 8609 and

accompanying Schedule A (Form 8609) for each

building for each tax year during the 15-year

compliance period. You must also enter certain

first-year information on Form 8609.

Except for buildings financed with certain

tax-exempt bonds, you may not take a

low-income housing credit on a building if it has

not received an allocation from the housing

credit agency. Also, the credit cannot exceed the

amount allocated to the building. See section

42(h)(1) for details. No allocation is needed when

(a) 50% or more of the aggregate basis of the

building and the land on which the building is

located is financed with certain tax-exempt

bonds issued after 1989 for buildings placed in

service after 1989 or (b) 70% or more of the

aggregate basis of the building and land is

financed with certain tax-exempt bonds issued

before 1990. “Land on which the building is

located” includes only land that is functionally

related and subordinate to the qualified

low-income building (see Regulations sections

1.103-8(a)(3) and 1.103-8(b)(4)(iii) for the meaning

of “functionally related and subordinate”).

Recapture of Credit

Recordkeeping

Specific Instructions

Note. For credits from a pass-through entity (i.e.,

S corporation, partnership, estate, or trust), you

do not have to obtain, complete, or attach Form

8609 or Schedule A (Form 8609). If all your

credits are from pass-through entities, skip lines

1 through 4.

Line 1. If any of the attached Forms 8609 are for

buildings that are part of a multiple building

project (defined in instructions for Part II of Form

8609), attach a schedule listing for each project:

(a) the name and address of the project and

each building in the project, (b) the building

identification number (BIN) of each building, 

(c) the aggregate credit dollar amount for the

project, and (d) the credit allocated to each

building.

Line 3b. A decrease in qualified basis will result

in recapture if the qualified basis at the close of

the tax year is less than the qualified basis at the

close of the first year of the credit period.

Line 4. The line 4 credit for the year is figured on

Schedule A (Form 8609) for each building.

Attach copies of Forms 8609 and Schedules A

(Form 8609) to Form 8586 for each tax year a

credit is claimed. Enter on line 4 the credit from

Schedule A (Form 8609). If more than one Form

8609 and related Schedules A are attached,

enter on line 4 the total credit from all attached

Schedules A.

For a pass-through entity with a line 4 credit

attributable to more than one building, attach a

schedule to Form 8586 that shows each

shareholder’s, partner’s, or beneficiary’s name,

identifying number, and share of the line 4 credit

and the BIN for each building.

Line 5. If you have a credit from a pass-through

entity, enter the entity’s employer identification

number (EIN) and the credit amount on line 5. If

you have credits from more than one

pass-through entity, attach a statement that

shows the EIN and credit amount for each entity.

Enter the total credit on line 5.

Line 15. Although you may not owe alternative

minimum tax (AMT), you generally must still

compute the tentative minimum tax (TMT) to

figure your credit. For a small corporation

exempt from the AMT under section 55(e), enter

zero. Otherwise, complete and attach the

applicable AMT form or schedule.

Line 14. See section 38(c)(5) for special rules

that apply to married couples filing separate

returns, controlled corporate groups, regulated

investment companies, real estate investment

trusts, and estates and trusts.

Line 18. If you cannot use all of the credit

because of the tax liability limit (line 17 is smaller

than line 7), carry the unused credit back 1 year

and then forward up to 20 years. See the

instructions for Form 3800 for details. The low-income housing credit can only be

claimed for residential rental buildings in

low-income housing projects that meet one of

the minimum set-aside tests (20–50 or 40–60

(25–60 for New York City only)). For details, see

the instructions for Form 8609, Part II, line 10c.

There is a 15-year compliance period during

which the residential rental building must

continue to meet certain requirements. If, as of

the close of any tax year in this period, there is a

reduction in the qualified basis of the building

from the previous year, you may have to

recapture a part of the credit you have taken.

Similarly, you may have to recapture part of the

credits taken in previous years upon certain

dispositions of the building or interests therein.

See Form 8611, Recapture of Low-Income

Housing Credit, and section 42(j) for details.

Keep a copy of this Form 8586 together with all

Forms 8609, Schedules A (Form 8609), and

Forms 8611 for 3 years after the 15-year

compliance period ends.

Line 7. The credit on line 6 may be subject to

the passive activity credit limitation. Individuals,

estates, and trusts figure the limit on Form

8582-CR, Passive Activity Credit Limitations, and

personal service and closely held corporations

figure the limit on Form 8810, Corporate Passive

Activity Loss and Credit Limitations. If this

limitation applies, enter the allowable credit from

Form 8582-CR or 8810 on line 7. If line 7 is zero,

skip Part II. If you are not subject to the passive

activity limitation, enter on line 7 the amount

from line 6.

If you have comments concerning the

accuracy of these time estimates or suggestions

for making this form simpler, we would be happy

to hear from you. See the instructions for the tax

return with which this form is filed.

S Corporations, Partnerships,

Estates, and Trusts

Important: If the reduction in qualified basis at

the close of the tax year also results in a violation

of the minimum set-aside requirement, then no

credit is allowable for the year. If you must

recapture credits, use Form 8611. See section

42(j) for more information.

Complete Part I to figure the credit to pass

through to the shareholders, partners, or

beneficiaries. Attach Form 8586 to the

pass-through income tax return along with Form

8609 and Schedule A (Form 8609), Annual

Statement, for each building. An electing large

partnership treats the part of the credit

attributable to property placed in service before

1990 as a “rehabilitation credit” when reporting

the credit to its partners.

Paperwork Reduction Act Notice. We ask for

the information on this form to carry out the

Internal Revenue laws of the United States. You

are required to give us the information. We need

it to ensure that you are complying with these

laws and to allow us to figure and collect the

right amount of tax.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time is:

Recordkeeping, 6 hr., 13 min.; Learning about

the law or the form, 1 hr., 37 min.; Preparing

the form, 3 hr., 40 min.; Copying, assembling,

and sending the form to the IRS, 32 min.

You are not required to provide the

information requested on a form that is subject

to the Paperwork Reduction Act unless the form

displays a valid OMB control number. Books or

records relating to a form or its instructions must

be retained as long as their contents may

become material in the administration of any

Internal Revenue law. Generally, tax returns and

return information are confidential, as required

by section 6103.

Section references are to the Internal Revenue

Code unless otherwise noted.

General Instructions

Purpose of Form

Use Form 8586 to claim the low-income housing

credit.

This general business credit is allowed for

each new qualified low-income building placed

in service after 1986; it is taken over a 10-year

credit period. The present value of the 10 annual

credit amounts equals 70% of the building’s

qualified basis (30% for certain federally

subsidized new buildings or existing buildings).

In general, the 10-year credit period starts at the

beginning of the tax year in which the building is

placed in service. However, you may elect to

begin the 10-year credit period in the

succeeding tax year by checking the “Yes” box

in Part II, line 10a, of Form 8609, Low-Income

Housing Credit Allocation Certification.

Line 6. The credit allowed for the current year

may be limited based on your tax liability.

Complete line 7 and Part II to figure the

allowable credit unless you must file Form 3800,

General Business Credit. You must file Form

3800 if you have more than one credit included

in the general business credit (other than a credit

from Form 8844, Form 8884, or Section B of

Form 8835) or a carryback or carryforward of

any of those credits. See the instructions for

Form 3800 to find out which credits are included

in the general business credit.