Cat. No. 63987I

OMB No. 1545-0984

Form 8586 Low-Income Housing Credit

Department of the Treasury

Internal Revenue Service

Attachment

© Attach to your return. Sequence No. 36b

Name(s) shown on return Identifying number

Current Year Credit (See instructions.)

1 Number of Forms 8609 attached ©

2 Eligible basis of building(s) (total from attached Schedule(s) A (Form 8609), line 1) 2

3a Qualified basis of low-income building(s) (total from attached Schedule(s) A (Form 8609), line 3) 3a

b Has there been a decrease in the qualified basis of any building(s) since the close of the preceding

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

4 Current year credit (total from attached Schedule(s) A (Form 8609), see instructions) 4

If you are a— Then enter total of current year housing credit(s) from—

a Shareholder

b Partner

c Beneficiary

Schedule K-1 (Form 1120S), lines 12b(1) through (4)

Schedule K-1 (Form 1065), lines 12a(1) through (4)

Schedule K-1 (Form 1041), line 14

5 Credits from flow-through entities (if from more than one entity, see instructions):

5

6 Add lines 4 and 5. (See instructions to find out if you complete Part II or file Form 3800.) 6

Tax Liability Limit

Form 8586 (1997)

Part I

% EIN of flow-through entity

–

7 Passive activity credit or total current year credit for 1997 (see instructions) 7

tax year?

building(s) that had a decreased basis. If more space is needed, attach a schedule to list the BINs.

Yes No If “Yes,” enter the building identification number (BIN) of the

8

10

12

9a

9b

9c

9d

9e

9g

9j

Low-income housing credit allowed for current year. Enter the smaller of line 7 or line 16. Enter

here and on Form 1040, line 44; Form 1120, Schedule J, line 4d; Form 1120-A, Part I, line 2a;

Form 1041, Schedule G, line 2c; or the applicable line of your return

11

%

Part II

%

17

9f

● Individuals. Enter amount from Form 1040, line 39

● Corporations. Enter amount from Form 1120, Schedule J, line 3 (or Form 1120-A, Part I, line 1)

● Other filers. Enter regular tax before credits from your return

9a Credit for child and dependent care expenses (Form 2441, line 9)

b Credit for the elderly or the disabled (Schedule R (Form 1040), line 20)

Foreign tax credit (Form 1116, line 32, or Form 1118, Sch. B, line 12)

d

e

Possessions tax credit (Form 5735)

f

g

h Credit for fuel from a nonconventional source

Qualified electric vehicle credit (Form 8834, line 19)

Add lines 9a through 9i

Net regular tax. Subtract line 9j from line 8

Alternative minimum tax:

Individuals. Enter amount from Form 6251, line 28

Corporations. Enter amount from Form 4626, line 15

Estates and trusts. Enter amount from Form 1041, Schedule I, line 42

13 Tentative minimum tax (see instructions):

● Individuals. Enter amount from Form 6251, line 26

● Corporations. Enter amount from Form 4626, line 13

● Estates and trusts. Enter amount from Form 1041, Schedule I, line 38

14 If line 10 is more than $25,000, enter 25% (.25) of the excess (see instructions)

Subtract line 15 from line 12. If zero or less, enter -0-

15

c Mortgage interest credit (Form 8396, line 11)

8 Regular tax before credits:

12 Net income tax. Add lines 10 and 11

Enter the greater of line 13 or line 14

11

10

13

% ●

●

●

14

16

17

15

16

Section references are to the Internal

Revenue Code.

1997

Adoption credit (Form 8839, line 10)

i

9h

General Instructions

Purpose of Form

An owner of a residential rental building in a

qualified low-income housing project uses

The low-income housing credit determined

under section 42 is a credit of 70% of the

qualified basis of each new low-income

building placed in service after 1986 (30% for

certain federally subsidized new buildings or

9i

District of Columbia first-time homebuyer credit (Form 8859)

j

Form 8586 to claim the low-income housing

credit.

existing buildings). This credit is taken over a

10-year period so that the present value of

the 10 annual credit amounts determined as

of the last day of the first year of the credit

period equals 70% (or 30%) of the building’s

qualified basis.

For Paperwork Reduction Act Notice, see back of form.
Form 8586 (1997) Page 2

Qualified Low-Income Housing

Project

Except as noted in the Specific

Instructions, you must obtain a Form 8609

(with Part I completed) from the state or local

credit agency for each building for which you

are claiming a credit. Attach to your return a

copy of Form 8609 and accompanying

Schedule A (Form 8609) for each building for

each year of the 15-year compliance period.

You must also certify certain first-year

information to the IRS on Form 8609. If this

certification is not made, you may not claim a

credit for that building.

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. Generally, the

allocation must be received by the close of

the calendar year the building is placed in

service. In addition, no credit will be allowed

in excess of the amount allocated to the

building by the housing credit agency. See

section 42(h)(1) for details. An allocation is not

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

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: If your only credit is from a

flow-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) to Form 8586. Skip

lines 1 through 4 and complete only lines 5,

6, and 7 of Part I and the applicable lines of

Part II, or Form 3800, if required.

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, line 2b (line 8b on the January 1993

and later versions) of Form 8609), attach a

schedule listing the following information for

each project: (a) name and address of the

project and each building in the project, 

(b) the building identification number (BIN) of

each building in the project, (c) the aggregate

credit dollar amount for the project, and 

(d) the credit allocated to each building in the

project.

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 Form(s) 8609 and

Schedule(s) 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 flow-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 BIN for each building.

Line 5. If you have a credit from a

flow-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 flow-through entity,

attach a statement that shows the EIN and

credit amount for each entity. Enter the total

credit on line 5.

Line 6. If the line 6 credit is your only 1997

general business credit (see Note below) and

you do not have a carryback or carryforward

of any general business credit, complete line

7 and Part II to determine your allowed

low-income housing credit.

Line 13. Enter the tentative minimum tax

(TMT) that was figured on the appropriate

alternative minimum tax (AMT) form or

schedule. Although you may not owe AMT,

you must still compute the TMT to figure your

credit.

Line 14. See section 38(c)(3) 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 17. If you cannot use part or all of the

credit because of the tax liability limit (line 16

is smaller than line 7), carry the excess back

3 years and then forward 15 years. See the

separate 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)). See the

instructions for Part II, line 10c of Form 8609

for details. You may elect either test for the

project, but once made, the election is

irrevocable. The test elected must be the

same for all buildings in the project. Use

Form 8609 to make this election. See section

42(g) for more details.

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

any 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. Use Form 8611,

Keep a copy of this Form 8586 together with

all Forms 8609, Schedule(s) A (Form 8609),

and Form 8611 for 3 years after the 15-year

compliance period ends.

If you have more than one general business

credit or a carryback or carryforward of any

general business credit, do not complete line

7 or Part II. Enter the line 6 credit on Form

3800, General Business Credit, and complete

Form 3800 to determine your allowed credit.

Line 7. The line 6 credit may be subject to

the passive activity credit limitation.

Individuals, estates, and trusts should see the

separate Instructions for Form 8582-CR,

Passive Activity Credit Limitations, and

closely held corporations should see the

separate Instructions for Form 8810,

Corporate Passive Activity Loss and Credit

Limitations, to find out if this limitation

applies. If applicable, enter the credit allowed

from Form 8582-CR or Form 8810 on line 7.

Filers not subject to the passive activity

limitation should enter the line 6 amount on

line 7.

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 entity’s

income tax return along with Form 8609, and

Schedule A (Form 8609), Annual Statement,

for each building.

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.

Learning about the law

or the form 1 hr., 32 min.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time

is:

Recordkeeping 6 hr., 56 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.

Preparing and sending

the form to the IRS 4 hr., 6 min.

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 tax year after the year the building was

placed in service by checking the “Yes” box

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

Housing Credit Allocation Certification.

Recapture of Low-Income Housing Credit.

See the instructions for Form 8611 and

section 42(j) for more information.

Note: The general business credit consists of

several credits including investment (Form

3468), work opportunity (Form 5884),

welfare-to-work (Form 8861), alcohol used as

fuel (Form 6478), research (Form 6765),

low-income housing (Form 8586), disabled

access (Form 8826), enhanced oil recovery

(Form 8830), renewable electricity production

(Form 8835), Indian employment (Form 8845),

employer social security and Medicare taxes

paid on certain employee tips (Form 8846),

orphan drug (Form 8820), contributions to

selected community development

corporations (Form 8847), and trans-Alaska

pipeline liability fund. The empowerment zone

employment credit (Form 8844), while a

component of the general business credit, is

figured separately on Form 8844 and is never

carried to Form 3800.