Form 11652, also known as the Application for Transfer of Residential Organizational Deficiency Credits, serves a specific purpose within the taxation system. Here are some relevant points to understand its purpose:
1. Explanation of the form: Form 11652 is an IRS form used by taxpayers, specifically those involved in low-income housing projects, to apply for a transfer of residential organizational deficiency credits.
2. Low-income housing projects: The purpose of the form is related to the Low-Income Housing Tax Credit (LIHTC) program. This program encourages investment in affordable housing by providing tax credits to developers of qualified projects.
3. Transfer of credits: In the process of developing low-income housing projects, developers may have accumulated residential organizational deficiency credits, which are created when a project is not completed or fails to meet certain requirements. Form 11652 allows developers to transfer these credits to another qualified project.
4. Facilitating investment and completion of projects: By allowing the transfer of residential organizational deficiency credits, Form 11652 serves as a tool to encourage developers to invest in and complete projects that might otherwise struggle due to unforeseen circumstances or financial difficulties.
5. Utilizing unused credits: Transferring unused credits from one low-income housing project to another helps maximize the benefits of the LIHTC program. It enhances the chances of meeting targeted affordable housing goals and ensures that available tax credits are utilized effectively to create more affordable housing options.
6. Compliance with regulations: Form 11652 aids in ensuring compliance with IRS regulations and guidelines regarding the transfer of residential organizational deficiency credits. The form requires detailed information about the transferring and receiving projects to evaluate eligibility and conformity with program requirements.
7. Reduction of tax liability: By successfully transferring residential organizational deficiency credits, developers can potentially reduce their tax liability. These credits offset a portion of their tax obligations, providing financial incentives for their continued involvement in low-income housing projects.
8. Supporting affordable housing initiatives: Ultimately, the purpose of Form 11652 is to support the development and maintenance of affordable housing options for low-income individuals and families. The form helps to streamline the process of transferring credits and encourages the growth of affordable housing initiatives across the country.
It is important to note that tax-related matters can be complex, and consulting with a tax professional or the IRS itself is advisable when dealing with Form 11652, ensuring compliance and accurate completion of the form.