This form is used to claim the low-income housing credit, which is one of the credits that make up the general business credit.
The main purpose of Part I is to collect in one convenient place information about your low-income housing credit which may be found in a number of different locations and to compute a tentative credit. The tentative credit is carried to Form 3800 where it may be subject to certain limitations applicable to the general business credit generally.
To complete Part I, you'll need to determine the source(s) of your low-income housing credit. Let's start with the simpler case.
Suppose that the only low-income housing credits which you are claiming are those which you receive from S corporations, partnerships, or estates and trusts. In that case, you can ignore lines 1 through 3 of the form completely. When you complete your K-1 worksheets for the flow-through entities in question, we will automatically carry the necessary information on to lines 4 and 5 of the form. Also, if you have any low-income housing credits shown in box 8 of a Schedule K-1 (Form 1065-B) that you received from an electing large partnership, you'll need to manually include such credits in the total on line 4.
Things get a little more complicated if you are claiming a credit other than through a flow-through entity. In that case, you should have received a copy of Form 8609 (Low-Income Housing Credit Allocation Certification) for each such credit from the appropriate housing credit agency. If you haven't done so already, you will need to complete Part II of each Form 8609 (without, however, signing it). Make a photocopy of the completed form and then complete all items in the signature section of the photocopy. Then fill out a Form 8609-A for each building. When it comes time to file your tax return, you will need to file, in addition to Form 8586, signed photocopies of all necessary Forms 8609 as well as Form 8609-A for each Form 8609.
If you are claiming a credit that does not come through a flow-through entity, you will need to complete lines 1 through 3 of Form 8586. We make this easy for you by carrying most of the necessary information directly from your Form 8609-A.
We compute the qualified basis by looking at your Form 8609-A and adding the amounts shown there on line 3.
We compute the credit shown in line 3 by adding together the amounts shown on line 18 of your Form 8609-A.
To compute this line we do the following:
We look at your Schedules K-1 (Partnership/S Corp.) and add the amounts on line 15 .
We look at your Schedules K-1 (Estate/Trust) and add the amounts on line .
If you have any low-income housing credits shown in box 8 of a Schedule K-1 (Form 1065-B) that you received from an electing large partnership, you'll need to manually include such credits in the total on line 4 .
Check the Yes or No box to indicate whether you (or your spouse if married filing jointly) have more than one of the credits included in the general business credit, a carryback or carryforward of any of these credits, or general credits from an electing large partnership (Schedule K-1, (Form 1065-B)).