Understanding Tax Credit Units and Partnerships
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Questions and Answers

What are the requirements for units that support tax credits?

  • Income limits
  • Rent limits
  • Safe and sanitary
  • All of the above (correct)

    • What is a general partner?

    An owner (partner) who has unlimited liability and is active in managing the firm.

    What is a limited partnership (LP)?

    A partnership where one or more partners have limited liability and at least one (the general partner) has unlimited liability.

    What is the role of a syndicator?

    <p>Facilitates the GP and LP relationship and combines multiple projects into a single fund.</p> Signup and view all the answers

    What are State HFAs often called?

    <p>State agencies or state allocating agencies.</p> Signup and view all the answers

    What are the two primary functions of State HFAs as used by the IRS?

    <p>The allocation of credits and compliance monitoring.</p> Signup and view all the answers

    How is the ceiling on the allocation amount determined?

    <p>Adjusted for inflation each year and based on a state's population.</p> Signup and view all the answers

    What document contains the allocation rules?

    <p>Qualified Allocation Plan (QAP).</p> Signup and view all the answers

    How are applications scored for tax credits?

    <p>According to the QAP, and credits are awarded accordingly.</p> Signup and view all the answers

    What form is used for reporting non-compliance to the IRS?

    <p>Form 8823.</p> Signup and view all the answers

    The states use ______ for local code for physical inspections.

    <p>Uniform Physical Conditions Standards (UPCS).</p> Signup and view all the answers

    How is household income for tax credit properties determined?

    <p>In a manner consistent with Section 8 housing rules.</p> Signup and view all the answers

    What changes when HUD modifies the document?

    <p>The tax credit income and asset rules change with it.</p> Signup and view all the answers

    What documents must be included for tenant income certification?

    <p>Household application, verification of income and assets, student status, tenant income certification (TIC).</p> Signup and view all the answers

    Student status exemptions include conditions like ______.

    <p>Married adults entitled to file jointly, single parents with minor children, receiving TANF, former foster care assistance, assistance from similar programs.</p> Signup and view all the answers

    When must student status be verified?

    <p>Move-in and annually.</p> Signup and view all the answers

    Who is counted in the household?

    <p>Children temporarily absent, in joint custody, away at school, unborn, members temporarily away, members in rehab, future spouse or roommate, foster children and adults.</p> Signup and view all the answers

    Who is NOT included in the household?

    <p>Live-in attendants.</p> Signup and view all the answers

    Define a live-in attendant.

    <p>A person who resides with elderly persons or persons with disabilities, essential for their care but not obligated to support them.</p> Signup and view all the answers

    What constitutes annual income?

    <p>Earned income + unearned income + income from assets before any deductions.</p> Signup and view all the answers

    What is considered unearned income?

    <p>Benefit income, unemployment income.</p> Signup and view all the answers

    What is earned income?

    <p>Income from jobs or wages.</p> Signup and view all the answers

    What should be done when subtracting members?

    <p>Wait until the next recertification date.</p> Signup and view all the answers

    What should be done when adding new members?

    <p>Verify and add the new members' income to the most recent certification.</p> Signup and view all the answers

    What are the three basic types of verification available in order of preference?

    <ol> <li>Third party verification from the source, 2. Review of documentation from the applicant, 3. Family certification by household statement.</li> </ol> Signup and view all the answers

    What to do if third party verification cannot be gathered?

    <p>Current, complete, and unaltered original documents are allowed.</p> Signup and view all the answers

    40 hours a week, hourly pay equals what total hours in a year?

    <p>2,080.</p> Signup and view all the answers

    How many weeks are in a year?

    <ol start="52"> <li></li> </ol> Signup and view all the answers

    How many pay periods are there in a bi-weekly pay schedule?

    <ol start="26"> <li></li> </ol> Signup and view all the answers

    How many pay periods are in a semi-monthly pay schedule?

    <ol start="24"> <li></li> </ol> Signup and view all the answers

    How many pay periods are in a monthly pay schedule?

    <ol start="12"> <li></li> </ol> Signup and view all the answers

    What to do when a raise is indicated on the verification of employment?

    <p>Use the effective date of the raise and the date of the certification in the calculation.</p> Signup and view all the answers

    What are the IRS 1040 schedules C, E, F for?

    <p>C: business income, E: rental income, F: farm income.</p> Signup and view all the answers

    Study Notes

    Tax Credit Units Requirements

    • Income limits, rent limits, and safe and sanitary conditions are essential for tax credit units.

    General Partner

    • Owners with unlimited liability.
    • Actively involved in managing the firm.

    Limited Partnership (LP)

    • Composed of at least one general partner with unlimited liability.
    • Limited partners are passive investors without management roles.

    Syndicator

    • Facilitates the relationship between general partners (GP) and limited partners (LP).
    • Combines multiple projects into a single fund, offering shares to individual investors.

    State HFAs

    • Also known as state agencies or state allocating agencies.

    Functions of State HFAs

    • Responsible for allocation of tax credits.
    • Conduct compliance monitoring according to IRS requirements.

    Allocation Ceiling

    • Adjusted yearly for inflation, based on state population.

    Allocation Rules

    • Detailed in the Qualified Allocation Plan (QAP).

    Application Scoring

    • Applications are scored based on the QAP; credits are awarded accordingly.

    Noncompliance Reporting

    • Reported to the IRS using Form 8823.

    Physical Inspection Standards

    • Uniform Physical Condition Standards (UPCS) are used for local code inspections.

    Household Income Determination

    • Consistent with Section 8 housing rules.

    HUD Handbook Impact

    • Changes in HUD handbook 4350.3 affect tax credit income and asset rules.

    Required Tenant Documentation

    • Must include household application, income verification, student status, and Tenant Income Certification (TIC).

    Exemptions for Student Status

    • Exemptions apply for married couples, single parents with minors, TANF recipients, former foster care recipients, and individuals receiving similar assistance.

    Student Status Verification

    • Required at move-in and annually thereafter.

    Household Member Inclusion

    • Includes temporarily absent children, joint custody children, foster children, unborn children, and other family members temporarily away.

    Exclusion from Household Count

    • Live-in attendants are not included.

    Definition of Live-In Attendant

    • Resides with elderly or disabled persons for essential care, not obligated for their support.

    Annual Income Definition

    • Total of earned income, unearned income, and income from assets before deductions (gross income).

    Types of Income

    • Unearned Income: Benefits and unemployment income.
    • Earned Income: Income from jobs or wages.

    Member Adjustment Policy

    • Subtract members at the next recertification; verify and add income of new members immediately.

    Verification Types Preference

    • Third-party verification from the source is preferred, followed by documentation review, then family certification.

    Document Use When Verification Fails

    • Original documents are accepted if third-party verification is unattainable.

    Weekly Income Calculation

    • 40 hours per week equals 2,080 hours annually (52 weeks).

    Pay Periods

    • Weekly wages calculated over 52 weeks.
    • Bi-weekly wages calculated over 26 pay periods.
    • Semi-monthly wages calculated over 24 pay periods.
    • Monthly wages calculated over 12 pay periods.

    Raise Impact on Calculations

    • Use the effective raise date for income calculations during certification.

    IRS Schedules for Income Reporting

    • Schedule C for business income, Schedule E for rental income, Schedule F for farm income.

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    Description

    This quiz covers the requirements and components of tax credit units, including the roles of general partners, limited partnerships, and syndicators. Additionally, it explains the functions of state housing finance agencies (HFAs) in allocating tax credits and compliance monitoring. Test your knowledge of these essential concepts in affordable housing finance.

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