LIHTC 100 Self Study Quiz Questions
With 100% Correct Answers
How do TPs make the election under 42f1 to defer the start of the
credit period? - ✔ ✔ The building owner may elect under 42f1 to
begin the credit and compliance period the year after building is placed
in service by checking the appropriate box on line 5a in Part II of Form
8609. Form 8609 must be attached to the owner's federal income tax
return for each year of the 15-year compliance period, which beings the
first year of the credit period
What irrevocable election is deemed to have occurred when the owner
does not claim a LIHTC on its timely filed federal income tax return for
the year in which the building is placed in service (or fails to timely file)?
- ✔ ✔ Owner is deemed to have made the irrevocable election to
begin the credit and compliance period the succeeding year.
When does the credit and compliance period begin again (assuming no
deferment)? - ✔ ✔ Begins the first day of the tax year in which the
building is placed in service, or the succeeding year if a 42f1 election is
made. Note: each building has one credit period
X, a calendar year corporation, was created on June 1, 1987. On July 1,
1987, X placed in service a qualified low-income building. If X chooses
not to defer the beginning of the credit period under section 42(f)(1) of
the Code, when does the credit period for the building begin? - ✔ ✔
When the first tax year of the credit period is a short tax year, the
credit period begins 12 months before the end of the short tax year. In
,other words, the credit period begins on what would have been the
first day of the tax year, had the tax year not been a short tax year.
So, here, b/c no election was made, the building's credit period began
12 months before the end of X's short tax year, AKA Jan. 1, 1987.
What is the Seller's Sworn Statement's purpose and who drafts it? - ✔
✔ H&K drafts and Aly sent it out with the LPA and ancillary equity
documents.
It is a certification from the Client/Investor's entities that ensures the
buyer of the land/property acquired legal title from the seller of that
land/property. And that the seller and buyer are not related persons
under the tax code.
What is the HAP contract? - ✔ ✔ Housing Assistance Payment
contract, I think it's for section 8 funding
What are some documents included in the HUD documents? - ✔ ✔
1. regulatory agreement - outlines compliance with LIHTC statute
2. building loan agreement
3. security instrument
What if a project has multiple buildings, and they are placed in service
on different dates? - ✔ ✔ General rule is still that a building in such
a project is a qualified low-income building only if the project as a
whole meets the minimum set-aside requirements not later than close
of first year of the credit period for the buildings.
,Essentially, if all the buildings are placed in service within 12 months
time and the project as a whole meets the Minimum Set-Aside Test,
whole Project qualifies.
How does the rent restriction amount work? - ✔ ✔ Gross rent paid
by tenants in low-income units cannot exceed 30% of the qualifying
income standard applicable to the project (ex: 50% of AMI for a unit,
and 30% of that). And the amount of individuals is presumed to be 1.5
individuals per bedroom for 1 bedrooms and up, or 1 individual for
studios.
Rent restriction is based on the number of bedrooms rather than the
number of persons actually living in the unit.
EX: 40-60 Test, 3 member family, 3 bedroom apartment.
In order to satisfy the income limitations test, what is maximum [__]%
of AMGI allowed? - ✔ ✔ Rent-Restriction Test, so 30% test also
must be satisfied. First, multiply bedrooms by 1.5, that is 4.5 persons.
Second, determine the permitted 30% rent as if the outcome was 4
persons, redo it assuming 5, then average them. Note that qualifying
income as % of area median is modified so as to include the combined
incomes of all occupants of a unit; for a 4 family that is 60% AMGI, and
for 5 it is 66% of AMGI, average is 63% (there are tables out there and it
is updated sometimes). Multiply that by the 30% maximum rent charge
to get 18.9% of AMGI. From the table ref'd above, under the 60% min-
, set-aside test, qualifying income must be below 54% AMGI for a family
of 3.
So rent cannot exceed 18.9% AMGI and income cannot exceed 54%
AMGI.
Rev. Rul 94-57 holds that a low-income tenant generally must satisfy
the the applicable income limitation elected by a project owner, at
what time? - ✔ ✔ Only at the time the tenant initially occupies the
rent-restricted unit. If AMGI declines, occupant generally will continue
to qualify
Next available unit rule in action:
(1) Assume that the tenant's annual income is recertified a year later to
be $36, at a time when the income limitation is $25. This is more than
140% of the current income limitation.
(2) Assume that the tenant's annual income is recertified a year later to
be $36, at a time when the income limitation is $28.
What must happen next? - ✔ ✔ (1) The next available unit must be
rented to a tenant who satisfies the current limitation
With 100% Correct Answers
How do TPs make the election under 42f1 to defer the start of the
credit period? - ✔ ✔ The building owner may elect under 42f1 to
begin the credit and compliance period the year after building is placed
in service by checking the appropriate box on line 5a in Part II of Form
8609. Form 8609 must be attached to the owner's federal income tax
return for each year of the 15-year compliance period, which beings the
first year of the credit period
What irrevocable election is deemed to have occurred when the owner
does not claim a LIHTC on its timely filed federal income tax return for
the year in which the building is placed in service (or fails to timely file)?
- ✔ ✔ Owner is deemed to have made the irrevocable election to
begin the credit and compliance period the succeeding year.
When does the credit and compliance period begin again (assuming no
deferment)? - ✔ ✔ Begins the first day of the tax year in which the
building is placed in service, or the succeeding year if a 42f1 election is
made. Note: each building has one credit period
X, a calendar year corporation, was created on June 1, 1987. On July 1,
1987, X placed in service a qualified low-income building. If X chooses
not to defer the beginning of the credit period under section 42(f)(1) of
the Code, when does the credit period for the building begin? - ✔ ✔
When the first tax year of the credit period is a short tax year, the
credit period begins 12 months before the end of the short tax year. In
,other words, the credit period begins on what would have been the
first day of the tax year, had the tax year not been a short tax year.
So, here, b/c no election was made, the building's credit period began
12 months before the end of X's short tax year, AKA Jan. 1, 1987.
What is the Seller's Sworn Statement's purpose and who drafts it? - ✔
✔ H&K drafts and Aly sent it out with the LPA and ancillary equity
documents.
It is a certification from the Client/Investor's entities that ensures the
buyer of the land/property acquired legal title from the seller of that
land/property. And that the seller and buyer are not related persons
under the tax code.
What is the HAP contract? - ✔ ✔ Housing Assistance Payment
contract, I think it's for section 8 funding
What are some documents included in the HUD documents? - ✔ ✔
1. regulatory agreement - outlines compliance with LIHTC statute
2. building loan agreement
3. security instrument
What if a project has multiple buildings, and they are placed in service
on different dates? - ✔ ✔ General rule is still that a building in such
a project is a qualified low-income building only if the project as a
whole meets the minimum set-aside requirements not later than close
of first year of the credit period for the buildings.
,Essentially, if all the buildings are placed in service within 12 months
time and the project as a whole meets the Minimum Set-Aside Test,
whole Project qualifies.
How does the rent restriction amount work? - ✔ ✔ Gross rent paid
by tenants in low-income units cannot exceed 30% of the qualifying
income standard applicable to the project (ex: 50% of AMI for a unit,
and 30% of that). And the amount of individuals is presumed to be 1.5
individuals per bedroom for 1 bedrooms and up, or 1 individual for
studios.
Rent restriction is based on the number of bedrooms rather than the
number of persons actually living in the unit.
EX: 40-60 Test, 3 member family, 3 bedroom apartment.
In order to satisfy the income limitations test, what is maximum [__]%
of AMGI allowed? - ✔ ✔ Rent-Restriction Test, so 30% test also
must be satisfied. First, multiply bedrooms by 1.5, that is 4.5 persons.
Second, determine the permitted 30% rent as if the outcome was 4
persons, redo it assuming 5, then average them. Note that qualifying
income as % of area median is modified so as to include the combined
incomes of all occupants of a unit; for a 4 family that is 60% AMGI, and
for 5 it is 66% of AMGI, average is 63% (there are tables out there and it
is updated sometimes). Multiply that by the 30% maximum rent charge
to get 18.9% of AMGI. From the table ref'd above, under the 60% min-
, set-aside test, qualifying income must be below 54% AMGI for a family
of 3.
So rent cannot exceed 18.9% AMGI and income cannot exceed 54%
AMGI.
Rev. Rul 94-57 holds that a low-income tenant generally must satisfy
the the applicable income limitation elected by a project owner, at
what time? - ✔ ✔ Only at the time the tenant initially occupies the
rent-restricted unit. If AMGI declines, occupant generally will continue
to qualify
Next available unit rule in action:
(1) Assume that the tenant's annual income is recertified a year later to
be $36, at a time when the income limitation is $25. This is more than
140% of the current income limitation.
(2) Assume that the tenant's annual income is recertified a year later to
be $36, at a time when the income limitation is $28.
What must happen next? - ✔ ✔ (1) The next available unit must be
rented to a tenant who satisfies the current limitation
