Leveraging New Markets Tax Credits to Finance Community Development: Latest Regs, Guidance, and Legal Developments

Twinning With Historic Tax Credits and Qualified Opportunity Zones, Allocating COD Income to Partners

Note: CPE credit is not offered on this program

A live 90-minute premium CLE webinar with interactive Q&A


Thursday, November 12, 2020

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE webinar will provide counsel with an overview of the New Market Tax Credit (NMTC) program and IRS regulations and guidance. The panel will discuss best practices for structuring NMTC deals, twinning with historic tax credits (HTCs) and Qualified Opportunity Zones, and allocating COD income among partners.

Description

The NMTC program presents significant opportunities for investors in economic development projects to secure additional financing to complete projects in low-income areas. For 2020 Congress authorized $5 billion in funding for the NMTC program, and more allocations are expected by year-end.

NMTCs can offer a critical source of financing for a variety of qualified equity investments (QEIs), including mixed-use affordable housing, charter schools, historic preservation projects, manufacturing, food and beverage processing, federally qualified health centers, and renewable energy projects. These tax credits are subject to recapture during the seven-year credit period if a QEI fails to satisfy specific investment and qualified business requirements.

Counsel must understand the recapture triggers, the impact of the IRS safe harbor for HTCs and current regulations relating "qualified active low-income community businesses" and "qualified low-income community investments," true debt issues, lease vs. ownership issues, the economic substance doctrine, and cancellation of indebtedness planning when negotiating new transactions, evaluating existing deals, or twinning NMTCs with other tax credit and tax deferral programs.

Listen as our authoritative panel discusses best practices for structuring NMTC deals, twinning with HTCs, QOZs, and renewable energy ITCs or PTCs, coordinating with USDA/SBA lending, and allocating COD income among partners. The panel will also discuss trends in the NMTC program, IRS regulations and guidance, and legislative developments under the new administration.

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Outline

  1. Structuring an NMTC deal
  2. Historic tax credit safe harbor
  3. Qualification issues/deal readiness/tax opinion issues
  4. Twinning of NMTCs with HTCs, QOZs and other tax benefits
  5. Allocation of costs in an unwind
  6. Drafting operating agreements to cover the allocation of COD income among partners
  7. Restructurings/workouts during the seven-year compliance period; recapture risk
  8. Legislative developments

Benefits

The panel will review these and other key issues:

  • What are best practices for structuring NMTC deals to ensure compliance with IRS program requirements?
  • What roles can nonprofit 501(c)(3) organizations play in NMTC deals, and what issues should they consider before entering into these transactions?
  • What is the potential impact on the use of NMTCs of the IRS safe harbor for partnerships claiming rehabilitation tax credits?
  • How are NMTC deals impacted by cancellation of indebtedness?

Faculty

Boccia, Thomas
Thomas Boccia, CPA

Partner
Novogradac & Company

Mr. Boccia specializes in community development, including historic rehabilitation tax credit (HTC), new markets tax...  |  Read More

Sanders, Michael
Michael I. Sanders

Partner
Blank Rome

Mr. Sanders focuses his practice in the area of taxation, particularly in matters affecting partnerships, limited...  |  Read More

Simmons, Myriam
Myriam Sido Simmons

Director, Credits and Incentives Consulting
Ryan

Ms. Simmons specializes in providing business incentives services to private sector clients and leads the New...  |  Read More

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