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Tax News: IRS Proposed Rule Rehabilitation Credit

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Today, May 21, 2020, the Internal Revenue Service ("IRS") proposed new rules that amend Internal Revenue Code Section 47.

Prior to the Tax Cuts and Jobs Act ("TCJA"), former section 47(a) provided a two-tier credit for qualified rehabilitation expenditures (QREs) incurred in connection with the 2 rehabilitation of a qualified rehabilitated building (QRB).

As amended by the TCJA, section 47(a)(1) provides that for purposes of the investment credit under section 46, for any taxable year during the 5-year period beginning in the taxable year in which a QRB is placed in service, the rehabilitation credit for such taxable year is an amount equal to the ratable share for the year.

Also, as amended by the TCJA, section 47(a)(2) defines the ratable share for any taxable year during the credit period as the amount equal to 20 percent of the QREs with respect to the QRB, as allocated ratably to each year during the credit period. Section 47(b)(1), which the TCJA did not amend, provides that QREs with respect to any QRB are taken into account for the taxable year in which the QRB is placed in service.

To read the full proposed bill, see link here: https://aboutbtax.com/QYW

For any questions or assistance, please contact the Tax Attorneys at Fazzio Law, we are in your corner!

Category: Tax

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