HCCP Regulatory Compliance 2 — Questions and Answers
Question 1: Under IRS Revenue Procedure 2016-15, what is the maximum income a tenant can earn in the year following move-in before triggering income recertification concerns under the next-available-unit rule?
- 140% of the AMGI limit for the applicable unit size (Correct answer)
- 120% of the AMGI limit for the applicable unit size
- 100% of the AMGI limit for the applicable unit size
- 150% of the AMGI limit for the applicable unit size
Correct answer: 140% of the AMGI limit for the applicable unit size
The next-available-unit (140% rule) requires that once a tenant's income exceeds 140% of the qualifying limit, the next available comparable unit must be rented to a qualifying tenant.
Question 2: Which federal form is used by LIHTC property owners to report the certification of qualified basis and eligible basis to the IRS annually?
- Form 8586 (Correct answer)
- Form 8609
- Form 8823
- Form 8611
Correct answer: Form 8586
Form 8586 (Low-Income Housing Credit) is filed annually by the building owner to claim the housing credit and report qualified and eligible basis.
Question 3: A LIHTC property has a set-aside of 20/50. Which tenant household would qualify for a restricted unit?
- A household at 48% AMI (Correct answer)
- A household at 55% AMI
- A household at 60% AMI
- A household at 65% AMI
Correct answer: A household at 48% AMI
The 20/50 set-aside requires at least 20% of units be occupied by households at or below 50% AMI, so 48% AMI qualifies.
Question 4: Which IRS publication provides guidance specifically on tenant income certification and recordkeeping requirements for LIHTC properties?
- Revenue Procedure 94-65 (Correct answer)
- Revenue Ruling 2004-82
- Revenue Procedure 2014-49
- IRS Notice 88-91
Correct answer: Revenue Procedure 94-65
Revenue Procedure 94-65 outlines the income certification and recordkeeping standards that LIHTC owners and managers must follow.
Question 5: What happens to a building's eligible basis if it receives a federal grant that is used to finance construction costs?
- The eligible basis must be reduced by the amount of the federal grant (Correct answer)
- The eligible basis is unaffected by federal grants
- The eligible basis is increased to reflect the grant subsidy
- The building loses all credit eligibility upon receiving a federal grant
Correct answer: The eligible basis must be reduced by the amount of the federal grant
IRC §42(d)(5) requires that eligible basis be reduced by any federally funded grant proceeds used for construction or acquisition costs.
Question 6: Under the extended use agreement, what is the minimum total compliance period (initial + extended) for most LIHTC properties?
- 45 years (Correct answer)
- 30 years
- 15 years
- 60 years
Correct answer: 45 years
Most LIHTC properties have a 15-year initial compliance period plus a 30-year extended use period, totaling a minimum of 45 years of affordability.
Question 7: When a state agency discovers a noncompliance issue at a LIHTC property, within how many days must it notify the IRS by filing Form 8823?
- 45 days (Correct answer)
- 30 days
- 60 days
- 90 days
Correct answer: 45 days
State housing credit agencies must file Form 8823 with the IRS within 45 days of discovering (or the end of any correction period for) a noncompliance event.
HCCP Regulatory Compliance 2
Under IRS Revenue Procedure 2016-15, what is the maximum income a tenant can earn in the year following move-in before triggering income recertification concerns under the next-available-unit rule?