Transferability of Credit

(1) Transferors, Transferees. (a) Any taxpayer with an ownership interest in a qualified Massachusetts project with respect to which there has been allocated Massachusetts standard LIHTC and any taxpayer to whom the right to claim Massachusetts standard LIHTC has been allotted or transferred may transfer the right to claim unclaimed Massachusetts standard LIHTC to any other Massachusetts taxpayer without the necessity of transferring any ownership interest in the original project or any interest in the entity which owns the original project. The transferor may transfer all or any portion of tax credits issued, sold, or assigned to parties who are eligible under the provisions of M.G.L. c. 62, § 6I(c)(1), and M.G.L. c. 63, § 31H(f)(1). (b) Any taxpayer making a qualified donation with respect to a qualified Massachusetts project with respect to which there has been allocated Massachusetts donation LIHTC may transfer its right to claim donation LIHTC after the qualified donation has been made, and any taxpayer to whom the right to claim Massachusetts donation LIHTC has been allotted or transferred may transfer the right to claim unclaimed Massachusetts donation LIHTC to any other Massachusetts taxpayer without the necessity of any further transfer of ownership interest in the original project or in the taxpayer making the qualified donation. (c) For treatment of carry forward credit with respect to both donation LIHTC and standard LIHTC, see 760 CMR 54.10. (2) Transfer Contract Requirements. A taxpayer, owning an interest in a qualified Massachusetts project or to whom the right to claim Massachusetts low-income housing tax credit has been allotted or transferred, who transfers his, her or its credit such that credit may be claimed by a taxpayer without ownership in the project and without an interest in the entity that owns the project must enter into a transfer contract with the transferee. The transfer contract must specify the following: (a) Building Identification Numbers for all buildings in the project as of the date of transfer; (b) in the case of a standard LIHTC, the date each building in the project was placed in service, and in the case of a donation tax credit the date that the qualified donation was made; (c) the 15-year compliance period for the project; (d) in the case of a standard LIHTC, the schedule of years during which the credit may be claimed and the amount of credit previously claimed; and (e) the taxpayer or taxpayers that are responsible for paying recapture if recapture should occur. The transferring party shall attach a copy of this contract to the transfer statement required under 760 CMR 54.13(4). 54.07: continued (3) Transferred Eligibility to Claim Credit. Any taxpayer who is a transferee of the right to claim a Massachusetts low-income housing tax credit with respect to a qualified Massachusetts project may, provided all transfer requirements and all other requirements for claiming such credit are met, claim such credit notwithstanding the fact that the credit may initially have been allocated to a taxpayer paying a different income tax (i.e., personal or corporate) (4) Sale of Credit is Sale of Capital Asset. The sale of Massachusetts low-income housing tax credit will be treated as the sale of a capital asset under the Massachusetts personal income tax or the net income measure of the corporate excise. (5) Examples. The following examples illustrate the application of 760 CMR 54.07: (a) Example 1. If taxpayer X receives an allotment of Massachusetts low-income housing tax credit as a partner in a partnership that owns a qualified Massachusetts project, taxpayer X may transfer the Massachusetts low-income housing tax credit allotted to it to taxpayer Y, whether or not taxpayer Y is a partner in the partnership. (b) Example 2. Credit is allocated with respect to a project owned by a limited liability company and allotted to individuals who are members in the company. One of the members may sell his or her credit to a corporation, whether or not such corporation is a member in the company.