Yesterday the U.S. Department of the Treasury's Community
Development Financial Institutions Fund (the "CDFI Fund")
announced the award of $3.5 billion in Federal New Markets Tax
Credit (NMTC) allocation authority through its annual and
competitive application process. Eighty-five organizations
certified as Community Development Entities (CDEs) received the
awards, while over 282 CDEs applied.
The NMTC Program is designed to spur employment and investment
in low-income communities by allowing individuals and corporate
investors to receive credit against their Federal income tax
liability in exchange for making equity investments in CDEs that
have been awarded allocation authority. The CDEs in turn use the
investment proceeds to make loans and/or investments in businesses
or real estate projects located in low-income communities. The
credit totals 39 percent of the original investment and is claimed
over a period of seven years (five percent for each of the first
three years, and six percent for each of the remaining four years).
A taxpayer's investment in the CDE generally must remain
outstanding throughout the seven year period. With the award of the
additional $3.5 billion in allocation authority, $3.5 billion in
loans and/or investments will be made in low-income communities and
those investments will generate $1.365 billion in tax credits over
the seven year period.
A list of the organizations that received 2012 allocations can
be found at: http://www.cdfifund.gov/news_events/CDFI-2013-21-
Of the $3.5 billion in allocation authority that was awarded,
$1.905 billion is available for qualifying projects that are
located anywhere in the country, an additional $160 million is
available for qualifying projects located in Missouri, an
additional $105 million is available to qualifying projects located
in Illinois, and an additional $45 million is available to
qualifying projects located in Washington, D.C.
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On October 5th, 2016, the Internal Revenue Service and Treasury Department published final, temporary and reproposed regulations1 under Sections 707 and 752 of the Internal Revenue Code of 1986, as amended.
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