4 CSR 85-5.100 - [Effective until 3/31/2024] Not-for-Profits
(1)
Not-for-profit entities, including but not limited to entities organized as
not-for-profit corporations pursuant to chapter 355, RSMo, shall be ineligible
for tax credits. Under no circumstance shall tax credits be issued to a
not-for-profit.
(2) A for-profit
entity will be restricted from full participation in the program if that entity
has a not-for-profit as part of its ownership group or has received a
contribution from a related not-for-profit. Such a for-profit applicant shall
have its tax credits reduced by the greater of:
(A) The percentage interest in its ownership
held by or attributed to a not-for-profit. When a not-for-profit is considered
part of the applicant's ownership group, ownership interest shall be attributed
to the related party not-for-profit in accordance with the attribution rules of
section 304(c)(3) of the Internal Revenue Code of 1986, as amended;
and
(B) The percentage of capital
contributed by or on behalf of a not-for-profit owner or related
party.
(3) A for-profit
applicant may obtain a non-forgivable loan from a related not-for-profit entity
and not have its tax credits reduced on account of such loan if such loan is
made on reasonable, commercial terms evidencing an arms-length transaction, as
reasonably determined by the department.
(4) For purposes of section (2) of this rule,
an ownership interest will not be attributed to a related party not-for-profit
that is separated from the applicant in the ownership structure, directly or
indirectly, by a for-profit entity, including blocker corporations and all
corporations filing U.S. Treasury (Internal Revenue Service) Form 1120 or their
successors that have been formed for a legitimate business purpose. The related
party not-for profit is still considered to be a related party for all other
purposes under the program. The determination of whether or not a business was
formed for a legitimate business purpose will be made by the department after
considering all relevant facts and circumstances. In its review of a legitimate
business purpose, the department shall consider, but not be limited to, the
factors and principles set forth in Moline Properties, Inc. v. Commissioner,
319 U.S. 436 (1943), and applicable federal law.
(5) In cases of not-for-profit ownership for
the sole purpose of obtaining local tax exemptions pursuant to chapters 100 or
353, RSMo, consistent with the holding of the U.S. Supreme Court in Helvering
v. F&R Lazarus & Co., 308 U.S. 252 (1939) and the Internal Revenue
Service's published guidance in Revenue Ruling 68-590, the change in ownership
required for such local tax exemptions will not render a project ineligible for
tax credits, provided that all invoices submitted to the department as
Qualified Rehabilitation Expenditures (QREs) are incurred and paid by the
applicant.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.