The Internal Revenue Service has issued a new notice (2010-18) that provides guidance in several aspects regarding the proper treatment of Section 1602 low-income housing tax credit (LIHTC) credit exchange funds. The notice instructs state housing credit agencies on how to reduce their annual housing credit ceiling by the amount of credits exchanged for cash; clarifies that subawards of exchange grant funds are not gross income to recipients (i.e. developers) and are not subject to federal taxation; and clarifies that subawards of grants do not reduce the basis of a building. Read More…