FTB exempts Low-Income Housing Credit from disclosure requirements

The FTB has clarified that they are now following IRS Rev. Proc. 2007-20, which exempts from the IRS Form 8886 filing requirement transactions in which the refundable or contingent fee is related to eight federal tax credits. One of the federal tax credits, the Low-Income Housing Credit, has a California counterpart. Since California’s Low-Income Housing Credit generally conforms to the federal Low-Income Housing Credit, the IRS exemption from Form 8886 reporting also applies California.  (E-mail to Spidell Publishing from the FTB on December 14, 2007) The FTB had previously told Spidell that it was not following Rev. Proc. 2007-20.

With the exception of the Low-Income Housing Credit, California still requires the filing of Form 8886 for other tax incentives generated from a contingency or refundable fee arrangement.