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1st and 11th Year of the Credit Period

IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis) · 2026 edition · updated 2026-07-29 · United States

If the first year of the compliance period is audited, the special rule for computing the applicable fraction under IRC §42(f) (2) is used. The taxpayer should provide:

  • Certificates of Occupancy, which will establish when the units were first available for occupancy. The taxpayer may provide alternative documentation. See Notice 1988-116.

  • A schedule indicating when each low-income unit was first occupied by an incomequalified household.

  • Computation of the applicable fraction, including the computation of the applicable fraction for each month.

If the eleventh year of the compliance period is audited and the taxpayer has claimed credit, the taxpayer should provide the information identified above as well as a copy of the tax return for the first year of the credit period.

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▸Contents — IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis)
IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis)

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