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Cash Flows

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

Generally, it is expected that the rents generated from the operation of the low- income project will be sufficient to pay on-going operating expenses and retire debt. Did that expectation hold true? If not, it is important to understand why cash flows were insufficient and how the taxpayer responded. Did the taxpayer forgo maintenance or otherwise limit costs? Did the taxpayer find additional sources of revenue? Did the taxpayer stop servicing the debt, incur additional debt, or find alternative financing such as a grant? Did the partners make supplementary capital contributions?

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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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