[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.42-4]

[Page 151]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.42-4  Application of not-for-profit rules of section 183 to low-income housing credit activities.

    (a) Inapplicability to section 42. In the case of a qualified low-
income building with respect to which the low-income housing credit 
under section 42 is allowable, section 183 does not apply to disallow 
losses, deductions, or credits attributable to the ownership and 
operation of the building.
    (b) Limitation. Notwithstanding paragraph (a) of this section, 
losses, deductions, or credits attributable to the ownership and 
operation of a qualified low-income building with respect to which the 
low-income housing credit under section 42 is allowable may be limited 
or disallowed under other provisions of the Code or principles of tax 
law. See, e.g., sections 38(c), 163(d), 465, 469; Knetsch v. United 
States, 364 U.S. 361 (1960), 1961-1 C.B. 34 (``sham'' or ``economic 
substance'' analysis); and Frank Lyon Co. v. Commissioner, 435 U.S. 561 
(1978), 1978-1 C.B. 46 (``ownership'' analysis).
    (c) Effective date. The rules set forth in paragraphs (a) and (b) of 
this section are effective with respect to buildings placed in service 
after December 31, 1986.

[T.D. 8420, 57 FR 24729, June 11, 1992]