Hillside Group,a partnership,purchased a building for $60,000 that was originally placed in service in 1929.The partnership incurs $180,000 rehabilitating the building.The building serves as the partnership's headquarters.The rehabilitation is completed in November 2017.What amount can the Hillside Group claim on their partnership return as a rehabilitation tax credit?
A)$2,000
B)$3,000
C)$6,000
D)$18,000
E)$24,000

Question

Quizplus · Accepted Answer

The partnership can claim a rehabilitation tax credit equal to 20% of the qualified rehabilitation expenditures, which in this case is $180,000. Therefore, the amount of the rehabilitation tax credit is $36,000. However, since the building was placed in service before 1936, the credit is limited to the taxpayer's tax liability for the year. Therefore, the partnership can claim a rehabilitation tax credit of $18,000 (the lesser of $36,000 or their tax liability for the year).

Hillside Group,a Partnership,purchased a Building for $60,000 That Was Originally