Hillside Group,a partnership,purchased a building for $60,000 that was originally placed in service in 1929.The partnership incurs $180,000 rehabilitating the building.The building serves as the partnership's headquarters.The rehabilitation is completed in November 2013.What amount can the Hillside Group claim on their partnership return as a rehabilitation tax credit?
A)$ 2,000
B)$ 3,000
C)$ 6,000
D)$18,000
E)$24,000

Question

Quizplus · Accepted Answer

The building was placed in service before 1936, which means it meets the criteria for the rehabilitation tax credit. The credit amount is 20% of the qualified rehabilitation expenses, which in this case is $180,000. Therefore, the Hillside Group can claim a rehabilitation tax credit of $36,000. However, the credit must be claimed over a five-year period, so the amount claimed each year is $7,200. The partnership can claim $7,200 for the tax year 2013, which is the year the rehabilitation was completed.

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