Mo. Code Regs. tit. 4 § 85-5.100
Current through Register Vol. 49, No. 24, December 16, 2024
Section 4 CSR 85-5.100 - Not-for-ProfitsPURPOSE: This proposed amendment will eliminate an unnecessary provision.
(1) Not-for-profit entities, including but not limited to entities organized as not-for-profit corporations pursuant to chapter 355, RSMo, shall be ineligible for tax credits. Under no circumstance shall tax credits be issued to a not-for-profit.(2) A for-profit entity will be restricted from full participation in the program if that entity has a not-for-profit as part of its ownership group or has received a contribution from a related not-for-profit. Such a for-profit applicant shall have its tax credits reduced by the greater of: (A) The percentage interest in its ownership held by or attributed to a not-for-profit. When a not-for-profit is considered part of the applicant's ownership group, ownership interest shall be attributed to the related party not-for-profit in accordance with the attribution rules of section 304(c)(3) of the Internal Revenue Code of 1986, as amended; and(B) The percentage of capital contributed by or on behalf of a not-for-profit owner or related party.(3) For purposes of section (2) of this rule, an ownership interest will not be attributed to a related party not-for-profit that is separated from the applicant in the ownership structure, directly or indirectly, by a for-profit entity, including blocker corporations and all corporations filing U.S. Treasury (Internal Revenue Service) Form 1120 or their successors that have been formed for a legitimate business purpose. The related party not-for-profit is still considered to be a related party for all other purposes under the program. The determination of whether or not a business was formed for a legitimate business purpose will be made by the department after considering all relevant facts and circumstances. In its review of a legitimate business purpose, the department shall consider, but not be limited to, the factors and principles set forth in Moline Properties, Inc. v. Commissioner, 319 U.S. 436 (1943), and applicable federal law.(4) In cases of not-for-profit ownership for the sole purpose of obtaining local tax exemptions pursuant to Chapters 100 or 353, RSMo, consistent with the holding of the U.S. Supreme Court in Helvering v. F&R Lazarus & Co., 308 U.S. 252 (1939) and the Internal Revenue Service's published guidance in Revenue Ruling 68-590, the change in ownership required for such local tax exemptions will not render a project ineligible for tax credits, provided that all invoices submitted to the department as Qualified Rehabilitation Expenditures (QREs) are incurred and paid by the applicant.Adopted by Missouri Register May 1, 2019/Volume 44, Number 9, effective 3/30/2019Amended by Missouri Register October 1, 2019/Volume 44, Number 19, effective 11/30/2019Amended by Missouri Register February 1, 2024/volume 49, Number 03, effective 3/31/2024.