Revised safe harbor dates, management contracts not private business use

Revised safe harbor dates, management contracts

The IRS has revised an effective date provision in Rev. Proc. 2016-44 with respect to safe harbor rules relating to bond-financed property and management contracts not resulting in private business use.

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Original version

The IRS last week released an advance version of Rev. Proc. 2016-44 that provided safe harbor conditions under which a management contract does not: (1) result in private business use of property financed with governmental tax-exempt bonds under section 141(b); or (2) cause the modified private business use test for property financed with qualified 501(c)(3) bonds under section 145(a)(2)(B) to be met.

The originally issued version of Rev. Proc. 2016-44 specified that an issuer could apply the safe harbors in Rev. Proc. 97-13 (as modified by Rev. Proc. 2001-39 and amplified by Notice 2014-67) to a management contract that is entered into before February 18, 2017, and that is not materially modified or extended on or after February 18, 2017.

Date changed to August 18, 2017

The version of Rev. Proc. 2016-44 that appears in Internal Revenue Bulletin 2016-36 (dated September 6, 2016) reflects that an issuer may apply the safe harbors in Rev. Proc. 97-13 (as modified by Rev. Proc. 2001-39 and amplified by Notice 2014-67) to a management contract that is entered into before August 18, 2017, and that is not materially modified or extended on or after August 18, 2017. 

 

Read the version of Rev. Proc. 2016-44 as published in IRB 2016-36 [PDF 411 KB]

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