While this caveat is intended to describe the IRS` objective of expanding and clarifying Reverend 97-13 and his descendants and giving a brief summary of the new safe port for management contracts, there are several secure safe havens in the general security port described above, and whether a private use management contract remains based on or without a test of facts and circumstances. A management contract for financed real estate (if it cannot be properly characterized as a lease) may lead to private commercial use of the property on the basis of all facts and circumstances. A management contract for financed real estate generally results in private use of the property where the contract provides compensation for services that, with compensation, are based, in whole or in part, on a share of the net profit from the operation of the facility. A management contract for funded real estate results in private commercial use of the property when the claimant is treated as a tenant or owner of federally funded income tax assets. For safe ports under rev. Proc. 2016-44 and Rev. Proc. 2017-13, the service provider must agree that it is not entitled and will not occupy a tax position incompatible with the performance of a service provider for the qualified user with respect to the managed property. The service provider`s failure to comply with this agreement may be evidence that the agreement is not just a management contract. If the service provider claims the rent of the property managed by the service provider. B, amortization, investment tax credits or the deduction of a payment, the agreement can be characterized as a forward sale or lease.
Secure returns to confirm that the supplier is complying with its agreement. If you find that the supplier is not declaring in accordance with its agreement, refer to the corresponding business unit and check whether the tax position agreement should be treated in the administration contract as evidence of fraud. On August 22, the IRS issued Regulation Procedure 2016-44, which constitutes a substantial revision of safe ports, in which a management contract will not result in private use of tax-exempt real estate financed by bonds. This new guide replaces the safe ports described in Income Procedure 97-13 as amended by the 2001-39 income procedure and reinforced by the 2014-67 IRS communication. Rev. Proc. 2016-44 Modifies and replaces rev. 97-13, Rev.
Proc. 2001-39, 2001-2 C.B 38 and Section 3.02 of 2014-67, 2014-46 I.R.B 822. Rev. Proc. 2016-44 applies a principles-based approach like its predecessor and focuses on state control over projects, risks of loss of state, the economic life of managed projects and the consistency of the tax positions of the service provider. Rev`s provisions. Proc. 2016-44 are much the same as Rev.