June 30, 2000

RE: Act 148, Session Laws of Hawaii 2000 (Act 148), Relating to Low-income Housing Tax Credit

Act 148 allows a partnership the flexibility of allocating the State low-income housing tax credit among partners without regard to their proportionate interests in their partnership, and is effective for taxable years beginning after December 31, 1999.

Federal regulations require allocation of credits for income tax purposes to partners in accordance with their partnership interests.  Hawaii conformed to these provisions for purposes of the Hawaii income tax law.  Accordingly, it was not possible to allocate all of the State low-income housing tax credit to, for example, the one partner with Hawaii income tax liability.  Act 148, however, specifies that these allocation provisions shall not apply to an allocation of the State low-income housing tax credit for Hawaii income tax purposes.

Example.  XYZ Partnership has a Hawaii partner with Hawaii income tax liabilities and two Mainland partners without Hawaii income tax liabilities.  XYZ invests in a low-income housing project in Hawaii.  Act 148 allows XYZ to allocate its entire State low-income housing tax credit to the Hawaii partner beginning taxable year 2000.
Forms and other tax information are available at the Department's website at:

On Oahu, forms may be ordered by calling the Department's Forms Request Line at:  808-587-7572.  Persons who are not calling from Oahu, may call:  1-800-222-7572 (toll-free) to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.

Director of Taxation

HRS Sections Explained:  HRS Sections 235-2.4 and 235-110.8