New Markets Tax Credits After OBBBA: Deal Structures, Pairing With Other Tax Credits, Allocating COD Income to Partners
Course Details
- smart_display Format
Live Online with Live Q&A
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Finance
- event Date
Wednesday, October 29, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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This CLE webinar will provide an update and overview of New Market Tax Credits (NMTCs) and the impact of the One Big Beautiful Bill Act (OBBBA) on this tax program. The panel will review the most recent IRS regulations and guidance on the NMTC program and discuss best practices for structuring NMTC deals, pairing with historic tax credits (HTCs) and qualified opportunity zones (QOZs), and allocating cancellation-of-debt (COD) income among partners.
Mr. Whitney is dedicated to structuring and financing low-income housing, historic rehabilitation, and new markets tax credit transactions. Utilizing his unique experience structuring tax credit transactions, Mr. Whitney leads a team that represents developers, investors, syndicators, lenders and Community Development Enterprises (CDEs) in all aspects of tax credit transactions. In 2024, the team closed over 73 tax credit transactions totaling over $900 million in tax credit equity. Mr. Whitney and his team regularly represent CDEs on the deployment of New Markets Tax Credit (NMTCs) allocations. He also represents Qualified Active Low Income Community Business that have received NMTCs awards. Mr. Whitney has a passion for affordable housing, representing lenders in the financing of hundreds of millions of dollars annually of LIHTC construction and permanent debt for both 4% and 9% deals. Finally, Mr. Whitney is involved in billions of dollars of historic rehabilitation projects nationwide utilizing federal and state historic tax credits. His historic rehabilitation experience includes the representation of historic tax credit bridge lenders, syndicators and developers. Many of his projects also utilize other incentives such as tax abatements/exemptions and tax increment financing.
OBBBA, which was signed into law by President Trump on July 4, 2025, permanently extends the NMTC program, which was set to expire at the end of 2025. Extending the NMTC program allows the Community Development Financial Institutions Fund (CDFI) to continue allocating $5 billion in NMTC awards annually to support projects in low-income communities nationwide. OBBBA also permits a five-year carry-forward for any NMTCs that are not allocated by the CDFI in a given year.
The NMTC program provides significant opportunities for investors in economic development projects to secure additional financing to complete projects in low-income areas. NMTCs can offer a critical source of financing for a variety of qualified equity investments (QEIs), including mixed-use affordable housing, charter schools, historic preservation projects, manufacturing, food and beverage processing, federally qualified health centers, and renewable energy projects.
These tax credits are subject to recapture during the seven-year credit period if a QEI fails to satisfy specific investment and qualified business requirements. Counsel must understand the recapture triggers, the impact of the IRS safe harbor for HTCs and current regulations relating to "qualified active low-income community businesses" and "qualified low-income community investments," true debt issues, lease vs. ownership issues, the economic substance doctrine, and cancellation of indebtedness planning when negotiating new transactions, evaluating existing deals, or pairing NMTCs with other tax credit and tax deferral programs.
Listen as our authoritative panel discusses best practices for structuring NMTC deals, pairing them with other programs like HTCs, QOZs, coordinating with USDA/SBA lending, and allocating COD income among partners. The panel will also discuss trends in the NMTC program, IRS regulations and guidance, and other developments under the Trump administration.
I. Overview: NMTCs and OBBBA's permanent extension of the program
II. Structuring an NMTC deal
III. Historic tax credit safe harbor
IV. Qualification issues/deal readiness/tax opinion issues
V. Pairing NMTCs with HTCs, QOZs, and other tax benefits
VI. Allocation of costs in an unwind
VII. Drafting operating agreements to cover the allocation of COD income among partners
VIII. Restructurings/workouts during the seven-year compliance period; recapture risk
IX. IRS regulations and guidance
X. NMTC exit strategies
XI. Practitioner pointers and key takeaways
The panel will review these and other key issues:
- What is the effect of OBBBA's permanent extension of the NMTC program?
- What are best practices for structuring NMTC deals to ensure compliance with IRS program requirements?
- What is the potential impact on the use of NMTCs with the IRS safe harbor for partnerships claiming rehabilitation tax credits?
- How are NMTC deals impacted by cancellation of indebtedness?
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