May 21, 2024: Planning, Timing Critical in NMTC Year 7 Exits

Year 7 marks the end of the compliance period for a new markets tax credit (NMTC) transaction, marking seven years since an investor made its qualified equity investment into a community development entity (CDE). In this week’s episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Greg Clements, CPA, discuss the most-common type of Year 7 NMTC exit, the put-call structure. After defining the structure, Novogradac and Clements outline the roles and viewpoints of the investors, qualified active low-income community businesses (QALICBs) and CDEs during a Year 7 exit. Later, Clements gives his perspective on the value of planning, timing and communication between the parties.
Summaries of each topic:
1. Introduction (0:12-4:53)
2. NMTC Services (4:54-6:27)
3. Put-Call Structure (6:28-12:26)
4. Three Key Players (12:27-17:38)
5. Impact to Investors and QALICBs (17:39-28:44)
6. Timing, Planning, Communication (28:45-35:18)
7. Impact to Community Development Entities (35:19-38:56)
8. Additional Resources and Wrap-Up (38:57-41:52)
9. Off-Mike Section (41:53-44:16)
Find podcast show notes and more Tax Credit Tuesday episodes at www.novoco.com/podcast.