The final regulations on the New Markets Tax Credit issued recently by the Internal Revenue Service include a tax credit to investors who make qualified equity investments in "community development entities," effective Dec. 22.As privately managed investment tools, CDEs are required to invest in low-income communities most of the proceeds generated by qualified equity investments. The final regulations amend temporary requirements that expired on Dec. 23. (Regulations were initially extended in December 2001 and again in March 2004.) The IRS maintains that a taxpayer making an equity investment in a qualified CDE that has received a New Markets Tax Credit allocation "may claim a 5% tax credit with respect to the qualified equity investment on each of the first 3 credit allowance dates and a 6% tax credit with respect to the qualified equity investment on each of the remaining 4 credit allowance dates."

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