New-Markets Credit Schedule

Generate the seven-year 5/5/5/6/6/6/6 percent credit schedule for a supplied investment.

Description

The New Markets Tax Credit schedule spreads a percentage of a qualifying investment over seven years.

The New Markets Tax Credit schedule spreads a percentage of a qualifying investment over seven years. This calculator uses three 5% installments followed by four 6% installments.^{[1, 2]}

Generate the seven-year 5/5/5/6/6/6/6 percent credit schedule for a supplied investment.

When to use New-Markets Credit Schedule

Use this tool to generate the seven-year 5/5/5/6/6/6/6 percent credit schedule for a supplied investment.

Choose the specific arithmetic or checklist scenario and establish its input amounts, dates, rates and criteria from the applicable records. Keep currencies, periods and jurisdictions consistent; review the tool-specific assumptions before interpreting the result.

How to use New-Markets Credit Schedule and understand its results

Choose the specific arithmetic or checklist scenario and establish its input amounts, dates, rates and criteria from the applicable records. Keep currencies, periods and jurisdictions consistent; review the tool-specific assumptions before interpreting the result.
Enter qualifiedEquityInvestment using the field table and calculation rules, then run the tool.
Read annualCreditSchedule, totalCredit. The explanation below defines the units, signs, ordering and any flags or placeholder values.
If the tool reports an input issue, correct the values and run it again. Apply the stated assumptions when interpreting a successfully returned result.

Input field	Meaning	Value type; see rules below	Requirement
qualifiedEquityInvestment	Qualified equity investment (currency)	number; minimum: 0	Required

Enter a nonnegative investment amount. Read the ordered seven annual credit amounts and their aggregate; no calendar dates are generated.

yearlyCredits=investment×[.05,.05,.05,.06,.06,.06,.06]; total=investment×.39

Units, indexing, boundary conditions and exceptional cases are defined in the calculation rules above.

Output field	Meaning	Value type
annualCreditSchedule	Seven-year credit schedule (currency)	list of number
totalCredit	Total seven-year credit (currency)	number; minimum: 0

json

{
  "input": {
    "qualifiedEquityInvestment": 1000000
  },
  "output": {
    "annualCreditSchedule": [
      50000,
      50000,
      50000,
      60000,
      60000,
      60000,
      60000
    ],
    "totalCredit": 390000
  }
}

Limitations and assumptions

The fixed schedule does not establish investment qualification, allocation availability, holding-period compliance or recapture treatment.

Numeric inputs must be finite. Follow the calculation-specific rules for overflow, underflow and exceptional cases. Missing required fields, extra fields, wrong value types and violations of the calculation rules are input errors.

Alternative or Complementary methods

Use Clean-Energy Credit: Calculate a clean-energy credit using caller-supplied rate and cap. For a complementary task, use Rehabilitation Credit: Estimate rehabilitation credit and basis reduction from caller-supplied rates.

Further background: Internal Revenue Bulletin 2005-6: New Markets Tax Credit.

References

New-Markets Credit Schedule — tool.io
Internal Revenue Bulletin 2005-6: New Markets Tax Credit — Internal Revenue Service

Similar or alternative tools

Clean-Energy Credit
Calculate a clean-energy credit using caller-supplied rate and cap.
Rehabilitation Credit
Estimate rehabilitation credit and basis reduction from caller-supplied rates.