US Legal Forms
Legal definitions
Q
Qualified Low-Income Community Investment [Tax]

Understanding Qualified Low-Income Community Investment [Tax]: A Legal Overview

Q: Can individuals invest in these communities?

Yes, individuals can make qualified investments, but they must meet the legal criteria to qualify for tax benefits.

Q: What types of businesses can receive these investments?

Qualified active low-income community businesses that meet specific operational and financial requirements are eligible.

Definition & Meaning

The term "qualified low-income community investment" refers to specific types of financial contributions aimed at supporting businesses and development in low-income areas. These investments can take several forms, including:

Capital or equity investments in qualified active low-income community businesses.
Loans to these businesses.
Purchasing loans from a qualified community development entity that are themselves qualified low-income community investments.
Providing financial counseling and other services to businesses and residents in low-income communities.
Equity investments or loans to qualified community development entities.

Table of content

Legal Use & context

This term is primarily used in tax law and community development finance. It is relevant for businesses seeking funding to improve their operations in low-income areas. Legal professionals may encounter this term when advising clients on tax credits or incentives related to investments in these communities. Users can manage some aspects of this process themselves using legal forms and templates provided by services like US Legal Forms.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Here are a couple of examples of qualified low-income community investments:

A local bank provides a loan to a startup restaurant in a low-income neighborhood to help it establish operations and create jobs. (hypothetical example)
A nonprofit organization invests in a community development entity that focuses on improving housing and services in a low-income area. (hypothetical example)

Relevant laws & statutes

The primary legal reference for qualified low-income community investments is found in the Internal Revenue Code under 26 USCS § 45D. This statute outlines the criteria and regulations governing these investments.

Common misunderstandings

What to do if this term applies to you

If you are considering making a qualified low-income community investment, start by identifying eligible businesses or community development entities. You can explore legal templates and forms available through US Legal Forms to assist in the process. If your situation is complex or you need specific legal advice, consider consulting with a legal professional who specializes in tax law or community development finance.