What Texas Form 05-179 (2011) Is For
The sale, assignment, or allocation of a historic structure credit under the Texas Comptroller of Public Accounts' historic structure rehabilitation program must be reported using Texas Form 05-179 (2011). A transfer of ownership of an existing tax credit is recorded on the form.
The form covers credits earned from the restoration of a certified historic building. The building must meet the requirements of the Historic Preservation Tax Credit Act and be connected to landmark properties that are either designated at the state or local level or listed in the National Register of Historic Places.
There is no new rehabilitation credit created by Form 05-179. Based on authorized rehabilitation costs and completed cost certification, it documents the transfer of a previously granted tax credit certificate.
When You’d Use Texas Form 05-179
When a taxable entity sells, assigns, or transfers all or part of a historic structure credit to another entity, it uses Texas Form 05-179. Both the transferor and the recipient must participate in the filing.
Businesses in Texas that can't fully utilize the credit due to limited franchise tax liability are everyday situations that require the form. There are also transfers between flow-through entities, such as partnerships, Limited Liability Companies, S corporations, and joint ventures.
The form must be filed within 30 days of the transaction date. Regardless of when the payment is made or how it is documented in the business's records, the transaction date is the date on which the legal ownership interest in the credit changes.
Key Rules or Details for 2011
The historic structure credit was restricted to six consecutive tax years, beginning with the 2011 tax year. The credit can be used starting in the tax year following the implementation of the landmark project.
The credit's life was not prolonged by selling or transferring it. Even if the credit changed ownership several times, the expiration date stayed the same.
The credit could only offset franchise tax or insurance premium tax reports. It could not reduce tax liability below zero and was unable to generate refunds under the provisions of the Texas Tax Code.
Step-by-Step (High Level)
Texas Form 05-179 is completed jointly by the credit owner and the credit recipient. All information must align with records maintained by the Texas Comptroller.
Steps involved in completing the form include:
- Identifying the credit owner using the registered legal name and Texas taxpayer number
- Identifying the credit recipient using accurate entity information
- Reporting the transaction date and the transferred credit amount
- Verifying that retained and transferred amounts reconcile correctly
- Attaching all required supporting documentation
Supporting documents must include Form 05-901, the Certificate of eligibility, the Certificate of Completion, and the audited cost certification for rehabilitation costs. The completed form must be mailed to the Texas Comptroller in Austin, TX, with original signatures.
Common Mistakes and How to Avoid Them
- Missing the 30-day filing deadline: File within 30 days so the recipient can use the credit on the Texas Franchise Tax Report without delay.
- Math errors in retained and transferred credit balances: Reconcile each credit balance to its supporting schedules so that the totals match exactly and the filing is not rejected.
- Submitting without Form 05-901: Include Form 05-901 with the transfer submission so an updated Tax Credit Certificate can be issued.
- Omitting required cost certification documents: Attach the certification of cost needed documents so the Comptroller can verify the transfer and update the certificate.
- Entity name mismatches with Comptroller records: Use the legal name exactly as shown on Comptroller records, including capitalization and punctuation, to avoid processing delays.
What Happens After You File
After submission, the Texas Comptroller reviews the form and supporting documentation for accuracy and completeness. Processing time varies but typically requires several weeks.
Following approval, the Comptroller issues amended Form 05-901 certificates that reflect the remaining credit balances and the new ownership. The credit can only be applied to tax returns by the certificate holder.
Using the relevant schedules, the credit is claimed on the Texas Franchise Tax Report. This could be the Ownership Information Report, Public Information Report, or No Tax Due Report, depending on the reporting entity. Within the permitted tax years, unused credits may be carried forward. Credits cannot be deducted from total revenue or gross receipts.
FAQs
Who is eligible to receive a historic structure credit?
Eligible recipients include taxable entities subject to Texas Franchise Tax or insurance premium tax reports. Individuals filing income tax returns cannot claim the credit directly.
Can part of a historic structure credit be sold?
Yes, Texas law allows the sale, assignment, or allocation of all or part of a historic structure credit, provided the transaction is reported correctly.
Does transferring the credit change its expiration date?
No, the expiration period remains tied to the original certified rehabilitation and does not reset after transfer.
Are insurance companies allowed to use allocated credits?
No, insurance premium tax entities may only use credits acquired through purchase or assignment, not allocation from flow-through entities.
Is Form 05-179 filed electronically?
No, the form must be mailed with original signatures and required attachments. Electronic filing is not permitted.
What if errors are discovered after filing?
An amended Form 05-179 should be filed with corrected information and updated signatures. The credit should not be claimed until a corrected Form 05-901 is issued.
Does this credit affect federal tax returns?
No, the historic structure credit applies only to state-level franchise tax or insurance premium tax reports and does not impact federal tax law filings.
