What Texas Form 05-179 (2021) Is For
Texas Form 05-179 is used to report the sale, assignment, or allocation of a historic structure credit to the Texas Comptroller of Public Accounts. The form records changes in ownership interest when a Tax Credit tied to a certified historic structure is transferred between taxable entities.
The historic structure credit applies to qualified rehabilitation costs incurred during Certified Rehabilitation of historic properties in Texas. The credit may be used against franchise tax or insurance premium tax reports, depending on the Reporting Entity and applicable tax years.
Form 05-179 must always be filed with Form 05-901, the Tax Credit Certificate that shows the approved credit amount, taxable year, and remaining balance. Without Form 05-179, the Texas Comptroller cannot issue an updated certificate to the new owner.
When You’d Use Texas Form 05-179
Texas Form 05-179 is required whenever ownership of a historic structure credit changes. Whether the transfer includes the entire credit or just a portion of it, this requirement still applies.
The following circumstances call for filing:
- A historic structure credit is sold by a Texas company to another taxable entity.
- When preparing a tax return or restructuring, a credit is allocated between related entities.
- Credits are distributed to partners, members, or shareholders by a flow-through entity.
- Participants in a joint venture receive credit according to their agreed-upon ownership stake.
After the transfer date, the form must be submitted within 30 days. Although it delays the ability to apply the credit to tax reports or lower tax liability, late filing does not render the transaction void.
Key Rules or Details for 2021
For a qualified historic structure, the landmark structure credit is 25% of the qualified rehabilitation costs. Under a qualified rehabilitation plan, structural improvements, mechanical systems, and electrical wiring may all be eligible rehabilitation costs.
Here are some important rules to keep in mind:
- The property needs to have an authorized Certificate of Eligibility and be a certified historic property.
- The project must meet the standards set by the federal Secretary of the Interior.
- The credit expires six tax years after the place-in-service date, regardless of any transfers.
- Credit transfers do not extend the expiration or increase the overall revenue cap.
Insurance companies are subject to additional restrictions under the Texas Insurance Code. They may only use credits acquired through an actual sale or assignment and not through internal establishment or allocation.
Step-by-Step (High Level)
Step 1: Confirm credit eligibility
The reporting entity must ensure that the Landmark Structure Rehabilitation Program has approved the old project. Before negotiating a transfer, the entity should also check the cost certification and qualified expenditures.
Step 2: Finalize the transfer agreement
The buyer and seller agree on pricing and allocation terms. The Texas Comptroller does not approve or review private agreements for internal use.
Step 3: Complete Texas Form 05-179
Both parties must fill out the form. Some of the required information is the names of the entities, their federal identification numbers, the taxable year details, and the credit balances before and after the transfer.
Step 4: Attach Form 05-901
The most recent Tax Credit Certificate must be included with the filing. Application Process materials and historic project approvals are not required unless specifically requested.
Step 5: Submit the filing
Within 30 days of the transaction date, the completed forms must be mailed to the Texas Comptroller of Public Accounts in Austin, TX.
Common Mistakes and How to Avoid Them
- Missing required signatures: Obtain signatures from both parties on Texas Form 05-179 to ensure timely processing and issuance of updated certificates.
- Incorrect credit calculations: Reconcile the transferred amount with the available balance on Form 05-901 and confirm that any split transfers are calculated correctly.
- Submitting Form 05-179 without Form 05-901: Attach the current Tax Credit Certificate (Form 05-901) with Form 05-179 so the Comptroller can process the transfer.
- Claiming credits before a new certificate is issued: Wait to claim the credit on a Texas Franchise Tax Report or insurance premium tax report until the updated certificate is issued.
- Misunderstanding allocation rules: Allocate credits only to eligible recipients subject to franchise tax and report the credit on the proper return using the required documentation.
What Happens After You File
After receipt, the Texas Comptroller reviews the filing for accuracy, signatures, and compliance with the Texas Tax Code and the federal Internal Revenue Code section 47. Processing generally takes several weeks.
If approved, the Comptroller issues updated Tax Credit Certificates reflecting the new ownership interest. If the seller retains a portion of the credit, separate certificates are issued to each Reporting Entity.
Once the updated Form 05-901 is received, the credit may be applied to the appropriate Texas Franchise Tax Report. Depending on filing status, this may include the Long Form, No Tax Due Report, or filings made after an Extension of Time to File.
FAQs
Who must file Texas Form 05-179?
Any taxable entity involved in the sale, assignment, or allocation of a historic structure credit must file. This includes Limited Liability Companies, S corporation filers, partnerships, and trust company structures.
Can a historic structure credit be transferred more than once?
Texas law does not limit the number of transfers. Each transaction must be reported separately within 30 days.
Does Form 05-179 affect income tax filings?
The form applies only to the Texas Franchise Tax and insurance premium tax. It does not affect federal income tax or other state tax returns.
Can the credit be used across multiple tax years?
Credits may be carried forward and applied to future tax years, subject to annual limits and reporting requirements, until they expire or are fully utilized.
What if an error is discovered after filing?
There is no amended version of the form. Corrections may be requested in writing, accompanied by supporting documentation.
Do historic properties outside Texas qualify?
No, the credit applies only to qualified historic structures located in Texas and does not apply to properties in New York, North Carolina, Kansas, Minnesota, or other states.
