Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 42.—Low-Income Housing Credit

26 CFR 1.42–16: Eligible basis reduced by federal grants.

Rev. Rul. 2002–65

Pursuant to § 1.42–16(b)(3) of the Income Tax Regulations, the Internal Revenue Service has determined that rental assistance payments made to a building owner on behalf or in respect of a tenant under the Rent Supplement Payment program (12 U.S.C. § 1701s) or the Rental As- sistance Payments program (12 U.S.C. § 1715z–1(f)(2)) are not grants made with respect to a building or its operation under § 42(d)(5) of the Internal Revenue Code.

Interest reduction payments made under mortgage insurance programs (for example, section 236 of the National Housing Act (12 U.S.C. § 1715z–1)) which the payments under the Rent Supplement Payment program and Rental Assistance Payments program are intended to augment are not included within the scope of this revenue ruling. The Treasury Department and the Internal Revenue Service are studying the proper treatment of these payments under § 42.

DRAFTING INFORMATION

The principal author of this revenue ruling is Christopher J. Wilson of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Susan Reaman at (202) 622–3040, or Mr. Wilson at (808) 539–2874 (not tollfree calls).

Section 103.—Interest on State and Local Bonds

May a partner in a partnership that invests in bonds that are exempt from taxation under § 103 make monthly allocations of partnership items under § 706(a)? See Rev. Proc. 2002–68, page 753.

Section 702.—Income and Credits of a Partner

May a partner in a partnership that invests in bonds that are exempt from taxation under § 103 make monthly allocations of partnership items under § 706(a)? See Rev. Proc. 2002–68, page 753.

Section 704.—Partner’s Dis- tributive Share

May a partner in a partnership that invests in bonds that are exempt from taxation under § 103 make monthly allocations of partnership items under § 706(a)? See Rev. Proc. 2002–68, page 753.

Section 706.—Taxable Years of Partner and Partnership

26 CFR 1.706–1: Taxable years of partner and partnership. 26 CFR 1.706–1(c): Closing of partnership year. 26 CFR 1.441–2T: Election of year consisting of 52–53 weeks (temporary). 26 CFR 1.761–2: Exclusion of certain unincorpo- rated organizations from the application of all or part of subchapter K of chapter 1 of the Internal Revenue Code. 26 CFR 301.7701–4: Trusts.

May a partner in a partnership that invests in bonds that are exempt from taxation under § 103 make monthly allocations of partnership items under § 706(a)? See Rev. Proc. 2002–68, page 753.

Section 761.—Terms Defined

May a partner in a partnership that invests in bonds that are exempt from taxation under § 103 make monthly allocations of partnership items under § 706(a)? See Rev. Proc. 2002–68, page 753.

2002–43 I.R.B. 729 October 28, 2002