Section 42.—Low-Income — Internal Revenue Bulletin 2004-15

Low-income housing credit; satis- factory bond; “bond factor” amounts for the period April through June 2004. This ruling announces the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period April through June 2004.

Rev. Rul. 2004–40

In Rev. Rul. 90–60, 1990–2 C.B. 3, the Internal Revenue Service provided

guidance to taxpayers concerning the general methodology used by the Treasury Department in computing the bond factor amounts used in calculating the amount of bond considered satisfactory by the Secretary under § 42(j)(6) of the Internal Revenue Code. It further announced that the Secretary would publish in the Internal Revenue Bulletin a table of bond factor amounts for dispositions occurring during each calendar month.

Rev. Proc. 99–11, 1999–1 C.B. 275, established a collateral program as an alternative to providing a surety bond for taxpayers to avoid or defer recapture of

the low-income housing tax credits under § 42(j)(6). Under this program, taxpayers may establish a Treasury Direct Account and pledge certain United States Treasury securities to the Internal Revenue Service as security.

This revenue ruling provides in Table 1 the bond factor amounts for calculating the amount of bond considered satisfactory under § 42(j)(6) or the amount of United States Treasury securities to pledge in a Treasury Direct Account under Rev. Proc. 99–11 for dispositions of qualified low-income buildings or interests therein during the period April through June 2004.

Table 1 Rev. Rul. 2004–40 Monthly Bond Factor Amounts for Dispositions Expressed As a Percentage of Total Credits
	Calendar Year Building Placed in Service or, if Section 42(f)(1) Election Was Made, the Succeeding Calendar Year
Month of Disposition	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000
Apr ’04 May ’04 Jun ’04	15.55 15.55 15.55	28.88 28.88 28.88	40.34 40.34 40.34	50.12 50.12 50.12	58.45 58.45 58.45	57.84 57.71 57.59	57.87 57.75 57.63	57.99 57.87 57.75	58.25 58.13 58.02	58.56 58.45 58.34	58.98 58.87 58.77

Table 1 (cont’d) Rev. Rul. 2004–40 Monthly Bond Factor Amounts for Dispositions Expressed As a Percentage of Total Credits
	Calendar Year Building Placed in Service or, if Section 42(f)(1) Election Was Made, the Succeeding Calendar Year
Month of Disposition	2001	2002	2003	2004
Apr ’04 May ’04 Jun ’04	59.74 59.64 59.55	60.79 60.69 60.59	62.04 61.93 61.84	62.68 62.68 62.68

dispositions occurring during the period January through March 2004, see Rev. Rul. 2004–16, 2004–8 I.R.B. 503.

For a list of bond factor amounts applicable to dispositions occurring during other calendar years, see: Rev. Rul. 98–3, 1998–1 C.B. 248; Rev. Rul.

2001–2, 2001–1 C.B. 255; Rev. Rul. 2001–53, 2001–2 C.B. 488; Rev. Rul. 2002–72, 2002–2 C.B. 759; and Rev. Rul. 2003–117, 2003–46 I.R.B. 1051. For

2004-15 I.R.B. 716 April 12, 2004

ted coverage.” H.R. Conf. Rep. No. 391, 108 ^th Cong., 1st Sess. 841 (2003). Under section 223, an eligible individual cannot be covered by a health plan that is not an HDHP unless that health plan provides coverage for permitted insurance or permitted coverage. A plan that provides benefits for prescription drugs is a health plan. Prescription drug benefits are not in the list of permitted insurance or permitted coverage. Consequently, an individual who is covered by both an HDHP and by a prescription drug plan is not an eligible individual for the purpose of contributing to an HSA unless the prescription drug coverage is also an HDHP ( i.e., the prescription drug plan does not provide benefits unless the required minimum annual deductible under section 223(c)(2)(A) for an HDHP has been satisfied).

HOLDINGS

Individual A is covered by both an HDHP that does not cover prescription drugs and by a separate prescription drug plan (or rider) that provides benefits before the minimum annual deductible of the HDHP has been satisfied. Individual A is not an “eligible individual” under section 223(c)(1)(A) and may not make contributions to an HSA. The result is the same if this prescription drug benefit is provided as a benefit under a health plan (and not separately) or as a benefit for Individual A under a spouse’s plan.

However, if a separate prescription drug plan (or rider) does not provide benefits until the minimum annual deductible of the HDHP has been satisfied, or the prescription drug plan is part of an HDHP and subject to the minimum annual deductible, Individual A is an eligible individual under section 223(c)(1)(A).

See Rev. Proc. 2004–22, published elsewhere in this Internal Revenue Bulletin for information concerning transition relief.

DRAFTING INFORMATION

The principal author of this Rev. Rul. is Shoshanna Tanner of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this Rev. Rul., contact Ms. Tanner at (202) 622–6080 (not a toll-free call).

DRAFTING INFORMATION

The principal author of this revenue ruling is Gregory N. Doran of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Mr. Doran at (202) 622–3040 (not a toll-free call).