# New markets tax credit.
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Correcting amendment.
**SUMMARY:**
This document contains corrections to final regulations (TD 9171), that were published in the *Federal Register* on Tuesday, December 28, 2004 (69 FR 77625) relating to the new markets tax credit under section 45D.
**DATES:**
This correction is effective December 28, 2004.
**FOR FURTHER INFORMATION CONTACT:**
Paul F. Handleman or Lauren R. Taylor, (202) 622-3040 (not a toll-free number).
**SUPPLEMENTARY INFORMATION:**
**Background**
The final regulations (TD 9171) that are the subject of these corrections are under section 45D of the Internal Revenue Code.
**Need for Correction**
As published, TD 9171 contains errors that may prove to be misleading and are in need of clarification.
**List of Subjects in 26 CFR Part 1**
Income taxes, Reporting and recordkeeping requirements.
**26 CFR Part 1**
**Correction of Publication**
Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:
**PART 1—INCOME TAXES**
*Paragraph 1.* The authority citation for part 1 continues to read in part as follows:
**Authority:**
26 U.S.C. 7805 * * *
**26 CFR Part 1**
§ 1.45D-1
*Par. 2.* Section 1.45D-1(a), under the “Table of contents”, the entry for paragraph (h)(2) “(2) Exception for certain provisions” is removed and the language “(2) Exception” is added in its place.
**26 CFR Part 1**
*Par. 3.* Section 1.45D-1(d)(4)(i)(E), second sentence, the language, “For purposes the preceding” is removed and the language “For purposes of the preceding” is added in its place.
**26 CFR Part 1**
*Par. 4.* Section 1.45D-1(d)(5)(ii) and (h)(2) are revised to read as follows:
§ 1.45D-1
(d) * * *
(5) * * *
(ii) *Rental of real property.* The rental to others of real property located in any low-income community (as defined in section 45D(e)) is a qualified business if and only if the property is not residential rental property (as defined in section 168(e)(2)(A)) and there are substantial improvements located on the real property. However, a CDE's investment in or loan to a business engaged in the rental of real property is not a qualified low-income community investment under paragraph (d)(1)(i) of this section to the extent a lessee of the real property is described in paragraph (d)(5)(iii)(B) of this section.
(h) * * *
(2) *Exception.* Paragraph (d)(5)(ii) of this section as it relates to the restriction on lessees described in paragraph (d)(5)(iii)(B) of this section applies to qualified low-income community investments made on or after June 22, 2005.
**26 CFR Part 1**
*Par. 5.* Section 1.45D-1(d)(8)(ii), *Example* (ii), first sentence, the language, “On November 1, 2004, W makes a” is removed and the language “On November 1, 2004, W makes an” is added in its place.
Cynthia E. Grigsby,
Acting Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedures and Administration).