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STATE OF HAWAII—DEPARTMENT OF TAXATION

FORM TAX
TAX CREDIT FOR LOW-INCOME HOUSING YEAR
N-586 Or ﬁscal year beginning _________________, 20____, and ending __________________, 20____
(REV. 2009)
Enter the start and end of your tax year in the space provided. 20_ _
ATTACH THIS SCHEDULE AND A COPY OF FEDERAL FORM 8586 TO FORM N-11, N-15,
N-20, N-30, N-35, N-40, N-70NP, F-1 OR TO THE ANNUAL PREMIUM TAX RETURN (Form 314), WHICHEVER IS APPLICABLE.
ATTACH A COPY OF FORMS 8609 AND 8609-A TO THIS SCHEDULE.
Name(s) as shown on Form N-11, N-15, N-20, N-30, N-35, N-40, N-70NP, F-1, or Form 314 Social Security Number

NOTE: If you are claiming the Ethanol Facility Tax Credit, no other credit can be claimed for the taxable year. Federal Employer I.D. No.
NOTE: If you are only claiming the tax credit from a ﬂow-through entity, start on line 5.
Part I Low-Income Housing Credit
1 Name and address of building(s) for which the credit is being
claimed
2 Date building(s) placed in service (month, year)

3 Enter the amount of the tax credit allocated by the HHFDC to Hawaii property:
a Placed in service before July 1, 2005 ................................................................................................. 3a
b Placed in service on or after July 1, 2005 ........................................................................................... 3b

4 a Multiply the amount on line 3a by 30% and enter here ....................................................................... 4a
b Multiply the amount on line 3b by 50% and enter here ....................................................................... 4b

5 Flow through of Hawaii low-income housing credit received from other entities, if any:
Check the applicable box below. Enter the name and Federal Employer I.D. No. of Entity:
__________________________________________________________________________________
 a S corporation shareholder — enter total from Schedule K-1 (Form N-35), line 12d ......................
 b Partner — enter amount from Schedule K-1 (Form N-20), line 15 .................................................
 c Beneﬁciary — enter amount from Schedule K-1 (Form N-40), line 7b ...........................................
 d Patron — enter the amount from federal Form 1099-PATR ............................................................ 5

6 Carryover of unused low-income housing tax credit from prior years ........................................................ 6

7 Tentative current year low-income housing credit (Add lines 4a, 4b, 5, and 6) .......................................... 7
Note: Form N-20, Form N-35, and Form 314 ﬁlers stop here and enter the amount on line 7 on the
appropriate lines of your tax return.
Part II Tax Liability Limitations (Not to be completed by Form N-20, Form N-35, and Form 314 ﬁlers)
8 a Individuals — Enter tax liability amount from Form N-11 or, if applicable, Form N-15 ........................
b Corporations — Enter tax liability from Form N-30 .............................................................................
c Other ﬁlers — Enter your income tax liability, before credits, from the applicable form ..................... 8

9 Complete the credit worksheet in the instructions and enter the total here................................................ 9

10 Income tax liability, as adjusted (line 8 minus line 9). If the result is zero or less than zero,
enter zero on line 10 ................................................................................................................................... 10

11 Total credit allowed — Enter the smaller of line 7 or line 10. This is your low-income housing credit
allowable for the year. Enter this amount also, rounded to the nearest dollar for individual taxpayers,
on the appropriate line for the credit on Schedule CR (for Form N-11, N-15, N-30, and
N-70NP ﬁlers); Form N-40, Schedule E; or Form F-1, Schedule H, whichever is applicable ..................... 11

12 Carryover of unused credit. Enter here the difference between lines 7 and 11; otherwise
enter zero. The amount of any unused tax credit may be carried over and used as a credit
against your income tax liability in subsequent years until exhausted. ...................................................... 12

FORM N-586

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FORM N-586
Page 2 (REV. 2009)

PART III Recapture of Low-Income Housing Credit
Building Address of Building (as shown on Form N-586) Date placed in service
(from Form N-586)
A

Building TOTAL
A B

1 Enter the amount of accelerated portion of tax credits
recaptured, federal Form 8611, line 7 .................................................. 1

2 Enter the appropriate credit percentage (see Instructions) .................. 2

3 Multiply line 1 by line 2 and enter result ............................................... 3

4 Enter net recapture amount from ﬂow-through entities, Schedule K-1
or Federal Form 1099-PATR ................................................................. 4

5 Enter the interest on line 4 recapture amount (see Instructions) ......... 5

6 IRC Section 42 (j)(5) Partnerships ONLY - Enter interest
on line 3 recapture amount ................................................................... 6

7 Total recapture - Add lines 3, 4, 5, and 6. Enter here and on
proper line of your tax return ............................................................... 7

Purpose of Form. Owners of Insurers.—Complete Part I to ﬁgure
General residential rental buildings providing low- the credit to carry to Form 314, Annual
Instructions income housing must use Form N-586 to Premium Tax Return. Attach a copy of
claim the low-income housing credit. federal Form 8586 to Form 314.
(Section references are to the Internal
Revenue Code (IRC) unless otherwise The tax credit does not apply to Caution: No credit may be claimed on any
noted.) occupants of low-income housing units. building for which there has been allowed
any relief from the passive loss rules under
The Hawaii low-income housing tax For more information, contact the
section 502 of the Tax Reform Act of 1986.
credit allowed under section 235-110.8, Department of Taxation, Taxpayer Services
Hawaii Revised Statutes (HRS), is based Branch at (808) 587-4242, or toll-free at Statutory Reference. Section 235-
upon the tax credit allowed for federal 1-800-222-3229. 110.8, HRS.
income tax purposes under section 42. Banks and other ﬁnancial Low-income housing tax credit.
Generally, the Hawaii low-income tax credit institutions. –– Complete Parts I and
is 50% of the allowable federal low-income II. Attach a copy of federal Form 8586 to (a) Section 42 (with respect to low-
housing tax credit (30% for property placed Form F-1. income housing credit) is operative for
in service before July 1, 2005). A taxpayer purposes of Chapter 235, HRS.
may claim this credit whether or not the Partnerships, S Corporations, Estates
taxpayer claims a federal low-income and Trusts.—Complete Part I to ﬁgure (b) Each taxpayer subject to the tax
housing tax credit. the credit to pass through to the partners, imposed by Chapter 235, HRS, who ﬁles
shareholders, or beneﬁciaries. Attach a a net income tax return for a taxable year
Note: Although a taxpayer no longer has copy of federal Form 8586 to the entity’s may claim a low-income housing tax credit
to claim the federal low-income housing income tax return. against the taxpayer’s net income tax
tax credit in order to claim the State low- liability. The amount of the credit shall be
income housing tax credit, federal low- Partnership investors now have the deductible from the taxpayer’s net income
income housing tax credit forms, Form ﬂexibility of allocating the State low- tax liability, if any, imposed by Chapter
8586, will need to be completed in order income housing tax credit among its 235, HRS for the taxable year in which
to claim the State low-income housing tax partners without regard to the partners’ the credit is properly claimed on a timely
credit. Form 8586 needs to be attached proportionate interests in the partnership basis. A credit under this section may be
to your Hawaii return even if you are not for taxable years beginning after December claimed whether or not the taxpayer claims
required to attach it to your federal return.31, 1999. a federal low-income housing tax credit
pursuant to section 42.

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FORM N-586 
(REV. 2009)                                                                                                                      Page  3

(c) The low-income housing tax credit          claim the credit shall constitute a waiver of  •	The building no longer meets the 
shall be ﬁfty per cent of the applicable       the right to claim the credit. A taxpayer may    minimum set-aside requirements 
percentage basis of each building located      claim a credit only if the building or project   of section 42(g)(1), the gross rent 
in Hawaii.  Applicable percentage shall be     is a qualiﬁed low-income housing building        requirements of section 42(g)(2), or the 
calculated as provided in section 42(b).       or a qualiﬁed low-income housing project         other requirements for the units which 
                                               under section 42 of the Internal Revenue         are set-aside.
(d) For the purposes of this section, the      Code.
determination of:                                                                             Recapture does not apply if:
                                                 Section 469 (with respect to passive         •	You disposed of the building or an 
(1) Qualiﬁed basis and qualiﬁed low-           activity losses and credits limited) of the      ownership interest in it after July 30, 
income building shall be made under            IRC shall be applied in claiming the credit.     2008, and it is reasonably expected that 
section 42(c);
                                                 (h) The director of taxation may adopt         the building will continue to be operated 
(2) Eligible basis shall be made under         any rules under chapter 91 and forms             as a qualiﬁed low-income building 
section 42(d);                                 necessary to carry out this section.             for the remainder of the building’s 
                                                                                                compliance period;
(3) Qualiﬁed low-income housing project 
shall be made under section 42(g);                                                            •	You disposed of an ownership interest 
                                                 The Hawaii Housing Finance and                 in a building that you held through an 
(4) Recapture of credit shall be made                                                           electing large partnership; 
under section 42(j), except that the tax       Development Corporation (HHFDC), under 
for the taxable year shall be increased        the Department of Business, Economic           •	The decrease in qualiﬁed basis does 
under section 42(j)(1) only with respect       Development and Tourism, is designated           not exceed the additions to qualiﬁed 
to credits that were used to reduce            as the State housing credit agency to carry      basis for which credits were allowable 
State income taxes;                            out section 42(h) (with respect to limitation    in years after the year the building was 
                                               on aggregate credit allowable with respect       placed in service;
(5) Application of at-risk rules shall be      to projects located in the State).  As         •	You correct a noncompliance 
made under section 42(k);                      the State housing credit agency, the             within a reasonable period after it 
                                               corporation shall determine the eligibility      is discovered or should have been 
of the Internal Revenue Code                   basis for a qualiﬁed low-income building,        discovered.  (However, recapture 
(e) As provided in section 42(e),              make the allocation of housing credit dollar     applies if any vacant unit of comparable 
rehabilitation expenditures shall be           amounts with the State, and determine the        or smaller size to the low-income units 
treated as separate new building and their     portion of the State’s housing credit ceiling    is rented to other than a low-income 
treatment under this section shall be the      set aside for projects involving qualiﬁed        tenant (on other than a temporary 
same as in section 42(e).  The deﬁnitions      nonproﬁt organizations.                          basis) during any period when the 
and special rules relating to credit period      All claims for allocation of the low-          project does not comply with the set-
in section 42(f) and the deﬁnitions and        income housing credit under section 235-         aside requirement or has experienced 
special rules in section 42(i) shall be        110.8, HRS, shall be ﬁled with the HHFDC         a reduction in qualiﬁed basis for which 
operative.                                     at 677 Queen St., Suite 300, Honolulu,           credits were allowable.);
(f) The State housing credit ceiling in        HI  96813.  The HHFDC shall determine          •	The credit did not reduce your tax 
section 42(h) shall be zero for the calendar   the amount of the credit allocation, if          liability; or
year immediately following the expiration      necessary, and return the claim to the         •	The qualiﬁed basis is reduced because 
of the federal low-income housing tax          taxpayer.  The taxpayer shall ﬁle a credit       of a casualty loss, provided the 
credit program and for any calendar year       allocation form issued by the HHFDC              property is restored or replaced within a 
thereafter, except for the carryover of any    with the taxpayer’s tax return with the          reasonable period.
credit ceiling amount for certain projects in  Department of Taxation.
progress which, at the time of the federal                                                    Speciﬁc Instructions 
expiration, meet the requirements of           Recapture of Credit
                                                                                              Part II
section 42.                                      There is a 15-year compliance period 
(g) The credit allowed under this section      during which the residential rental building   Tax Liability Limitations
shall be claimed against net income            must meet certain requirements.
                                                                                                NOTE:  For the purpose of this tax 
tax liability for the taxable year. For the    Note: If the decrease in qualiﬁed basis        credit, net income tax liability means net 
purpose of deducting this tax credit, net      is because of a change in the amount for       income tax liability reduced by all other 
income tax liability means net income tax      which you are ﬁnancially at risk on the        credits, except for the high technology 
liability reduced by all other credits allowed building, then you must ﬁrst recalculate       business investment tax credit and the 
the taxpayer under this chapter.               the amount of credit taken in prior years      technology infrastructure renovation 
A tax credit under this section which          pursuant to section 42(k) before you           tax credit allowed under chapter 235, 
exceeds the taxpayer’s income tax              calculate the recapture amount on this         HRS.  If you are also claiming the high 
liability may be used as a credit against      form.                                          technology business investment tax 
                                                                                              credit (Form N-318) or the technology 
the taxpayer’s income tax liability in         Generally, recapture applies if:               infrastructure renovation tax credit 
subsequent years until exhausted. All 
claims for a tax credit under this section     •	You dispose of a building or an              (Form N-326), complete this form ﬁrst, 
must be ﬁled on or before the end of the         ownership interest in it;                    then Form N-318, then Form N-326.
twelfth month following the close of the       •	There is a decrease in the qualiﬁed          Line 8 — Enter the tax liability before any 
taxable year for which the credit may be         basis of the building from one year to       credits from the appropriate line of your tax 
claimed. Failure to properly and timely          the next; or                                 return.

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FORM N-586
Page 4 (REV. 2009)

Line 9 — The law requires that ALL other year involved. Add the interest amounts for For ﬂow-through entities that ﬁle Form
credits except for the high technology each prior year until the earlier of: N-20 or Form N-35, identify amounts as
“Recapture of low-income housing tax
business investment tax credit and the • The due date (not including extensions)
technology infrastructure renovation of the return for the recapture year, or credit”:
tax credit offset a taxpayer’s tax liability
BEFORE allowing a credit for low-income • The date the return for the recapture N-20, Schedule K-1, line 28.
housing. Complete the Credit Worksheet year is ﬁled and any income tax due for N-35, Schedule K-1, line 20.
on this page and enter the result on line 9. that year has been fully paid.
Line 11 — Compare the amounts on lines Enter the total on line 5 or 6. (This
interest is not deductible on your income
7 and 10. Enter the smaller of line 7 or 10
here. This is your maximum credit allowed tax return.)
for this taxable year. Line 7 — Include the total credit
recaptured on the appropriate line
Part III representing your tax liability.
To complete Part III of Form N-586 you
will need copies of all the following federal
forms that you have ﬁled: Form 8586, CREDIT WORKSHEET
Low-Income Housing Credit, Form 8609, Tax Credit Amount
Low-Income Housing Credit Allocation
a. High Technology Investment Tax
Certiﬁcation, Form 8609-A Annual Credit for investments made after
Statement for Low-Income Housing Credit, April 30, 2009 . . . . . . . . . . . . . . . . . .
and Form 8611, Recapture of Low-Income b. Ethanol Facility Tax Credit .........
Housing Credit. c. Income Taxes Paid to another state
Lines 1 through 7 — If the tax credit is or foreign country . . . . . . . . . . . . . . .
recaptured from more than two buildings, d. Enterprise Zone Tax Credit ........
attach a schedule and enter the totals in e. Carryover of the Energy
the third column. Conservation Tax Credit . . . . . . . . . .
If the tax credit recapture is only from f. Credit for Employment of Vocational
a ﬂow-through entity (partnership, S Rehabilitation Referrals ...........
corporation, estate, or trust) skip lines 1-3 g. Carryover of the Individual
and go to line 4. Development Account Contribution
Tax Credit . . . . . . . . . . . . . . . . . . . . .
Line 1 — Tax credit recapture.— h. Credit for School Repair and
Section 42(j)(5) partnerships ﬁll in line Maintenance ...................
7 also. All other ﬂow-through entities i. Ko Olina Resort and Marina
(partnerships, S corporations, estates, or Attractions and Educational
trusts) enter the result here and on the Facilities Tax Credit ..............
appropriate line of Schedule K of your j. Renewable Energy Technologies
respective return. Enter each recipient’s Income Tax Credit ...............
share on the appropriate line of Schedule k. Credit for Low-Income Household
K-1. Renters .......................
Line 2 — Appropriate credit l. Credit for Child and Dependent
percentage.—Enter 30% if the property Care Expenses .................
was placed in service before July 1, 2005.
m. Credit from a Regulated Investment
Enter 50% if the property was placed in Company . . . . . . . . . . . . . . . . . . . . .
service on or after July 1, 2005.
n. Fuel Tax Credit for Commercial
Lines 5 and 6 — Interest.—Compute Fishers . . . . . . . . . . . . . . . . . . . . . . .
the interest separately for each prior tax
year using a rate of 8% (.00667 monthly) o. Credit for Child Passenger
Restraint Systems ...............
for the period beginning on the due date
for ﬁling the original return for each prior p. Capital Goods Excise Tax Credit . . .
q. Refundable Food/Excise
Tax Credit . . . . . . . . . . . . . . . . . . . . .
r. Tax Credit for Research Activities ...
s. Motion Picture, Digital Media and
Film Production Income Tax Credit . .
t. Add lines a through s. Enter the
amount here and on
line 9 .........................

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