1. State Tax Credits – Brief Overview
Developers desire to “sell” their state tax credits
Credit Investor purchases - Certificated Credit
Investor has Federal deduction for payment of state tax.
Income to Buyer as they use appreciated property
Income to seller (Developer) of credit
Credit Investor invests in partnership – Allocated Credit
Loss of Federal Deduction
Positive Capital account to write off
What establishes investor as a partner? 1

2. Partnership Allocation
State
Investor MM
Federal
Investor
Federal Credits Allocated 100% to Federal Investor
State Credits
Allocated
100% to
State
Investor 1%
$’s
79%
.01%
99.99%
$’s
Real Estate
Entity
Landlord
Master Tenant
$’s
20%
Credit Pass Through Lease 2

3. Certificate Sale State Investor MM Federal Investor
Federal Credits Allocated 100% to Federal Investor
State Credits
Certificate
Sold
To State
Investor NA
$’s
80%
.01%
99.99%
$’s
Real Estate
Entity
Landlord
Master Tenant
$’s
20%
Credit Pass Through Lease 3

4. Certificate Sale - Structuring
State
Credit
Investor MM
Cash
Tax Credit
General Partner
Landlord
Certificate
Purchased
Equity
SCP
Member
Tax Credit certificate allocated 4