TAX POLICY DIVISIONDAWN CASH, DIRECTOR

June 29, 2009

Re: Our file number LR -09 -055

Dear

MMISSIONPHONE ( 405) 521 -3133

FACSIMILE ( 405) 522 -0063

This letter ruling is in response to your letter ruling request dated April 3, 2009, wherein you posed a ruling request relating to the Qualified Rehabilitation for CertifiedHistoric Structures Credit ( 68 O. S. § 2357.41). Following a verbatim restatement of thefacts as outlined in your letter, is the specific ruling requested and our response thereto.

Background

an Oklahoma limited liability company ( "Seller "), owns

and has incurred certain qualified rehabilitation expenses for a certified historic structure

generally known as located atthe " Project ") pursuant to which the Seller has qualified for transferable State

Credits. On the Oklahoma Tax Commission ( the " OTC ") issued an

acknowledgement letter confirming the State Credits for which the Project qualified (theAcknowledgment Letter "),

The approved the Project' s Historic PreservationCertification Application Part 2 — Description of Rehabilitation ( Form 10 -168x) on

December 31, 2008. The rehabilitation of the Project is a phased rehabilitation for

purposes. A permanent certificate of occupancy for the first phase of the Project' srehabilitation was issued on June 12, 2008.

Because of the phased rehabilitation, the will not issue a HistoricPreservation Certification Application Part 3 - Request for Certification of Completed

Work ( Form 10 -168c) ( the " Part 3 ") certifying the rehabilitation of the Project until allphases of the proposed rehabilitation are complete. However, the issued an advisory

2501 NORTH LINCOLN BOULEVARD 4 OKLAHOMA CITY 0 OKLAHOMA 73194

IT 15 OUR MISSION TO SERVE THE PEOPLE OF OKLAHOMA BY PROMOTING TAX COMPLIANCE THROUGH QUALITY SERVICE AND FAIR ADMINISTRATION

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LR -09 -055

June 29, 2009

Page 2 of 3

letter on December 31, 2008 indicating, that, based on their review the work done to dateon the Project, the rehabilitation " is consistent with the Secretary of the Interior' sStandards for Rehabilitation."

The OTC received and reviewed copies of all the referenced documentation priorto issuing the Acknowledgement Letter.

The Seller proposes to transfer after January 1, 2009 the State Credits to anunrelated third party ( "Buyer "), who intends to use the credits prior to the issuance of thePart 3 for the Project.

uestion

Paragraph G of Section 2 -24 -09 of the Oklahoma Statutes addresses the status ofthe Buyer of the State credits. We have the following question with respect to theapplication of that provision under these circumstances. If the Project did not obtain aPart 3, would the Buyer lose the benefit of the State Credits in some way, whether thatwas deemed to he a recapture of or refusal of the OTC to recognize the State Credits orsome other form of denial of their use?

Answer

Section 2357.41 of Title 68 of the Oklahoma Statutes provides for a tax credit forqualified rehabilitation expenditures incurred in connection with any certified historicstructure. The amount of the credit is 100% of the federal rehabilitation credit and " may

be claimed at any time after the relevant local government body responsible for doing soissues a certificate of occupancy ".

Although state tax credits may be claimed after the certificate of occupancy isissued, the state tax credits are subject to all requirements with respect to qualification for

the federal credit [ 68 O.S. § 2357.41( C)]. If the Project does not obtain a Part 3, and, as a

result, does not qualify for the federal tax credit, the state credit would be subject torecapture. [ 68 O. S. § 2357.41( G)].

This response applies only to the circumstances set out in your request dated April3, 2009. Pursuant to Commission Rule 710: 1- 3- 73( e), this Letter Ruling may begenerally relied upon only by the entity to whom it is issued and its investors, assumingthat all pertinent facts have been accurately and completely stated, and that there has beenno change in applicable law.

Please be advised that the issuance of this ruling does not preclude the OklahomaTax Commission from conducting an audit or examination under 68 Okla. Stat. § 206 of

LR -09 -055

June 29, 2009

Page 3 of 3

any report or return claiming a credit for the transactions outlined in this letter ruling. TheCommission reserves the right to issue any assessment, correction, or adjustmentauthorized under 68 Okla. Stat. § 221.

Sincerely,

Oklahoma Tax Commission

kk)o

Lisa R. Haws

Tax Policy & Research Division

s wi

To POLICY DIVISIONDAWN CASH, DIRECTOR

July 6, 2009

Re: Our file number LR -09 -055

Amended)

Dear

This letter ruling is in response to your letter ruling request dated April 3, 2009, wherein youposed a ruling request relating to the Qualified Rehabilitation for Certified Historic StructuresCredit (68 O.S. § 2357.41). Following a verbatim restatement of the facts as outlined in your letter, is the specific ruling requested and our response thereto.

Background

an Oklahoma limited liability company ( "Seller "), owns and has

incurred certain qualified rehabilitation expenses for a certified historic structure generally knownas the " Project") pursuantto which the Seller has qualified for transferable State Credits. On Mardi 5, 2009, the Oklahoma

Tax Commission ( the " OTC ") issued an acknowledgement letter confirming the State Credits forwhich the Project qualified (the " Acknowledgment Letter "),

The approved the Project' s Historic PreservationCertification Application Part 2 — Description of Rehabilitation (Form 10 -168a) on December 31, 2008. The rehabilitation of the Project is a phased rehabilitation for purposes. A permanentcertificate of occupancy for the first phase of the Project' s rehabilitation was issued on June 12, 2008.

Because of the phased rehabilitation, the will not issue a Historic PreservationCertification Application Part 3 - Request for Certification of Completed Work (Form 10 -168c) ( thePart 3 ") certifying the rehabilitation of the Project until all phases of the proposed rehabilitation are

complete. However, the issued an advisory letter on December 31, 2008 indicating, that, basedon their review the work done to date on the Project, the rehabilitation " is consistent with theSecretary of the Interior' s ` Standards for Rehabilitation."

2501 NORTH LINCOLN BOULEVARD I OKLAHOMA CITY 0 OKLAHOMA 73194

IT 15 OUR MISSION TO SERVE THE PEOPLE Of OKLAHOMA BY PROMOTING TAX COMPUANCE THROUGH OUAUTY

r1IL

LR -09 -055

June 29, 2009

Page 2 of 2

The OTC received and reviewed copies of all the referenced documentation prior to issuingthe Acknowledgement Letter

The Seller proposes to transfer after January 1, 2009 the State Credits to an unrelated thirdparty ( "Buyer "), who intends to use the credits prior to the issuance of the Part 3 for the Project.

Question

Paragraph G of Section 2 -24 -09 of the Oklahoma Statutes addresses the status of the Buyerof the State credits. We have the following question with respect to the application of that provisionunder these circumstances. If the Project did not obtain a Part 3, would the Buyer lose the benefit ofthe State Credits in some way, whether that was deemed to he a recapture of or refusal of the OTCto recognize the State Credits or some other form of denial of their use?

Answer

Section 2357. 41 of Title 68 of the Oklahoma Statutes provides for a tax credit for qualifiedrehabilitation expenditures incurred in connection with any certified historic structure. The amountof the credit is 100% of the federal rehabilitation credit and " may be claimed at any time after therelevant local government body responsible for doing so issues a certificate of occupancy ".

Although state tax credits may be claimed after the certificate of occupancy is issued, thestate tax credits are subject to all requirements with respect to qualification for the federal credit [ 68O. S. § 2357.41( C)]. If the Project does not obtain a Part 3, and, as a result, does not qualify for thefederal tax credit, the state credit would be subject to recapture. Only the transferor originallyallowed the credit, and not any subsequent transferee of the credit, shall be held liable to repay anyamount of the disallowed credit. [ 68 O. S. § 2357.41( G)].

This response applies only to the circumstances set out in your request dated April 3, 2009. Pursuant to Commission Rule 710: 1- 3- 73( e), this Letter Ruling may be generally relied upon onlyby the entity to whom it is issued and its investors, assuming that all pertinent facts have beenaccurately and completely stated, and that there has been no change in applicable law.

Please be advised that the issuance of this ruling does not preclude the Oklahoma TaxCommission from conducting an audit or examination under 68 Okla. Stat. § 206 of any report orreturn claiming a credit for the transactions outlined in this letter ruling. The Commission reservesthe right to issue any assessment, correction, or adjustment authorized under 68 Okla. Stat. §221.

Sincerely,

Oklahoma Tax mmission

Lisa R. Haws

Tax Policy & Research Division