What is the recapture of the New Markets Credit?

You may have to increase your tax by a credit recapture amount if at any time within 7 years from the date of the original issuance of the qualified equity investment:

• The entity ceases to be a qualified Community Development Entity (CDE).
• Substantially all of the proceeds of the investment cease to be used to make qualified low-income community investments.
• The investment is redeemed or otherwise cashed out by the entity.

There is an exception to this, so you should review Form 8874 and its instructions .