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Real Estate Investment Trust (REIT)

Swaps and captive REIT liquidations won’t sour REIT prohibited transactions safe harbor

Swaps and captive REIT liquidations won’t sour REIT prohibited transactions safe harbor

PLR 201614009 IRS has privately ruled that a real estate investment trust’s (REIT’s) like-kind exchanges won’t be treated as sales for purposes of the Code Sec. 857(b)(6)(C) prohibited transactions safe harbor, but that gain recognized on boot received in such exchanges may be treated as a sale for that safe harbor. IRS also ruled that […]

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Property sold by REIT as part of liquidation wasn’t held primarily for sale to customers

Property sold by REIT as part of liquidation wasn’t held primarily for sale to customers

PLR 201609004 In a Private Letter Ruling (PLR), IRS has ruled that real property that a real estate investment trust (REIT) sold as part of a plan of liquidation was not “property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business” and therefore the sale was […]

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REIT’s income inclusions from its foreign subsidiaries are qualifying income

REIT’s income inclusions from its foreign subsidiaries are qualifying income

PLR 201605005 In a private letter ruling, IRS has determined that, for purposes of Code Sec. 856(c)(2)’s 95% gross income test to qualify as a real estate investment trust (REIT), income inclusions attributable to a REIT’s ownership in foreign subsidiaries that are either controlled foreign corporations or passive foreign investment companies constitute qualifying income. IRS […]

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Notice sets out method for RIC’s refund of foreign tax that was treated as paid by shareholders

Notice sets out method for RIC’s refund of foreign tax that was treated as paid by shareholders

Notice 2016-10, 2016-6 IRB In a Notice, IRS has provided guidance with regard to regs it intends to issue on alternative methods that regulated investment companies (RICs) and their shareholders may use to satisfy their obligations under Code Sec. 853 and Code Sec. 905(c) where a RIC receives a refund of a foreign tax that […]

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Ski lift towers are real property for REIT qualification purposes

Ski lift towers are real property for REIT qualification purposes

PLR 201521006 In a private letter ruling (PLR), IRS has concluded that ski lift towers owned by a real estate investment trust (REIT) were inherently permanent structures and thus qualified as real property for purposes of Code Sec. 856. Background. At the close of each quarter of its tax year, at least 75% of the value […]

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REIT reforms in the “Protecting Americans from Tax Hikes” Act

REIT reforms in the “Protecting Americans from Tax Hikes” Act

Late on December 15, a bipartisan, bicameral agreement was reached on tax extenders—i.e., the 50 or so temporary tax provisions that are routinely extended by Congress on a one- or two-year basis—and numerous other tax provisions in the “Protecting Americans from Tax Hikes (PATH) Act of 2015” (the Act). The agreement, which makes permanent many […]

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IRS describes areas of concern under Code Sec. 355 & expands no-rule areas

IRS describes areas of concern under Code Sec. 355 & expands no-rule areas

Notice 2015-59, 2015-40 IRB, Rev Proc 2015-43, 2015-40 IRB In a Notice, IRS has announced that it is studying issues under Code Sec. 355 (and Code Sec. 337(d)) relating to certain distributions, described in Code Sec. 355, in which property becomes the property of a regulated investment company (RIC) or a real estate investment trust […]

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IRS Notice describes areas of concern under Code Sec. 355

IRS Notice describes areas of concern under Code Sec. 355

Notice 2015-59, 2015-40 IRB, Rev Proc 2015-43, 2015-40 IRB In a Notice, IRS has announced that it is studying issues under Code Sec. 355 (and Code Sec. 337(d)) relating to certain distributions, described in Code Sec. 355, in which property becomes the property of a regulated investment company (RIC) or a real estate investment trust […]

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Related entity’s management of hotel won’t cause taxable REIT subsidiary to lose qualification

Related entity’s management of hotel won’t cause taxable REIT subsidiary to lose qualification

PLR 201533006 In a private letter ruling (PLR), IRS determined that a taxable REIT subsidiary’s (TRS’s) acquisition of an equity interest in a limited liability company that leased a hotel property, but turned over all management responsibilities to an independent contractor, won’t jeopardize the TRS’s status. In so concluding, IRS examined the ownership structure of […]

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REIT distribution E&P rule applies to liquidating distributions

REIT distribution E&P rule applies to liquidating distributions

PLR 201530014 In a private letter ruling, IRS has concluded that a real estate investment trust (REIT) rule for determining which earnings and profits (E&P) a particular type of distribution is deemed to be made from, applies when that distribution is made as part of a liquidation, notwithstanding the general E&P rule for liquidations. Background. Code […]

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Court of Appeals 9th Circuit reverses; home mortgage interest deduction limits apply per taxpayer

Court of Appeals 9th Circuit reverses; home mortgage interest deduction limits apply per taxpayer

Voss v. Comm., (CA 9 8/7/2015) 116 AFTR 2d ¶ 2015-5128 A divided Court of Appeals for the Ninth Circuit, reversing a Tax Court decision, has concluded that the Code Sec. 163(h)(3) limitations ($1 million of acquisition indebtedness and $100,000 of home equity indebtedness) are applied on a per-individual basis, and not a per-residence basis. […]

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REIT can exclude income from two hedging transactions for purposes of income tests

REIT can exclude income from two hedging transactions for purposes of income tests

PLR 201527013 IRS has privately ruled that income received by a real estate investment trust (REIT) from two sets of hedging transactions won’t constitute gross income for purposes of the income tests that a taxpayer must satisfy in order to qualify as a REIT. Income from the original set of transactions, which were entered in […]

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REIT’s income from outdoor advertising displays was rent from real property

REIT’s income from outdoor advertising displays was rent from real property

PLR 201522002 IRS has privately ruled that income that a real estate investment trust (REIT) received under rental agreements from customers for the use of advertising space on its outdoor advertising displays qualified as rents from real properties for purposes of the REIT qualification tests. IRS also ruled that none of the services that the […]

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State real property development credit met REIT asset and income tests

State real property development credit met REIT asset and income tests

PLR 201518010 In a private letter ruling, IRS has said that, where a group of related real estate investment trusts (REITs) were treated for purposes of generally accepted accounting principles (GAAP) as having earned but not received a state credit for developing certain types of property, the credit was a receivable that qualified for the […]

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FIRPTA Amendments Proposed To Encourage Foreign Investment In U.S. Real Estate

FIRPTA Amendments Proposed To Encourage Foreign Investment In U.S. Real Estate

Two senior members of the U.S. House Ways & Means Committee, one Republican and one Democrat, have introduced amendments to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) that aim to encourage greater foreign investment in U.S. real estate. Background on FIRPTA. In December of ’80, Congress enacted FIRPTA. It greatly revised the […]

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Ventas Bets Big on an Aging Population – Some Think the REIT Could Surge 30% in Coming 12 Months

Ventas Bets Big on an Aging Population – Some Think the REIT Could Surge 30% in Coming 12 Months

Ventas Bets Big on an Aging Population – Some Think the REIT Could Surge 30% in Coming 12 Months, as reported in the WS Journal. Ventas, one of the nation’s biggest health-care real estate investment trusts, or REITs, offers the prospect of solid growth and steady dividend gains. The Chicago-based concern boasts a market value […]

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REIT’s advertising income from outdoor displays is rent from real property

REIT’s advertising income from outdoor displays is rent from real property

PLR 201431018 IRS has privately ruled that income derived by a real estate investment trust (REIT) from customers for the use of advertising space on Qualified Outdoor Advertising Displays (as defined below) qualifies as rents from real properties for purposes of the REIT qualification tests. Background. REITs are tax-favored vehicles for investing in real estate. […]

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Acquisition of S corp’s stock by REIT didn’t result in its being taxed as C corp

Acquisition of S corp’s stock by REIT didn’t result in its being taxed as C corp

IRS has privately ruled in PLR 201345021 that, in connection with the purchase of all the shares of an S corporation by a qualified real estate investment trust (REIT), there was no period between the termination of the S corporation’s election under Code Sec. 1362(d)(2) and its qualification as a qualified REIT subsidiary under Code […]

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Proposed regs clarify controlled group rules for RIC asset diversification test

Proposed regs clarify controlled group rules for RIC asset diversification test

IRS has issued proposed regs – Prop Reg § 1.851-5 – that would clarify how the controlled group rules apply for purposes of the regulated investment company (RIC) asset diversification test. Specifically, the proposed regs would make revisions to examples and add a new example to clarify that two corporations can constitute a controlled group […]

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REIT’s provision of telecom services to tenants won’t disqualify rental payments

REIT’s provision of telecom services to tenants won’t disqualify rental payments

In a supplemental private letter ruling (PLR), PLR 201334033, IRS has determined that a real estate investment trust’s (REIT’s) provision of cross-connectivity telecommunications services to its tenants in connection with leasing its buildings won’t cause any amounts received from the tenants to be treated as other than “rents from real property” under Code Sec. 856(d). […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney