Real Estate Investment Trust Corner

A recent adverse private letter ruling issued by the IRS has caused a degree of pause by the REIT industry and generated a healthy amount of discussion relating to the impact of the preferential dividend rules under Code Sec. 562(c) on REIT management fees and related items. This column provides an...

Full description

Saved in:
Bibliographic Details
Published in:Journal of Passthrough Entities 2015-05, Vol.18 (3), p.25
Main Author: Cullen, Daniel F
Format: Article
Language:English
Subjects:
Administrative expenses
C corporations
Cost control
Dividends
Fees & charges
Financial instruments
Internal Revenue Code
Investments
Letter rulings
Preferred stock
REITs
Stockholders
Tax deductions
Waivers
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:A recent adverse private letter ruling issued by the IRS has caused a degree of pause by the REIT industry and generated a healthy amount of discussion relating to the impact of the preferential dividend rules under Code Sec. 562(c) on REIT management fees and related items. This column provides an overview of the preferential dividend rules in the REIT and regulated investment company contexts and takes a closer look at the IRS's adverse decision in LTR 201444022. Congress enacted the REIT rules to permit corporate entities to hold a diversified portfolio of real estate assets without being subject to the double layer of tax normally levied on Subchapter C corporations. Because Code Sec. 857(b)(2)(B), in qualifying cases, awards to the REIT a "dividends paid deduction", a REIT is a tax-efficient vehicle to hold real estate and debt instruments secured by real estate. In LTR 201444022, the REIT at issue had common and preferred stock outstanding.
ISSN:1099-7407