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New Thomson Reuters Content Offers Tax Practitioners Guidance on Real Estate Investment Trusts

The latest topic added to Thomson Reuters Checkpoint Catalyst focuses on the taxation of real estate investment trusts (REITs) and their shareholders. Coverage includes qualification as a REIT, tax benefits offered to REIT investors, and important state and local tax considerations in each of the 50 states and the District of Columbia.

A REIT is like a mutual fund for commercial real estate—REIT shareholders can benefit from regular income streams and long-term growth from real estate investments without having to satisfy stringent capital requirements. A REIT is a tax-preferred vehicle because, unlike a regular corporation, it is not subject to entity-level tax on earnings that it distributes to its shareholders. But these benefits are only available if the real estate company satisfies a variety of intricate requirements.

The new topic addresses these requirements and related compliance strategies. It examines the organizational and operational requirements regarding a REIT’s sources of income, types of investments, management and ownership, required annual distribution, reporting and recordkeeping. The content identifies and analyzes key REIT issues, including constraints on real estate operations, relationships with financially interested parties, prohibited transactions, and special considerations for REITs’ tax-exempt and foreign shareholders.

“As the REIT and commercial real estate sectors emerge from the financial crisis, Congress has made it easier to qualify as a REIT, the IRS has allowed REITs to hold additional types of real estate assets, and more companies are converting from C corporation to REIT structures,” said Elyce Friedfeld, managing editor and author with the Tax & Accounting business of Thomson Reuters. “Our new content provides comprehensive, up-to-date analyses of critical and still evolving REIT-related tax issues and offers guidance to help firms meet complex requirements and strategies for maximizing tax benefits.”

Coverage reflects the many changes enacted in the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that affect the taxation of REITs and REIT shareholders, including the new exceptions from tax under the Foreign Investment in Real Property Tax Act (FIRPTA) intended to increase foreign investment in U.S. real estate.

Checkpoint Catalyst is a collection of multijurisdictional analysis of specific tax issues and business transactions from a practical, workflow perspective, covering implications at the federal, state and US international levels. Checkpoint Catalyst also provides expert guidance on a range of other topics, including:

  • Entity Classification/Disregarded Entities
  • Corporate Liquidations
  • Capital Gains and Losses
  • Transfers of Partnership Interests
  • Earnings and Profits