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Additional guidance on REIT sales of property not subject to prohibited transactions

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In Private Letter Ruling (“PLR”) 201844003 issued on November 2, 2018, the Internal Revenue Service (“IRS”) ruled that sales made pursuant to a plan of liquidation by a real estate investment trust (“REIT”) would not constitute prohibited transactions under IRC Section 857(b)(6).


PLR 201844003 is similar to a variety of other rulings issued by the IRS in which it concludes that the sales of property in connection with a liquidation, when combined with other factors, would not constitute a prohibited transaction. One interesting note on this ruling is that the rationale for the sales in liquidation was made, in part, on a prediction that the values of the properties would decline in value, which differentiates it from other rulings that the IRS has issued.

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Adam Feuerstein

Principal, National Real Estate Tax Technical Leader, PwC US

David Leavitt

US Real Estate Tax Technical Co-Leader, PwC US

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