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.
Principal, National Real Estate Tax Technical Leader, PwC US
US Real Estate Tax Technical Co-Leader, PwC US