Tax insight

REIT PLR provides favorable guidance on services provided at cold-storage warehouse

Insight
5 minute read
November 06, 2025

What happened?

In PLR 202520010 (PLR), the IRS addressed whether certain amounts received by a real estate investment trust (REIT) operating temperature-controlled warehouses for temperature reduction, tempering, blast freezing, and rapid tempering services (temperature services), and handling services performed by a taxable REIT subsidiary (TRS) did not constitute impermissible tenant service income (ITSI) for REIT income testing purposes.

Why is it relevant?

The ruling provides cold-storage REITs useful guidance as to the types of services that may be provided directly by the REIT and those that would need to be provided by a TRS or independent contractor (IK).

Action items to consider

REITs or taxpayers considering making a REIT election that hold cold-storage assets may want to consider the analysis in the PLR or consider obtaining their own ruling to determine the REIT qualification of the services provided directly at their cold-storage facilities.