IRS issues favorable PLR on qualifying REIT income

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December 2019

Overview

In PLR 201948006, the IRS ruled that a real estate investment trust’s (REIT) income attributable to the receipt of nonrefundable and transferable tax credits was considered qualifying income for purposes of the REIT 75% and 95% gross income tests.

 

The takeaway

In this PLR, the IRS ruled that income derived from the receipt of the tax credits would be considered qualifying income for purposes of the REIT income tests. This ruling provides insight on how the IRS may treat types of income not specifically listed in the Code as qualifying income for purposes of the REIT income tests.

Although a PLR may not be used by other taxpayers as precedent, this ruling indicates that the IRS may be willing to rule favorably in cases involving REITs owning similar types of assets and generating similar types of income.

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Adam Feuerstein

Principal, National Real Estate Tax Technical Leader, PwC US

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