Overview
Tax Analysts quoted Steptoe partner Lisa Zarlenga in an article titled “General Utilities Repeal Regs Shore Up New REIT Spinoff Prohibition.” The article, published June 20, discusses a package of temporary and proposed regulations issued June 7 that set forth new rules under Section 337(d) to impose corporate-level tax on transactions that managed to circumvent, through the use of a less direct conversion, the recent prohibition on a C corporation spinning off its real estate into a real estate investment trust.
Ms. Zarlenga tells Tax Analysts that regarding the Protecting Americans From Tax Hikes (PATH) of 2015 and Congress’s decision to end the ability of a C corporation to spin off its real estate tax free into a newly formed REIT, “There was still a gap between what the existing [section 337(d)] regs would stop and what the PATH Act would stop”. She adds that the “PATH Act technically only applies to REIT elections, not more broadly REIT conversions.”
The full article can be read at Tax Analysts (subscription required).
