The Internal Revenue Service (the “IRS”) and Treasury Department have proposed regulations (the “Proposed Regulations”) under Section 856 of the Internal Revenue Code providing guidance for analyzing whether non-traditional real estate assets qualify as real estate assets to a real estate investment trust (“REIT”). The Proposed Regulations are a good development for businesses with non-traditional assets that are considering converting into REITs or considering spinning off assets through REITs. There had been some question in 2013 regarding whether the IRS was considering contracting the categories of non-traditional assets that are qualifying real estate assets. The Proposed Regulations provide welcome guidance on the categories of assets that are qualifying real estate assets and provide factors for analyzing other types of assets. The Proposed Regulations also codify the REIT classification of solar assets.
View full memo, Proposed Regulations Provide Greater Certainty on the REIT Classification of Solar and Other Non-Traditional Assets