IRS Answers Lingering Tax-Free REIT Spinoff Ban Questions

The IRS issued rules for a 2015 law that bars corporations from spinning off tax-advantaged real estate investment trusts and avoiding tax on the transaction.

Under the Protecting Americans from Tax Hikes (PATH) Act, operating companies can no longer engage in a tax-free Section 355 spinoff of a REIT. REITs are generally only taxed at the shareholder level, not the corporate level, and their scope has expanded in recent years to include timber, warehouse, private prison, and telecommunication enterprises.

• The final rules (T.D. 9862) remove some temporary regulations and address questions left unanswered by a previous round of ...