IRS PLR: Certain Real Property Rents, Interest, Treated as Qualifying REIT Income (IRC §856)

The IRS has published a private letter ruling on I.R.C. §467 and I.R.C. §856 concerning taxpayer, a limited liability company electing to be treated as a real estate investment trust (REIT). The IRS determined that: 1) taxpayer’s allocable share of income from airline rents, payments for use of certain common and exclusive international airport terminal space, qualifies as rents from real property within the meaning of I.R.C. §856(d) for purposes of I.R.C. §856(c)(2) and (3); and 2) pursuant to I.R.C. §856(c)(5)(J)(ii), taxpayer’s allocable share of income from prepaid rent loan interest, I.R.C. §467 interest income on prepaid rent and an ...