Lawyer Group Asks IRS to Scrap ‘Look-Through’ Approach on REITs

The Internal Revenue Service should withdraw or revamp a proposed change to the standards under which US real estate investment trusts are considered to be “domestically controlled,” the American Bar Association’s Tax Section says.

US REITs and other “qualified investment entities,” or QIEs, are considered to be domestically controlled if they’re less than 50% owned, directly or indirectly, by foreign entities. Under regulations proposed in December (RIN 1545-BQ36), the IRS wants to apply a “look-through” approach to determine whether that’s the case instead of gauging it by actual owners of stock.

But that’s inconsistent with ...