REIT items of income, foreign currency gain under GILTI provisions
REIT items of income, foreign currency gain
The IRS today released an advance version of Rev. Proc. 2018-48 as guidance regarding how certain items of income are treated for purposes of determining whether a real estate investment trust (REIT) satisfies the gross income test in section 856(c)(2).
Rev. Proc. 2018-48 [PDF 57 KB] addresses the following types of income:
- Amounts required to be included in gross income under sections 951(a)(1) (except by reason of section 965), 951A(a), 1291(a), 1293(a)(1), and 1296(a)
- Amounts required to be taken into account under section 986(c) as foreign currency gain with respect to distributions of previously taxed earnings and profits
The revenue procedure notes that previously, the IRS received requests to exercise the authority under section 856(c)(5)(J) and (n)(3)(C) to treat certain amounts determined under section 951(a)(1), 986(c), 1291(a), and 1293(a)(1) either as not constituting gross income or as qualifying gross income, for purposes of section 856(c)(2). The IRS further noted that since section 951A was added to the Code by the new tax law (Pub. L. No. 115-97, enacted December 22, 2017), the IRS has received similar requests to exercise the authority under section 856(c)(5)(J) and (n)(3)(C) regarding REIT income inclusions and foreign currency gain with respect to “global intangible low-taxed income” (GILTI) under section 951A(a).
Accordingly, Rev. Proc. 2018-48 applies to any REIT that is required to include in gross income amounts under section 951(a)(1) (except by reason of section 965), 951A(a), 986(c), 1291(a), 1293(a)(1), or 1296(a). The revenue procedure is effective for tax years beginning after September 13, 2018, but may be applied for a prior tax year by a REIT.
Read an October 2018 report [PDF 82 KB] prepared by KPMG LLP that addresses the implications of Rev. Proc. 2018-48
© 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://kpmg.com/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.