Page 767 - Large Business IRS Training Guides

Section 965(m)
Election: REITs

• Section 965(m)
and Treas. Reg. §1.965-7(d) provide special rules for real
estate
investment trusts (REITs).

• A REIT
may make an election under section 965(m) to defer the inclusion in
gross
income of its “REIT section 965 amounts” and include them in income
according to the following schedule:

in
1) 8% of the REIT section 965 amounts would be includible in each taxable year
the five-taxable year
period beginning with the taxable year the amount would
otherwise be included;

2) 15% would be includible in year 6;

3) 20% would be includible in year 7; and

4) 25% would be includible in year 8.

• “REIT
section 965 amounts” means, with respect to a REIT and a taxable
year
of the REIT, the aggregate amount of section 965(a) inclusions and
section 965(c) deductions
that would (but for the section 965(m) election) be
taken into account in determining the REIT’s
income for the taxable year.

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