Favoring A Multiclass REIT Structure

Law360, New York (August 1, 2011, 1:16 PM EDT) -- In a private letter ruling (PLR) that we obtained on behalf of a client, the U.S. Internal Revenue Service extended rules applicable to open-end mutual funds (RICs) to a publicly registered, nontraded real estate investment trust (a REIT).

The IRS held that: (1) the issuance of multiple classes of common stock that are subject to different fees, similar to RICs, (A) would not cause distributions paid by the REIT with respect to those multiple classes of stock to be treated as preferential dividends under Section 562(c)[1]...
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