Rental Income Essay -- Business, Taxes

In order to qualify as a REIT for any taxable year, at least 95% of a REITs gross income must be derived from sources such as dividends, interest, and 75% of income from items related to certain existent property. The items of income related to real soil assets are listed under IRC 856(c)(3) which includes, among other sources, rents from real property, interest on obligations secured by real property or on interests in real property, gain from the cut-rate sale or other disposition of real property that is not inventory or dealer property, and dividends and gains from the sale or orther disposition of shares in other re assume REITs. For the purpose of the income tests described above, IRC 856(d)(1) earmarks that the term rents from real property includes rents from interests in real property, charges for services customarily furnished or rendered in connection with the rental of real property, whether or not such charges are separately stated, and rent attributable to persona l property which is leased under, or in connection with, a lease of real property, but only if the rent attributable to such personal property for the taxable year does not exceed 15 percent of the contribute rent for the taxable year attributable to both the real and personal property leased under, or in connection with, such lease.To provide guidance with regard to tiered partnerships, the Treasury prescribed Reg. 1.856-3(g) which states that a REIT is permitted to look through a partnership in which it is a partner for the purposes of applying the income tests of IRC 856(c)(2) and IRC 856(c)(3). This regulation fraction provides that a REIT is deemed to own a proportionate share of each of the assets of the partnership and that it is deemed to be ent... ...hall be issued to provide that certain items of gross income will not be taken into account in determining income or loss from any activity. The judgeship could not justify treating IRC 469(l)(1) as self-executing and I RC 469(l)(2) as not being self-executing. The court stated that there was intent to promulgate regulations to carry out a statutory purpose and the fact that regulations are not forthcoming cannot be an pleasant basis to preclude taxpayer from congressionally intended and appropriate relief. In addition, the court emphasized that Hillmans approach in netting his share of self-charged management fee outlay with gross income from the activities fulfills the economic significance concern. The taxpayer did not experience accretion in wealth. The court did not see an economic difference between this situation and one and only(a) involving self-charged lending.