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8 December 202324 minute read

REIT Tax News - December 2023

Editor’s note

Welcome to the 2023 year-in-review edition of REIT Tax News. This year has been a busy year for DLA Piper’s National REIT Tax practice, and we want to thank our readers for coming with us on this journey.

The beginning of 2023 had taxpayers and tax professionals adjusting to the Treasury Department’s December 2022 issuance of proposed regulations under Internal Revenue Code (the Code) Section 897. The proposed regulations came as a surprise to the REIT tax community and significantly modified longstanding interpretation of the definition of “domestically controlled” REIT status.

In particular, the proposed regulations would disallow the common practice of foreign investors using a foreign-owned domestic corporation to create a domestically controlled REIT which was permitted under prior guidance (the so-called corporate look-through rule). Please see our prior client alert for more information. In addition, we contributed to the American Bar Association Section of Taxation’s Comment Letter to the IRS on the proposed regulations recommending both a modification of the corporate look-through rule and an appropriate grandfathering of the rule. 

As of the date of publication of REIT Tax News, the Treasury Department has not yet issued final regulations, although there is still time for the Treasury Department to do so before the end of 2023. 

In June 2023, the Treasury Department and the IRS issued long-awaited proposed regulations addressing transfers of green energy tax credits under the Inflation Reduction Act (IRA). Prior to the IRA, a REIT typically held solar projects through a taxable REIT subsidiary and could not benefit from these credits without paying corporate tax. The transferability feature of the IRA allows a REIT to monetize these credits simply by selling the credits to an unrelated buyer for cash without needing to use a taxable REIT subsidiary. For more information, please see our prior client alert and our contribution to the New York State Bar Association Tax Section Report.  

Fresh off the heels of the Treasury Department’s release of the proposed regulations under Code Section 897, in late January 2023, the IRS provided helpful guidance on parking, amenity space, and various complimentary tenant services provided by REIT-owned office buildings and the character of the income derived therefrom for purposes of Code Section 856(d). For more information, please see PLR 202304003 (available on and our prior client alert.  

More recently, in the fourth quarter of 2023, the IRS issued a Private Letter Ruling related to a REIT’s ownership of floating docks from a REIT qualification perspective. The IRS held that such floating docks constitute real estate assets for purposes of Code Sections 856(c)(4) and (5) and the related storage fees, pipeline use fees, and docking fees constitute rents from real property for purposes of Code Sections 856(c)(2) and (c)(3).  This is a positive development for REIT taxpayers and is consistent with prior rulings. For more information, please see PLR 202346008 (available on  The IRS has also made the long-awaited update to Form W-8EXP to allow qualified foreign pension funds (QFPFs) to certify its status as a withholding qualified holder under Code Section 1445. This updated form will help streamline the investment of QFPFs into REITs.

Turning to the courts, 2023 includes a tax case currently before the Supreme Court of the United States. Earlier this year, the Supreme Court agreed to hear Moore v. United States, Docket No. 22-800. Although the amount in controversy in Moore is small (approximately $15,000), a decision in favor of the taxpayer imposing a realization requirement for federal income taxes could have a significant impact on other parts of the Code, not only on the mandatory repatriation tax at issue in the case. Notably, the imposition of a realization requirement may have an impact on REITs and, in particular, mortgage REITs that issue debt instruments with original issue discount may be able to defer distribution. For more information, please see the most recent Transcript of Oral Arguments and our recently published article on Bloomberg

2023 also introduced several legislative proposals that we will continue to monitor in 2024. Over the summer, US Representatives Mike Kelly and Brian Higgins introduced H.R. 5275 to restore the percentage of taxable REIT subsidiary (TRS) securities that a REIT may hold back up to 25 percent of a REIT’s assets, increased from the current 20 percent. For more information, see H.R. 5275 and the October 2023 edition of REIT Tax News.
In addition, Senate Finance Chairman Ron Wyden introduced the Ending Tax Breaks for Massive Sovereign Wealth Funds Act at the end of the third quarter, aiming to eliminate the Code Section 892 exemption for certain foreign governments with large sovereign wealth funds, many of which are active investors in REITs. Please see our prior client alert for more information. 

More recently, Chairman Wyden also introduced the Billionaires Income Tax Act at the end of November 2023, aiming to require billionaires to pay taxes annually by eliminating the ability of high-income and high-net-worth taxpayers to use tax planning strategies such as “buy, borrow, die” to defer paying taxes indefinitely. In particular, if passed, this bill would treat a capital gain dividend received by an applicable taxpayer from a privately held REIT as gain from the sale of a non-tradable covered asset, and the tax imposed would be increased by the “deferral recapture amount” (ie, an amount akin to interest charged on deferred tax). This bill would also limit the availability of Section 1031 (like-kind exchanges). For more details, please see

In international news, the South Korean National Assembly passed an amendment to the Special Taxation Act at the end of 2022 which, in part, allows certain Korean investors to look through certain foreign entities under Korean tax law. This amendment would facilitate the ability of Korean investors to claim the benefits of the US-Korean Income Tax Treaty for US REIT investments. Historically, Korean investors were concerned that they may lose the benefits of the US-Korean Income Tax Treaty if they were to invest in a US REIT indirectly, for example, through a Delaware partnership. With the new amendment, it is now clear that this common structure is no longer a concern. For more information, please see Bloomberg.

We are excited to remind readers that we have launched our online REIT Tax Resource Center, a centralized homepage allowing for easy access to our REIT tax thought leadership and news. The homepage also identifies, organizes, and links to a variety of key REIT tax resources, including IRS tax forms, Treasury regulations, relevant Code sections, IRS notices, and legislative history. Also available on our Resource Center is a simple primer on the basics of REIT taxation in the format of a FAQ. To access, please check out our website.

Our REIT practice was proud to be a sponsor of the annual Nareit REITwise Law, Accounting & Finance Conference. In addition, we served on the tax committees of the Real Estate Roundtable, the Institute for Portfolio Alternatives, the American Bar Association, and the New York State Bar Association. Lastly, we were honored to be awarded a Tier 2 ranking in The Legal 500 United States 2023 and Band 3 ranking in Chambers USA 2023.

I. Legislative updates

H.R. 5988: The United States-Taiwan Expedited Double-Tax Relief Act.

House and Senate lawmakers have been proactively advancing a version of a treaty-like domestic legislation for US and Taiwanese taxpayers providing for, among other things, a reduced rate of withholding of 15 percent for qualified REIT dividends.  

For more information, see H.R. 5988.

Billionaires Income Tax Act would eliminate “buy, borrow, die” practice.

Legislation co-sponsored by 15 Democratic senators would “end one of the most prominent, legal ways that billionaires avoid paying taxes known as ‘buy, borrow, die.’”

For more information, see Billionaires Tax Act.

Bill No. 2117151: Amendment to the Special Taxation Act (Korea).

The South Korean National Assembly passed an amendment to the Special Taxation Act which, in part, allows certain Korean investors to look through certain foreign entities under Korean tax law which should result in reduced uncertainty related to the interaction of Korean tax law and Code Section 894(c) and may allow REIT structures with Korean investors to be simplified. 

For more information, see Bill No. 2117151.

II. Treasury regulations

No updates this quarter. 

III. IRS memoranda and private letter rulings

IRS PLR 202346008: Floating docks storage fees satisfy REIT requirements.

The IRS ruled that floating docks are real property for purposes of Code Section 1.856-10(b) and, therefore, are real estate assets for purposes of Code Sections 856(c)(4) and (c)(5). The storage fees, pipeline use fees, and docking fees in relation to the floating docks qualified as rents from real property within the meaning of Code Section 856(d). The related Code Section 481(a) adjustment and remediation payments are not treated as gross income, and the taxpayer’s income from the related insurance payout is treated as qualifying income, each respectively for purposes of Code Sections 856(c)(2) and (c)(3).

Available on

IRS PLR 202340012: Taxable REIT subsidiary provided late election relief.

The IRS ruled that a taxpayer and its subsidiary satisfied the requirements for granting a reasonable extension of time to jointly elect under section 856(l) to treat the subsidiary as a taxable REIT subsidiary of the taxpayer where the taxpayer’s counsel became aware it had “inadvertently failed” to timely file Form 8875, Taxable REIT Subsidiary Election.  The taxpayer requested relief before the Statute of Limitations under Code Section 6501(a) had expired for the taxable year of the election and before the failure to make the election was discovered by the IRS.  Taxpayer represented that it did not use hindsight in requesting relief and that the grant of relief would not result in having a lower tax liability.  No other factors sided against relief.

Available on

IRS PLR 202344007: Relief granted for inadvertent REIT election.

The IRS ruled that a taxpayer could be treated as not having elected to be a REIT after its tax consultant inadvertently elected for it to be a REIT by filing a Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts.  The tax consultant’s team member that had been directly involved in discussions with the taxpayer was on paternity leave, and his remaining team members filed the election.  An advisor discovered the error within a year, and the taxpayer immediately engaged the tax consultant to file a Form 1120-X, Amended U.S. Corporation Income Tax Return, to undo the Form 1120-REIT and to submit a request for a private letter ruling.  The IRS held that the filing of Form 1120-X was to be effective and to not be treated as a termination or revocation of a REIT election for purposes of section 856(g).

Available on

IV. Court updates

Moore: The Supreme Court hears oral arguments.

The Supreme Court heard oral arguments in Moore on December 5, 2023.  The questions that the Justices choose to ask, as well as the general tone of questioning, frequently provide insight into the ultimate outcome of a case.  For more detail, please see our recent article on Bloomberg.

Available on the Supreme Court's website.

V. Other news

IRS updates Internal Revenue Manual to extend electronic signature relief.

The IRS updated the Internal Revenue Manual (10.10.1) to accept electronic signatures (instead of handwritten signatures) indefinitely with respect to certain IRS forms.  The update is an extension of the IRS’s temporary COVID-19-era procedures related to the acceptance of electronic signatures on certain IRS forms.  Notably for REITs and their advisors, Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts, is among the forms (see IRM Exhibit 10.10.1-2) for which the IRS will accept electronic signatures in lieu of “wet-ink” signatures.

Details of the IRS’s release are available on

IRS releases a new version of Form W-8EXP.

The IRS has updated Form W-8EXP, to include the ability of qualified foreign pension funds (QFPFs) to claim their exemption from withholding and taxation under FIRPTA. Prior to this, REITs required special certifications from QFPFs.  

The revised Form W-8EXP is available on


The three prior quarterly editions of REIT Tax News, which covered REIT tax news from the first, second, and third quarters of 2023, respectively, can be found here (Q1 2023), here (Q2 2023), and here (Q3 2023).


To learn more, please contact any of the following REIT tax attorneys at DLA Piper:

New York


Miami and Raleigh


Shiukay Hung

Jesse A. Criz

Joshua Lingerfelt

Andrew Kreisberg

James Manzione

Allen P. Ashley

Maximilian Viski-Hanka

Emily J. Snyder

Kentaro Murase

Jeffrey P. Zanchelli


Marina Kananova

Jennifer Saperstein

Aalok Virmani




Gregory R. A. Dahlgren




Katie LaKoma




Matthew Hilowitz




Kevin Murphy




Allan Bowen



Please check out this snapshot of each of our team members. 


DLA Piper’s National REIT Tax practice has in-depth knowledge and experience with US-listed public REITs, Singapore-listed public REITs, non-traded public NAV REITs, and private REITs. We advise on the acquisition, disposition, and operation of real estate assets through fund, REIT, and joint venture vehicles. Our attorneys are recognized as industry leaders by The Legal 500 and Chambers USA. We regularly publish articles in legal and trade publications and actively participate in real estate and REIT industry organizations.