The Tax Exchange - October 2016
Real estate investment trusts (REITs) must adhere to both quarterly asset tests and annual income tests, amongst a host of other administrative requirements, to maintain the tax-advantaged REIT designation. The Treasury and the IRS recently released new final regulations regarding the definition of real property for purposes of the REIT quarterly asset tests.
Many M&A transactions include provisions for breakup fees payable if a party to the transaction backs out of the deal. Many taxpayers generally view a breakup fee as an ordinary expense deductible by the payor. However, the IRS recently issued a Field Attorney Advice ruling that a breakup fee generated a capital loss.
Taxpayers apportioning service income under the Washington B&O Tax must file a reconciliation form by October 31 annually to avoid penalty.