Source: https://www.bna.com/real-estate-joint-ventures-p7659/
Timestamp: 2019-01-21 09:54:15
Document Index: 775087725

Matched Legal Cases: ['§ 856', '§ 856', '§ 856', '§ 856', '§ 856', '§ 1221', '§ 704', '§ 332', '§ 897', '§ 331', '§ 897', '§ 897', '§ 331', '§ 897', '§ 897', '§ 163', '§ 318']

Structuring Real Estate Joint Ventures with Private REITs (Portfolio 743) | Bloomberg Tax
Real estate investment trusts (REITs) create unique planning opportunities for private equity funds and other private investors seeking to invest substantial capital resources in U.S. real property. Tax Management Portfolio, Structuring Real Estate Joint Ventures with Private REITs, No. 743, addresses how the goals of these investors are achieved by entering into joint ventures using non-publicly traded or “private” REITs.
Scott L. Semer, J.D., Columbia University School of Law (1997); B.F.A., Tisch School of the Arts (1992); Lecturer-in-Law, Columbia University School of Law; Partner, Davies Ward Phillips & Vineberg LLP.
Michele J. Alexander, J.D., Georgetown University Law Center (1995); B.A., The College of New Jersey (formerly Trenton State College) (1992); Member, New York State Bar Association, Tax Section; Author, “Tax issues in Business Separation Transactions,” appearing in Business Separation Transactions (Law Journal Press); Counsel, Wachtell, Lipton, Rosen & Katz.
C. Taxable as a Corporation
D. Ownership Tests
1. 100 Person Rule
E. Income and Asset Tests
1. Income Tests
a. 95% Gross Income Test of § 856(c)(2)
b. 75% Gross Income Test of § 856(c)(3)
3. Definitions and Special Rules
4. Mortgage Secured by Partnership, LLC or Single Member Entity Interests
a. Partnership Interests Outside the Safe Harbor
b. Single Member Interests
A. Use of Partnership to Hold All REIT Common Shares
2. Free Transferability
3. Managed by Directors
B. Related Party Issues
1. Closely Held Test
2. Satisfying the Independent Contractor Test of § 856(d)(3)
a. Non-Customary Services
b. Management of Lodging Facilities and Health Care Properties
(2) Attribution Rules
3. Satisfying the â€œEligibleâ€ Independent Contractor Test of § 856(d)(9)
4. Master Lease Structures and § 856(d)(2)(B)
a. Reason for Master Lease Structures
b. What Constitutes â€œRentâ€
c. Unrelated Master-Tenant Structures
(1) Qualifying Lease Payments
(2) Avoiding a Disqualified Tenant
C. Tax-Exempt Joint Venture Partners
1. Pension-Held REITs
2. Dividend Distributions by Non-Pension-Held REITs
a. No Property Subject to Debt
b. Property Subject to Debt
D. Preferential Dividends
2. Definition of â€œClassâ€
4. Sliding Scale Management Fees
E. C Corporation Issues
1. Built-In Gains
2. Distribution of C Corporation Earnings
F. Prohibited Transactions
1. Property Described in § 1221(a)(1)
3. Property Held for Rental
5. Sale of Single Property
6. Sale of Partnership Interest
G. Personal Holding Company Issues
A. Single Private REIT as Acquiror
1. Section 351(e)
2. Section 351(g)
3. Section 357(c)
4. No § 704(c) Allocations
5. Treatment of Capital Gains/Depreciation Recapture
B. REIT as Partner: UPREITs and DownREITs as Acquirors
1. Reason for UPREIT
2. Structuring Contributions of Property to UPREIT Partnership
3. Ensuring Economic Equivalence Between OP Interests and REIT Shares
4. Partnership Anti-Abuse Rule
C. Avoiding Gain Recognition by Partner Contributing Property to UPREIT or DownREIT
1. Potential Gain-Triggering Events
2. Tax Protection Agreements
3. Tax Protection and Future Acquisitions
4. Structuring Contributions of Partnerships
a. Nonrecourse Debt
(1) Minimum Gain
(2) Section 704(c)
b. Form of Acquisitions
(1) Assets-Up
(2) Partnership Merger
(3) Acquisition of Partnership Interests
5. Allocating Nonrecourse Liabilities
b. Tier Two
c. Tier Three
d. Initial Allocation of Liabilities
e. Subsequent Reallocations of Liabilities
f. Tax Protection Agreements
6. Issues with DownREITs
D. Acquisitions of Public UPREITs and Other Targets
1. Structuring Considerations
2. Tax Consequences of Acquisition Form
a. Forward or Reverse Merger
b. Partnership-Level Treatment
3. Bootstrap Acquisitions
a. Desirability of a Pre-closing Distribution
b. Post-closing Liquidation/§ 332(c)
c. Tax Consequences of a Pre-closing Distribution
(1) Dividend vs. Redemption
(2) Effect on Earnings and Profits
(3) Pre-closing Distribution as Additional Purchase Price
d. Sale of Property in Connection with Acquisition
e. Debt Financing
4. Continuing REIT Requirements
5. Intentionally Terminating REIT Status
a. Section 331
b. Dividends-Paid Deduction
c. Stock Purchase and Liquidation Respected as Separate Steps
6. Cashing Out UPREIT Unit Holders
7. Acquisition of C Corporations
E. Exit Scenarios
2. Sale of Property/Distribution of Proceeds
A. FIRPTA
2. FIRPTA Provisions Specifically Applicable to REITs
a. Domestically Controlled REITs
b. Section 897(h)(1)
(1) Section 897(c)(1)(B)/Section 331 as Override to § 897(h)(1)
(a) Notice 2007-55
(b) Interplay of § 331 and § 897(h) Prior to Notice 2007-55
(i) The â€œCleansing Ruleâ€ of § 897(c)(1)(B)
(ii) Arguments in Favor of § 331 Prevailing Over § 897(h)(1)
(2) Section 332 Liquidations
(3) Section 897(h)(5)
3. Distributions of USRPIs
B. Section 892
1. Effective Practical Control
2. Agreements with Other Shareholders to Acquire REIT Shares
3. FIRPTA/§ 897(h)(1)
1. Capital Gain Dividends
3. Distributions in Excess of Earnings and Profits
D. Branch Profits Tax
2. Dividends and Sale of REIT Shares
3. Section 897(h)(1) Distributions
2. Tax Exempt Investors
F. Cross-Border Financing - § 163(j)
3. Treatment of Pledges and Other Security
Worksheet 1 Examples Illustrating Application of § § 318 and 856(d)
Worksheet 2 Sample Restriction Provisions in Tax Protection Agreement
Worksheet 3 Sample Break-Up Fee Savings Provision
Worksheet 4 UPREIT Structure
Worksheet 5 DownREIT Structure