Rev. Proc. 2020-19: Temporary modification to safe harbor for distributions by REITs and RICs (COVID-19)

Temporary modification to safe harbor

The IRS today released an advance version of Rev. Proc. 2020-19 to provide temporary guidance regarding the treatment of certain stock distributions by publicly offered real estate investment trusts (REITs) and publicly offered regulated investment companies (RICs).

1000

Related content

Rev. Proc. 2020-19 [PDF 16 KB] provides relief in recognition of the need for enhanced liquidity in response to economic issues resulting from the coronavirus (COVID-19) pandemic.

Rev. Proc. 2020-19 modifies the safe harbor provided in Rev. Proc. 2017-45 by temporarily reducing the minimum required aggregate amount of cash that distributee shareholders may receive to not less than 10% of the total distribution in order for Code section 301, by reason of section 305(b), to apply to the distribution. Specifically, today’s revenue procedure modifies a measure of Rev. Proc. 2017-45 by striking “The Cash Limitation Percentage is not less than 20 percent” and instead inserting “The Cash Limitation Percentage is not less than 10 percent.”

The relief provided by Rev. Proc. 2020-19 is a temporary modification and is effective only with regard to distributions declared by a publicly offered REIT or publicly offered RIC on or after April 1, 2020, and on or before December 31, 2020.


KPMG observation

The COVID-19 pandemic is causing uncertainty and changing the business environment for the REIT  industry. For a discussion of the use of elective stock dividends by publicly offered REITs, read TaxNewsFlash

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal