Die Arbeit beschäftigt sich mit den besonderen Vorschriften des US-Steuerrechts für REITs. Außerdem werden das deutsch-amerikanische DBA und Provisionen des dt. Steuerrechts für Anleger des US-REITs betrachtet. - This thesis treats the provisions of the US tax lax concerning REITs and the provisions of the DTA and the US and the german tax law regarding the shareholders of those REITs.
Table of Contents
1 INTRODUCTION
1.1 PROBLEM DEFINITION
1.2 APPROACH OF INVESTIGATION
2 GENERAL INFORMATION ABOUT REITS
2.1 DEFINITION OF REAL ESTATE INVESTMENT TRUSTS
2.2 REIT HISTORY/ LEGAL DEVELOPMENTS
2.3 TYPES OF REITS
2.4 SPECIAL REIT STRUCTURES
2.4.1 UMBRELLA PARTNERSHIP REITS
2.4.2 DOWNREITS
2.5 ECONOMIC PERFORMANCE AND INDUSTRY GROWTH
3 PREREQUISITES TO BE TAXED AS A REIT IN THE U.S
3.1 ORGANIZATION
3.1.1 GENERAL STRUCTURE
3.1.1.1 Paired Stocks
3.1.1.2 Paper-Clips
3.1.2 MANAGEMENT
3.1.2.1 Trustees and Directors
3.1.2.2 Shareholder Rights
3.1.3 REIT OWNERSHIP
3.1.3.1 Ownership of Shares and its Restrictions
3.1.3.2 Domestic Corporation
3.1.3.3 Banks and Insurances
3.1.3.4 Number of Shareholders
3.1.3.5 Closely Held Prohibition
3.1.4 ELECTION TO BE TAXED AS REIT
3.1.5 CONVERSION OF "C CORPORATION"
3.2 ASSET TESTS
3.2.1 75% TEST
3.2.2 25% TEST
3.2.3 FAILURE OF THE ASSET TESTS
3.3 INCOME TESTS
3.3.1 GROSS INCOME
3.3.2 75% TEST
3.3.3 95% TEST
3.3.4 FAILURE OF THE INCOME TESTS
3.4 TAXABLE REIT SUBSIDIARIES (TRS)
3.4.1 GENERAL INFORMATION
3.4.2 EFFECTS ON ASSET AND INCOME TESTS OF A REIT
3.5 DISTRIBUTION REQUIREMENTS
3.5.1 GENERAL INFORMATION
3.5.2 DISTRIBUTION OF STOCK
3.5.3 CAPITAL GAIN DISTRIBUTIONS
3.5.4 DISTRIBUTIONS AT A LATER DATE
4 TAXATION OF A REIT
4.1 GENERAL INFORMATION
4.1.1 FILING THE RETURN
4.1.2 TAX PAYMENTS
4.1.3 FAILURE TO COMPLY
4.1.4 ACCOUNTING METHOD AND PERIOD
4.2 INCOME TYPES
4.2.1 REIT TAXABLE INCOME
4.2.2 DEDUCTIONS FOR DIVIDENDS PAID
4.2.3 EARNINGS AND PROFITS
4.2.4 EXCESS NON-CASH INCOME
4.2.5 CAPITAL GAINS
4.2.6 NET OPERATING LOSSES
4.2.7 NET CAPITAL LOSSES
4.2.8 INCOME FROM FORECLOSURE PROPERTY
4.2.9 INCOME FROM PROHIBITED TRANSACTIONS
4.2.10 INCOME THROUGH CHANGES OF ACCOUNTING METHOD
4.3 CALCULATION OF FEDERAL TAX LIABILITY
4.3.1 TAXES ON REITTI INCLUDING CAPITAL GAINS
4.3.2 TAX ON NET INCOME FROM FORECLOSURE PROPERTY
4.3.3 TAX ON INCOME FROM PROHIBITED TRANSACTIONS
4.3.4 TAX ON GAINS THROUGH C CORPORATION CONVERSIONS
4.3.5 EXCISE TAX ON UNDISTRIBUTED INCOME
4.3.6 PENALTY TAXES FOR FAILURE OF ASSET OR INCOME TESTS
4.3.7 PENALTIES FOR FAILURE OF OWNERSHIP
4.3.8 PENALTY TAXES FOR CERTAIN DEALINGS WITH TRS
4.3.9 ALTERNATIVE MINIMUM TAX
4.4 TAXATION THROUGH STATES
4.4.1 IMPORTANCE OF FEDERAL LAWS FOR STATES
4.4.2 CONNECTION BETWEEN REIT AND STATE
4.4.3 BUSINESS IN MORE THAN ONE STATE
4.4.4 DIVISION OF INCOME FOR TAX PURPOSES
5 TAXATION OF SHAREHOLDERS
5.1 US SHAREHOLDERS
5.1.1 DISTRIBUTIONS FROM EARNINGS AND PROFITS
5.1.2 CAPITAL GAINS DIVIDENDS
5.1.3 RETAINED CAPITAL GAINS
5.1.4 CAPITAL GAINS TAX RATES
5.1.5 QUALIFIED DIVIDENDS
5.1.6 TAX-EXEMPT SHAREHOLDERS
5.2 GERMAN SHAREHOLDERS
5.2.1 GENERAL REGULATIONS FOR FOREIGN SHAREHOLDERS
5.2.1.1 United States Real Property Interest
5.2.1.2 Capital Gains Distributions
5.2.1.3 Ordinary Dividends
5.2.1.4 Penalties
5.2.2 DOUBLE TAXATION TREATY USA-GERMANY
5.2.2.1 General Information
5.2.2.2 Ordinary Dividends
5.2.2.3 Gains through Disposition of Shares
5.2.3 GERMAN INCOME TAXATION
5.2.3.1 Provisions of the German REIT Act and Income Taxation
5.2.3.2 Corporate Investors
5.2.3.3 Individual Investors
5.2.3.4 Contrast of the Tax Regimes
6 FUTURE FORECAST AND CONCLUSION
Research Objectives and Key Topics
The primary goal of this thesis is to provide potential German investors with a comprehensive insight into the U.S. tax situation of Real Estate Investment Trusts (REITs). It examines the legislative provisions, regulatory requirements, and tax implications for both the REIT entities and their shareholders, with a specific focus on the implications for German investors under existing double taxation treaties and German income tax law.
- Regulatory prerequisites for maintaining REIT status in the U.S.
- Economic performance and historical development of the REIT industry.
- Tax treatment of different classes of shareholders, including foreign investors.
- The impact of federal and state taxation on REIT operations.
- Comparison of U.S. tax regimes with the German regulatory environment for G-REITs.
Excerpt from the Book
2.1 DEFINITION OF REAL ESTATE INVESTMENT TRUSTS
“They [Real Estate Investment Trusts] are real operating companies that lease, renovate, manage, tear down, rebuild, and develop from scratch.”
REITs are mutual real estate funds. In §856(a) of the IRC they are defined as corporation, trust or association that specializes in investing in real estate and real estate mortgages. To qualify as a REIT, those companies have to meet six defined formal requirements and have to elect to be taxed as REITs in order to receive tax benefits. Besides the six initial requirements, they also have to comply with several tests regarding assets and income during the tax periods to retain their special status.
REITs receive federal tax credits equal to the dividends distributed to their shareholders, if they distribute at least 90% of their net income.
Summary of Chapters
1 INTRODUCTION: This chapter outlines the problem definition and provides an overview of the scope and objectives of the thesis regarding the taxation of U.S. REITs.
2 GENERAL INFORMATION ABOUT REITS: This section covers the definition, history, and legal evolution of REITs, including special structures like UPREITs and an analysis of industry growth.
3 PREREQUISITES TO BE TAXED AS A REIT IN THE U.S: This chapter details the strict organizational, management, asset, and income requirements that an entity must fulfill to qualify as a REIT.
4 TAXATION OF A REIT: This section explains the federal and state tax liabilities of the REIT entity itself, including specific income types and penalty structures.
5 TAXATION OF SHAREHOLDERS: This chapter examines the tax treatment for both U.S. and German shareholders, including the application of double taxation treaties.
6 FUTURE FORECAST AND CONCLUSION: The final chapter provides a forward-looking summary of economic trends and legislative changes affecting REITs.
Keywords
Real Estate Investment Trusts, REIT, Taxation, Internal Revenue Code, UPREIT, DownREIT, Dividends, Income Tests, Asset Tests, Shareholder Taxation, Double Taxation Treaty, Federal Tax, German REIT Act, Investment Property, Capital Gains
Frequently Asked Questions
What is the core subject of this thesis?
The work provides an in-depth analysis of the taxation of Real Estate Investment Trusts (REITs) within the United States, specifically focusing on the compliance requirements and the tax implications for German shareholders.
What are the central topics addressed?
The thesis covers the legal prerequisites for REIT status, the classification of different REIT types, the mechanics of federal and state taxation, and the specific tax treatment for international investors under treaty agreements.
What is the primary research objective?
The aim is to offer German investors clarity on the tax situation regarding U.S. REIT investments and to compare these mechanisms with the legislative framework established by the German REIT Act.
Which scientific methodology is employed?
The study relies on a legal and financial analysis of the Internal Revenue Code (IRC), IRS rulings, state-level regulations, and relevant academic and industry literature regarding real estate investment vehicles.
What does the main part of the document focus on?
The core of the thesis is dedicated to the strict criteria (Asset and Income tests) an entity must meet to qualify as a REIT and the subsequent tax liability calculation at both the entity and shareholder levels.
Which terms best characterize this work?
Key terms include REIT taxation, Internal Revenue Code, foreign investment, double taxation treaty, income tests, asset tests, and cross-border shareholder tax implications.
How do "paired stock" or "paper-clip" structures function?
These were innovative historical structures designed to bypass strict limitations on active business operations for REITs by associating the REIT with a separate C Corporation, though they have been heavily restricted by subsequent legislation.
What is the significance of the Taxable REIT Subsidiary (TRS)?
A TRS allows a REIT to engage in certain business activities that would otherwise be impermissible for the REIT itself, providing greater operational flexibility while maintaining the REIT's primary tax-advantaged status.
How does the RIDEA of 2007 impact REIT assets?
The REIT Investment Diversification and Empowerment Act (RIDEA) modified asset tests and income requirements, specifically addressing how foreign income and specific types of securities are treated within the REIT framework.
- Citar trabajo
- B.A. in International Business Katja Schlemmbach (Autor), 2008, Taxation of Real Estate Investment Trusts (REITs) in the United States and of their German Shareholders, Múnich, GRIN Verlag, https://www.grin.com/document/186524
