Nareit Comments on Revised Section 337(d) Proposed “Built-in Gain” Regulations

On May 10, Nareit requested that the IRS and Treasury Department narrow the scope regarding recently revised proposed “built-in gain” regulations under Code section 337(d) issued under the Protecting Americans from Tax Hikes Act (PATH Act) of 2015. These regulations require immediate gain recognition when a non-REIT C corporation that had been part of a tax-free spin-off in the prior 10 years merges with a REIT or elects REIT status.

Among other things, Nareit requested that an exception to this immediate gain recognition rule apply when a REIT receives a certification from a non-REIT C corporation that it had not been a party to a tax-free spin-off in the prior 10 years. Instead, the typical five-year built-gain recognition period would apply to assets acquired by the REIT from the non-REIT C corporation.

(Contact: Dara Bernstein at

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