Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Explain Taxable REIT Subsidiaries?
Expert Solution
Step 1
Taxable REIT subsidiary (TRS):
It may be an organization straightforwardly or by implication possessed by a REIT and chosen mutually with the REIT to be handled as a TRS for assessing purposes. A TRS is governed by a typical corporate income tax, which is presently a level assess the rate of 21% beneath the Tax Cuts and Jobs Act (TCJA).
Step 2
As a foundation, the TRS was presented through the 1999 Tax Relief Extension Act to supply extra adaptability for REITs. Since a REIT income must come overwhelmingly from inactive real estate investments, the TRS was made to carry out exercises that cannot be carried out straightforwardly by the REIT without abusing the REIT status.
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