Internal Revenue Bulletin: 2012-25
June 18, 2012
Interest in a money market fund as a cash item for REITs. This ruling provides guidance to real estate investment trusts (REITs) on the treatment of income derived from an investment in a money market fund for purposes of the REIT asset tests under section 856(c)(4) of the Code. The ruling holds that a REIT’s investment in a money market fund is an investment in “cash or cash items” for purposes of section 856(c)(4)(A).
Agency for a consolidated group. Proposed regulations under section 1502 of the Code clarify that the agent for the consolidated group that becomes either a partnership or an entity that is disregarded from its owner for Federal income tax purposes remains as the agent for the group. Another change is that in situations where the agent for the group may no longer continue to be the agent for the group, the regulations provide, under most circumstances, that the continuing agent for the group will be automatically determined by a default selection.
Section 83 addresses the income tax consequences of property transferred in connection with the performance of services. Proposed regulations under section 83 of the Code clarify the definition of a substantial risk of forfeiture under regulations section 1.83-3(c)(1). The regulations also update the regulations under section 1.83-3 to incorporate the holdings of Revenue Ruling 2005-48, 2005-2 C.B. 259, which address the substantial risk of forfeiture created by liability under section 16(b) of the Securities Exchange Act of 1934.
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