Alston & Bird Tax Blog

Reorganizations

REIT Conversions

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LTR 201314002 has caused quite a buzz in the investment community. Stock pickers want to know how far the envelope can be pushed on the definition of a real estate investment trust. The ruling seemed to allow it to be pushed fairly far, to include racks in buildings where computer servers are stored, called data centers. However, two companies in somewhat similar businesses recently filed information with the SEC indicating that the IRS was closely examining whether their real estate should receive REIT treatment. Facts A domestic consolidated group headed by a parent is now in the business of [...]Read more

Sections 305 and 306 and Tracking Stock

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LTR 201308001 rules on sections 305 and 306 are bread and butter subchapter C provisions that were designed for “tax shelters” that are so quaint and old fashioned that the sections mostly serve today as traps for the unwary. The ruling also involves tracking stock, a more up-to-date matter. Facts. Taxpayer is a closely held corporation, the parent of a consolidated group. All of its shareholders are either directors or employees. Employees have been allowed to buy stock based on book value. The stock has become too expensive due to group members’ ownership of substantial investment [...]Read more