Section of Taxation Publications
  VOL. 56
NO. 3
SPRING 2003
Contents | TTL Home

 
 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
 
 Foreign Investors in RICs and REITs
Robert J. Staffaroni*

*Member, Debevoise & Plimpton, New York, New York; Yale University, B.A. 1973; University of Pennsylvania, J.D. 1976. This Article is a revised version of a paper presented to The Tax Forum on February 3, 2003. The author gratefully acknowledges the assistance of his colleague Pamela Boorman and his Investment Company Act guru, Kenneth Berman. Helpful comments were also provided by Serge Mezhburd, Amy Ross, and David Stein.

I. INTRODUCTION

This Article discusses the U.S. federal tax treatment of foreign investors in investment companies that are entitled to special tax treatment as "regulated investment companies" (RICs) or "real estate investment trusts" (REITs) under subchapter M of the Code. Part II of this Article provides some general background information on RICs and briefly describes the federal income tax treatment of RICs under subchapter M and certain relevant aspects of investment company regulation under the Investment Company Act of 1940 ("1940 Act"). Part III describes the federal income tax treatment of RIC shareholders generally. Part IV analyzes the federal income and estate tax treatment of foreign investors in RICs, compares such treatment to the treatment of portfolio investments in stocks and securities made directly by foreign investors, analyzes the treatment of RIC dividends under income tax treaties, and discusses legislative proposals to change the income and estate tax treatment of foreign investors in RICs.

Part V provides some general background information on REITs and briefly describes the federal income tax treatment of REITs under subchapter M. Part VI describes the federal income tax treatment of REIT shareholders generally. Part VII analyzes the federal income and estate tax treatment of foreign investors in REITs, compares such treatment to the treatment of direct investment in real estate, and discusses the applicability of income tax treaties. Part VIII provides some reflections and recommendations.


 
 

Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center

 

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