Real estate investment trusts shouldn’t have their status as REITs jeopardized by the payment of liability-insurance proceeds to cover the costs of a legal settlement, the IRS said.
For the purpose of qualifying as REITs, the REITs don’t have to count as gross income any proceeds from their directors’ and officers’ (D&O) insurance that covers the costs of a settlement, the IRS said in two private letter rulings released Friday.
- REITs must have very high percentages of their income stemming from real estate-related activity, such as rents, in order to qualify for REIT status, which provides tax benefits for …
