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Vinson & Elkins Helps Draft ABA Comment Letter on Treasury and IRS Proposed Regulations on Foreign Investment in U.S. Real Estate

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Partner Chris Mangin, with assistance from partner Paige Anderson, led the ABA Section of Taxation’s comment letter (the “Comments”) on Treasury and the IRS’s recently proposed regulations under Sections 897 and 892 (the “Proposed Regulations”) regarding issues affecting foreign investment in U.S. real estate. Associate Maddie Brown and partner Gary Huffman also made contributions to the Comments.

The Proposed Regulations would require a look-through of certain taxable domestic corporations to their foreign owners in determining whether a REIT is domestically controlled (the “Corporate Look-Through Rule”) for purposes of the exemption from taxation under FIRPTA available to foreign shareholders of “domestically controlled qualified investment entities.” The Comments make the case for withdrawal of the Corporate Look-Through Rule, along with a number of alternative recommendations, including requests for transition relief should the Corporate Look-Through Rule be adopted.

To read the comment letter, click below.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.