Interested in training for your team? Click here to learn more

REITs: Meeting Qualification Rules, Taxable REIT Subsidiaries, and Exit Strategies

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, July 7, 2021

Recorded event now available

or call 1-800-926-7926

This course will cover real estate investment trust (REIT) structures, qualification rules, tax reporting requirements, and best practices for REIT investors and tax professionals working with these entities.


There are two primary types of REITs: equity and mortgage. The former generates income from rents and the sale of properties, while the latter invests in mortgages secured by commercial or residential properties.

For investors, the benefits of these vehicles include receipt of considerable dividends and significant capital appreciation. The Tax Act of 2017 made REITs even more appealing by lowering the tax rate on corporations to 21 percent and allowing taxpayers a 20 percent deduction for qualified REIT dividends under 199A.

Although the benefits are extensive, the requirements can be overwhelming:

  • At least 75 percent of its total assets must be invested in real estate
  • At least 90 percent of its taxable income must be paid in dividends
  • Have no less than 100 shareholders with no more than 50 percent of its shares being held by five or fewer individuals
  • Be taxable as a corporation

These are a few of many obstacles to a REIT designation. Compliance with the requirements is an ongoing process, and failing any tests may jeopardize an entity's REIT status. Tax practitioners must understand both the benefits and caveats of working with these entities.

Listen as our panel of REIT experts explains the rules for REIT qualification, meeting quarterly and annual requirements, the consequences of failing REIT tests, and successfully exiting a REIT.



  1. Real estate investments trusts
  2. Types of REITs
  3. 2017 Tax Act's impact on REITs
  4. REIT structures
  5. REIT qualification rules
    1. Organizational requirements
    2. Closely held test
    3. Annual income tests
    4. Quarterly asset tests
    5. Distribution requirements
  6. Taxable REIT subsidiaries
  7. Impermissible tenant service income
  8. Consequences of failing tests
  9. Tax reporting requirements
  10. Due diligence
    1. Buying a property to put into a REIT
    2. Buying a REIT
  11. Exit strategies


The panel will cover these and other critical issues:

  • What is ITSI (impermissible tenant service income), and how to avoid it?
  • The benefit of REITs for triple net leases
  • Mid-year curative strategies for meeting qualification tests
  • Meeting the 90 percent annual distribution requirement


Clayman, Jeffrey
Jeffrey Clayman, CPA, JD, LLM

Tax Senior Director
Alvarez & Marsal

Mr. Clayman has over 18 years of public accounting experience with a focus on for-profit businesses in many different...  |  Read More

Kettler, Ashley
Ashley Kettler, CPA

Tax Senior Manager – Real Estate
Withum Smith+Brown

Ms. Kettler has ten years of experience working in Real Estate. She also has experience in REIT due diligence and REIT...  |  Read More

Access Anytime, Anywhere

CPE credit is not available on downloads.