June 27, 2022

Volume XII, Number 178

Advertisement
Advertisement

June 27, 2022

Subscribe to Latest Legal News and Analysis

IRS Provides Temporary Guidance on Stock Distributions by Publicly Offered RICs and REITs

On December 1, 2021, the Internal Revenue Service issued Revenue Procedure 2021-53, which provides temporary guidance regarding the treatment of certain stock distributions by publicly offered regulated investment companies (RICs) and real estate investment trusts (REITs). Revenue Procedure 2021-53 modifies Revenue Procedure 2017-45, which provides a safe harbor under which a publicly offered RIC or REIT may permit shareholders to elect to receive a distribution in stock in lieu of cash, provided, among, other things that the RIC or REIT makes at least 20 percent of the aggregate distribution in cash. (See Vedder Price’s publication Strategies for Funds Facing Liquidity Issues as a Result of the COVID-19 Pandemic, available here, for additional information on the safe harbor.) Recognizing the need RICs and REITs may have for liquidity as a result of the effects of the ongoing COVID-19 pandemic, the IRS issued Revenue Procedure 2021-53 to reduce temporarily the minimum required aggregate amount of cash that RIC and REIT shareholders receive to not less than 10 percent of the total distribution. Revenue Procedure 2021-53 is effective only with respect to distributions declared by a publicly offered RIC or REIT on or after November 1, 2021 and on or before June 30, 2022.

The IRS previously granted similar temporary relief applicable to distributions declared by publicly offered RICs and REITs between April 1, 2020 and December 31, 2020 pursuant to Revenue Procedure 2020-19.

The full text of Revenue Procedure 2021-53 is available here.

© 2022 Vedder PriceNational Law Review, Volume XII, Number 41
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

John Marten Investment Attorney Vedder Price Law FIrm
Shareholder

John S. Marten, a Shareholder in the Chicago office of Vedder Price, has substantial experience representing clients in the investment management industry.

As a member of the firm’s Investment Services group, Mr. Marten counsels clients on a wide variety of matters involving the application of the federal securities laws to investment companies, investment advisers and broker-dealers. He has significant experience counseling investment company clients with respect to new products and was recently involved in the creation of two mutual funds...

(312) 609 7753
Nathaniel Segal Investment Attorney Vedder Price Law Firm
Counsel

Nathaniel Segal is counsel at Vedder Price and a member of the Investment Services group. He focuses his practice on investment companies and investment advisers in connection with the organization and operation of investment products and services, including traditional mutual funds, closed-end investment companies (including interval funds and listed closed-end funds), variable insurance products and registered hedge funds, as well as mutual funds utilizing complex hedging and absolute return strategies. Mr. Segal has experience in conducting transactional due diligence...

(312) 609 7747
Jacob Tiedt,Vedder Price law firm investment services attorney
Shareholder

Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....

312-609-7697
Amy E. Lewis Counsel Chicago Vedder Price
Counsel

Amy E. Lewis serves as Counsel in Vedder Price's Chicago office.

As a member of the firm’s Tax and Estate Planning group, Ms. Lewis concentrates her practice in the areas of tax and corporate law. She represents corporations, partnerships, limited liability companies and individuals in a variety of matters, including business start-ups, mergers and acquisitions, restructurings, federal, state and international tax planning, executive compensation, corporate finance and general corporate matters.

Ms. Lewis also has...

312-609-7837
Advertisement
Advertisement
Advertisement