I.R.C. § 4981(a) Imposition Of Tax —
There is hereby imposed a tax on every real estate investment trust for each calendar
year equal to 4 percent of the excess (if any) of—-
I.R.C. § 4981(a)(1) —
the required distribution for such calendar year, over
I.R.C. § 4981(a)(2) —
the distributed amount for such calendar year.
I.R.C. § 4981(b) Required Distribution —
For purposes of this section—-
I.R.C. § 4981(b)(1) In General —
The term “required distribution” means, with respect to any calendar year, the sum
of—-
I.R.C. § 4981(b)(1)(A) —
85 percent of the real estate investment trust's ordinary income for such calendar
year, plus
I.R.C. § 4981(b)(1)(B) —
95 percent of the real estate investment trust's capital gain net income for such
calendar year.
I.R.C. § 4981(b)(2) Increase By Prior Year Shortfall —
The amount determined under paragraph (1) for any calendar year shall be increased
by the excess (if any) of—-
I.R.C. § 4981(b)(2)(A) —
the grossed up required distribution for the preceding calendar year, over
I.R.C. § 4981(b)(2)(B) —
the distributed amount for such preceding calendar year.
I.R.C. § 4981(b)(3) Grossed Up Required Distribution —
The grossed up required distribution for any calendar year is the required distribution
for such year determined—-
I.R.C. § 4981(b)(3)(A) —
with the application of paragraph
(2) to such taxable year, and
I.R.C. § 4981(b)(3)(B) —
by substituting “100 percent” for each percentage set forth in paragraph (1).
I.R.C. § 4981(c) Distributed Amount —
For purposes of this section—-
I.R.C. § 4981(c)(1) In General —
The term “distributed amount” means, with respect to any calendar year, the sum
of—-
I.R.C. § 4981(c)(1)(A) —
the deduction for dividends paid
(as defined in section 561)
during such calendar year (but computed without regard to that portion of such deduction
which is attributable to the amount excluded under section 857(b)(2)(D)), and
I.R.C. § 4981(c)(1)(B) —
any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A) of section
857 for any taxable year ending in such calendar year.
I.R.C. § 4981(c)(2) Increase By Prior Year Overdistribution —
The amount determined under paragraph (1) for any calendar year shall be increased
by the excess (if any) of—-
I.R.C. § 4981(c)(2)(A) —
the distributed amount for the preceding calendar year (determined with the application
of this paragraph to such preceding calendar year), over
I.R.C. § 4981(c)(2)(B) —
the grossed up required distribution for such preceding calendar year.
I.R.C. § 4981(c)(3) Determination Of Dividends Paid —
The amount of the dividends paid during any calendar year shall be determined without
regard to the provisions of section 858.
I.R.C. § 4981(d) Time For Payment Of Tax —
The tax imposed by this section for any calendar year shall be paid on or before
March 15 of the following calendar year.
I.R.C. § 4981(e) Definitions And Special Rules —
For purposes of this section—-
I.R.C. § 4981(e)(1) Ordinary Income —
The term “ordinary income” means the real estate investment trust taxable income
(as defined in section 857(b)(2)) determined—-
I.R.C. § 4981(e)(1)(A) —
without regard to subparagraph (B)
of section 857(b)(2),
I.R.C. § 4981(e)(1)(B) —
by not taking into account any gain or loss from the sale or exchange of a capital
asset, and
I.R.C. § 4981(e)(1)(C) —
by treating the calendar year as the trust's taxable year.
I.R.C. § 4981(e)(2) Capital Gain Net Income
I.R.C. § 4981(e)(2)(A) In General —
The term “capital gain net income” has the meaning given such term by section 1222(9) (determined by treating the calendar year as the trust's taxable year).
I.R.C. § 4981(e)(2)(B) Reduction For Net Ordinary Loss —
The amount determined under subparagraph (A) shall be reduced by the amount of the
trust's net ordinary loss for the taxable year.
I.R.C. § 4981(e)(2)(C) Net Ordinary Loss —
For purposes of this paragraph, the net ordinary loss for the calendar year is the
amount which would be net operating loss of the trust for the calendar year if the
amount of such loss were determined in the same manner as ordinary income is determined
under paragraph (1).
I.R.C. § 4981(e)(3) Treatment Of Deficiency Distributions —
In the case of any deficiency dividend (as defined in section 860(f))—-
I.R.C. § 4981(e)(3)(A) —
such dividend shall be taken into account when paid without regard to section 860, and
I.R.C. § 4981(e)(3)(B) —
any income giving rise to the adjustment shall be treated as arising when the dividend
is paid.
(Added Pub. L. 94-455, title XVI, 1605(a), Oct. 4, 1976,
90 Stat. 1754, and amended Pub. L. 99-514, title VI, 668(a), Oct. 22, 1986, 100 Stat.
2306; Pub. L. 100-647, title I, 1006(s)(1), (3), Nov. 10, 1988, 102 Stat. 3418.)
BACKGROUND NOTES
Amendments to Chapter
1986--Pub. L. 99-514, title VI, 651(c), Oct. 22, 1986, 100 Stat. 2297, substituted:
“QUALIFIED INVESTMENT ENTITIES” for “REAL ESTATE INVESTMENT TRUSTS"
as chapter heading, substituted “Excise tax on undistributed income of real estate
investment trusts” for “Excise tax based on certain real estate investment trust taxable
income not distributed during the taxable year” in item 4981, and added item 4982.
1976--Pub. L. 94-455, title XVI, 1605(a), Oct. 4, 1976, 90 Stat. 1754, added chapter
heading and section analysis.
AMENDMENTS
1988--Subsec. (c)(1)(A). Pub. L. 100-647, 1006(s)(3), inserted “(but computed without
regard to that portion of such deduction which is attributable to the amount excluded
under section 857(b)(2)(D)” after “such calendar year”.
Subsec. (e)(2). Pub. L. 100-647, 1006(s)(1), amended par. (2) generally, designating
existing provisions as subpar. (A)
and adding subpars. (B) and (C).
1986--Pub. L. 99-514 substituted
“Excise tax on undistributed income of real estate investment trusts"
for “Excise tax based on certain real estate investment trust taxable income not distributed
during the taxable year” as section catchline and amended text generally. Prior to
amendment text read as follows:
“Effective with respect to taxable years beginning after December 31, 1979, there
is hereby imposed on each real estate investment trust for the taxable year a tax
equal to 3 percent of the amount (if any)
by which 75 percent of the real estate investment trust taxable income
(as defined in section 857(b)(2), but determined without regard to section 857(b)(2)(B),
and by excluding any net capital gain for the taxable year) exceeds the amount of
the dividends paid deduction (as defined in section 561, but computed without regard
to capital gains dividends as defined in section 857(b)(3)(C) and without regard to
any dividend paid after the close of the taxable year) for the taxable year. For purposes
of the preceding sentence, the determination of the real estate investment trust taxable
income shall be made by taking into account only the amount and character of the items
of income and deduction as reported by such trust in its return for the taxable year.”
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included
in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to calendar years beginning after Dec. 31,
1986, see section 669(b) of Pub. L. 99-514, set out as a note under section 856 of
this title.
