[Download] "IRS Rules Total Return Swap Tied to Real Estate Index is Not Subject to Firpta (Foreign Investment in Real Property Tax Act)" by Florida Bar Journal # eBook PDF Kindle ePub Free
eBook details
- Title: IRS Rules Total Return Swap Tied to Real Estate Index is Not Subject to Firpta (Foreign Investment in Real Property Tax Act)
- Author : Florida Bar Journal
- Release Date : January 01, 2008
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 84 KB
Description
In a significant taxpayer-friendly ruling (Rev. Rul. 2008-31), (1) the IRS ruled that a total return swap, the return of which was calculated by reference to a broadly based real estate index, does not give rise to a United States real property interest (USRPI) for purposes of [section]897. (2) The ruling is noteworthy for non-U.S. persons investing synthetically in U.S. real estate-related assets for at least two reasons. First, because of the broad definition of what constitutes a USRPI under the [section]897 regulations, it would not have been much of a stretch for the IRS to contend that a foreign person's long position in a swap that is tied to U.S. real property is a USRPI for U.S. federal income tax purposes. Second, given all of the recent press dealing with the use of derivatives by foreign persons (primarily offshore hedge funds) to convert what would otherwise be U.S. source income into foreign source income, it is somewhat surprising that the IRS issued a positive ruling in this regard to begin with. (3) This article will examine the ruling and discuss its broader implications to non-U.S. persons investing in U.S.--real estate related assets through total return swaps.