{"identifier":"/us/usc/t26/s4981","title":26,"num":"\u00a7\u202f4981.","heading":"Excise tax on undistributed income of real estate investment trusts","text":"\u00a7\u202f4981.\nExcise tax on undistributed income of real estate investment trusts\n(a)\nImposition of tax\nThere 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\u2014\n(1) the required distribution for such calendar year, over\n(2) the distributed amount for such calendar year.\n(b)\nRequired distribution\nFor purposes of this section\u2014\n(1)\nIn general\nThe term \u201crequired distribution\u201d means, with respect to any calendar year, the sum of\u2014\n(A) 85 percent of the real estate investment trust\u2019s ordinary income for such calendar year, plus\n(B) 95 percent of the real estate investment trust\u2019s capital gain net income for such calendar year.\n(2)\nIncrease by prior year shortfall\nThe amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of\u2014\n(A) the grossed up required distribution for the preceding calendar year, over\n(B) the distributed amount for such preceding calendar year.\n(3)\nGrossed up required distribution\nThe grossed up required distribution for any calendar year is the required distribution for such year determined\u2014\n(A) with the application of paragraph (2) to such taxable year, and\n(B) by substituting \u201c100 percent\u201d for each percentage set forth in paragraph (1).\n(c)\nDistributed amount\nFor purposes of this section\u2014\n(1)\nIn general\nThe term \u201cdistributed amount\u201d means, with respect to any calendar year, the sum of\u2014\n(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\n(B) any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A)\n1\n1 See References in Text note below.\n(2)\nIncrease by prior year overdistribution\nThe amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of\u2014\n(A) the distributed amount for the preceding calendar year (determined with the application of this paragraph to such preceding calendar year), over\n(B) the grossed up required distribution for such preceding calendar year.\n(3)\nDetermination of dividends paid\nThe amount of the dividends paid during any calendar year shall be determined without regard to the provisions of section 858.\n(d)\nTime for payment of tax\nThe tax imposed by this section for any calendar year shall be paid on or before March 15 of the following calendar year.\n(e)\nDefinitions and special rules\nFor purposes of this section\u2014\n(1)\nOrdinary income\nThe term \u201cordinary income\u201d means the real estate investment trust taxable income (as defined in section 857(b)(2)) determined\u2014\n(A) without regard to subparagraph (B) of section 857(b)(2),\n(B) by not taking into account any gain or loss from the sale or exchange of a capital asset, and\n(C) by treating the calendar year as the trust\u2019s taxable year.\n(2)\nCapital gain net income\n(A)\nIn general\nThe term \u201ccapital gain net income\u201d has the meaning given such term by section 1222(9) (determined by treating the calendar year as the trust\u2019s taxable year).\n(B)\nReduction for net ordinary loss\nThe amount determined under subparagraph (A) shall be reduced by the amount of the trust\u2019s net ordinary loss for the taxable year.\n(C)\nNet ordinary loss\nFor 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).\n(3)\nTreatment of deficiency distributions\nIn the case of any deficiency dividend (as defined in section 860(f))\u2014\n(A) such dividend shall be taken into account when paid without regard to section 860, and\n(B) any income giving rise to the adjustment shall be treated as arising when the dividend is paid.","url":"https://projectusc.org/usc/t26/s4981.html","content":[{"t":"sec","id":"/us/usc/t26/s4981","children":[{"t":"num","text":"\u00a7\u202f4981."},{"t":"heading","text":"Excise tax on undistributed income of real estate investment trusts"},{"t":"subsec","id":"/us/usc/t26/s4981/a","children":[{"t":"num","text":"(a)"},{"t":"heading","text":"Imposition of tax"},{"t":"chapeau","text":"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\u2014"},{"t":"para","id":"/us/usc/t26/s4981/a/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" the required distribution for such calendar year, over","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/a/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" the distributed amount for such calendar year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s4981/b","children":[{"t":"num","text":"(b)"},{"t":"heading","text":"Required distribution"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s4981/b/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201crequired distribution\u201d means, with respect to any calendar year, the sum of\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/b/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" 85 percent of the real estate investment trust\u2019s ordinary income for such calendar year, plus","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/b/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" 95 percent of the real estate investment trust\u2019s capital gain net income for such calendar year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/b/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Increase by prior year shortfall"},{"t":"chapeau","text":"The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/b/2/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the grossed up required distribution for the preceding calendar year, over","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/b/2/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the distributed amount for such preceding calendar year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/b/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Grossed up required distribution"},{"t":"chapeau","text":"The grossed up required distribution for any calendar year is the required distribution for such year determined\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/b/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" with the application of paragraph (2) to such taxable year, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/b/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" by substituting \u201c100 percent\u201d for each percentage set forth in paragraph (1).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s4981/c","children":[{"t":"num","text":"(c)"},{"t":"heading","text":"Distributed amount"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s4981/c/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201cdistributed amount\u201d means, with respect to any calendar year, the sum of\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/c/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" 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","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/c/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A)\u202f","children":[{"t":"ref","text":"1"},{"t":"num","text":"1","tail":"\u202fSee References in Text note below."},{"t":"text","text":"\u202fSee References in Text note below.","tail":" of section 857 for any taxable year ending in such calendar year."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/c/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Increase by prior year overdistribution"},{"t":"chapeau","text":"The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/c/2/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the distributed amount for the preceding calendar year (determined with the application of this paragraph to such preceding calendar year), over","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/c/2/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the grossed up required distribution for such preceding calendar year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/c/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Determination of dividends paid"},{"t":"content","children":[{"t":"p","text":"The amount of the dividends paid during any calendar year shall be determined without regard to the provisions of section 858.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s4981/d","children":[{"t":"num","text":"(d)"},{"t":"heading","text":"Time for payment of tax"},{"t":"content","children":[{"t":"p","text":"The tax imposed by this section for any calendar year shall be paid on or before March 15 of the following calendar year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s4981/e","children":[{"t":"num","text":"(e)"},{"t":"heading","text":"Definitions and special rules"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s4981/e/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Ordinary income"},{"t":"chapeau","text":"The term \u201cordinary income\u201d means the real estate investment trust taxable income (as defined in section 857(b)(2)) determined\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/e/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" without regard to subparagraph (B) of section 857(b)(2),","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/e/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" by not taking into account any gain or loss from the sale or exchange of a capital asset, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/e/1/C","children":[{"t":"num","text":"(C)"},{"t":"content","text":" by treating the calendar year as the trust\u2019s taxable year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/e/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Capital gain net income"},{"t":"subpara","id":"/us/usc/t26/s4981/e/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"The term \u201ccapital gain net income\u201d has the meaning given such term by section 1222(9) (determined by treating the calendar year as the trust\u2019s taxable year).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/e/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Reduction for net ordinary loss"},{"t":"content","children":[{"t":"p","text":"The amount determined under subparagraph (A) shall be reduced by the amount of the trust\u2019s net ordinary loss for the taxable year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/e/2/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Net ordinary loss"},{"t":"content","children":[{"t":"p","text":"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).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s4981/e/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Treatment of deficiency distributions"},{"t":"chapeau","text":"In the case of any deficiency dividend (as defined in section 860(f))\u2014"},{"t":"subpara","id":"/us/usc/t26/s4981/e/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" such dividend shall be taken into account when paid without regard to section 860, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s4981/e/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" any income giving rise to the adjustment shall be treated as arising when the dividend is paid.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"}]}]}