§ 4981 Excise tax on undistributed income of real estate investment trusts
(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—
(1) the required distribution for such calendar year, over
(2) the distributed amount for such calendar year.
(b) Required distribution
For purposes of this section—
(1) In general
The term “required distribution” means, with respect to any calendar year, the sum of—
(A) 85 percent of the real estate investment trust’s ordinary income for such calendar year, plus
(B) 95 percent of the real estate investment trust’s capital gain net income for such calendar year.
(c) Distributed amount
For purposes of this section—
(1) In general
The term “distributed amount” means, with respect to any calendar year, the sum of—
(A) the deduction for dividends paid (as defined in section ) during such calendar year (but computed without regard to that portion of such deduction which is attributable to the amount excluded under section ), and
(B) any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A) of section for any taxable year ending in such calendar year.
(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—
(A) the distributed amount for the preceding calendar year (determined with the application of this paragraph to such preceding calendar year), over
(B) the grossed up required distribution for such preceding calendar year.
(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 .
(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.
(e) Definitions and special rules
For purposes of this section—
(1) Ordinary income
The term “ordinary income” means the real estate investment trust taxable income (as defined in section ) determined—
(A) without regard to subparagraph (B) of section ,
(B) by not taking into account any gain or loss from the sale or exchange of a capital asset, and
(C) by treating the calendar year as the trust’s taxable year.
(2) Capital gain net income
(A) In general
The term “capital gain net income” has the meaning given such term by section (determined by treating the calendar year as the trust’s taxable year).
(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.
(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).
(Added Pub. L. 94–455, title XVI, § 1605(a), Oct. 4, 1976, 90 Stat. 1754; 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.)
Operative text only. Editorial notes, amendment history, and effective dates: official OLRC text of § 4981