HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2001–29, page 1348. REIT and section 355(b) active conduct of a trade or business. A REIT can be engaged in the active conduct of a trade or business within the meaning of section 355(b) of the Code solely by virtue of functions with respect to rental activity that produces income qualifying as rents from real property within the meaning of section 856(d) of the Code. Rev. Rul. 73-236 obsoleted.

Rev. Rul. 2001–31, page 1348. Captive insurance transactions. This ruling explains that the Service will no longer raise the “economic family theory,” set forth in Rev. Rul. 77–316 (1977–2 C.B. 53), in addressing whether captive insurance transactions constitute valid insurance. Rather, the Service will address captive insurance transactions on a case-by-case basis. Rev. Ruls. 77–316, 78–277, 88–72, and 89–61 obsoleted. Rev. Ruls. 78–338, 80–120, 92–93, and 2000–3 modified.

Rev. Rul. 2001–32, page 1350. Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning July 1, 2001, will be 7 percent for overpayments (6 percent in the case of a corporation), 7 percent for underpayments, and 9 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 4.5 percent.