SECTION 3. SCOPE

This revenue procedure applies to a loan made by an entity that makes an election to be taxed as a REIT under § 856(c) if the loan meets the requirements of this section.

.01 The borrower is either a partner in a partnership or the sole member of an eligible entity that has not elected to be treated as a corporation for federal tax purposes and is therefore disregarded as an entity separate from its owner under §§ 7701 and 301.7701–3(b)(1). .02 The loan is nonrecourse, secured only by the partner's interest in the partnership, or the member's interest in the disregarded entity; thus, in the event of default, the sole recourse is against the pledged ownership interest.

.03 The lender is granted a first priority security interest in the pledged ownership interest. This security interest will place the lender's claim as lender ahead of the

has failed to make available to QI’s auditor the records described in paragraph (1)(c) of this section within 90 days after these records are requested. If, for any calendar year, the partnership or trust has failed to make these records available within the 90-day period, or if QI and the partnership or trust fail to comply with any other requirement of this Section 4A.02, QI must apply Treas. Reg. § 1.1441–1 and 1.1441–5 to the partnership or trust, must correct its withholding, and must file corrected Forms 1042 and 1042–S for the calendar year.

26 CFR 601.201: Rulings and determination letters. (Also Part I, §§ 856; 1.856–3, 1.856–5, and 301.7701–3.)

Rev. Proc. 2003–65