SECTION 3. REQUESTS FOR

GUIDANCE AND RELIEF

Representatives of REITs and RICs have requested guidance on the tax treatment of excess inclusion income of a REIT that either is a TMP or has a qualified REIT subsidiary that is a TMP. Some of the questions and issues they have raised are:

clusion income of a REIT (or qualified REIT subsidiary) that is a TMP under section 7701(i)(3);

cess inclusion income among the dividends paid by REITs and RICs during the taxable year;

RICs, and their shareholders with respect to excess inclusion income;

to, or otherwise recognized by, an organization that is subject to tax under section 511, whether the $1,000 deduction provided by section 512(b)(12) is available;

imis exception that applies to REITs, RICs, and other pass-through entities that have only small amounts of excess inclusion income.

Taxpayers have requested the Treasury Department and the Service to issue an announcement providing that sections 860E(d) and 7701(i)(3) do not apply before the issuance of the regulations authorized by those sections. Taxpayers have also requested that any such regulations

apply only to REIT distributions made some period after the issuance of regulations or other guidance.