REIT TAX SERVICES OVERVIEW

REIT Quarterly Testing:

We will perform the following quarterly asset tests:

At least 75% of the value of its total assets must consist of real estate assets, cash and cash items (including receivable arising in the ordinary course of the REIT’s business), and government securities;
Not more than 25% of the value of its total assets may consist of securities, other than those includible under the 75% test;
Not more than 5% of the value of its total assets may consist of securities of any one issuer, except with respect to a taxable REIT subsidiary and those securities includible under the 75% test; (for example, ABC REIT cannot not hold XYZ stocks in which its FMV is greater than 5% of REIT’s total assets value)
Not more than 10% of the outstanding total voting power of the outstanding securities of any one issuer may be held, except with respect to a taxable REIT subsidiary and those securities includible under the 75% test;

REIT Annual Income Test:

We will perform the following annual income tests:

At least 75% of the REIT’s gross income (excluding gross income from property held primarily held for sales in the ordinary course of trade or business) for the taxable year must be from rents, mortgage interest, and other specified real estate source income;
At least 95% of the REIT’s gross income must be from income items qualifying for the 75% income test and other interest, dividends, and portfolio-type income.

Preparation of Annual Earning & Profit Study

For purposes of determining the amount of the REIT’s dividends, and thus the amount eligible for the dividends paid deduction, a REIT must calculate its earnings and profits annually in conjunction with the dividend distribution calculation discussed above. Earnings and profits are different from taxable income. Common adjustment to taxable income to determine the REIT’s earnings and profits are for example adjustment for depreciation and amortization

Preparation of FAS 109 Tax Accrual

We will prepare the Taxable Subsidiary REIT’s quarterly and annual income tax provisions including the calculation of deferred tax assets and liabilities and preparation of footnote disclosures.

Preparation of Tax Compliance Checklist

We will prepare a REIT tax compliance checklist to be used by the REIT’s internal staff to ensure all general tax procedures have been performed. Furthermore, a master tax calendar will be prepared to ensure all federal and state estimated tax payments, extensions, tax returns and REIT test are prepared in timely manner. Our Checklist will be used to verify that all the quarterly and year-end control procedures relating to taxes will be completed in a timely manner.

In addition to the above, we will provide and prepare the following:

Prepare REIT Policies and Procedures,
Loan Acquisition Checklist
Prepare Tax Policy Binder

Sarbanes Section 404 Compliance Procedures

We will complete the year end Sarbanes-Oxley compliance of the REIT, which would include risk assessment, internal control analysis and testing, and documentation. We can also assist in coordinating the audit of your internal control environment with your external auditors.

Additional Services:

Recurring tax consulting services

We will provide advice, answers to questions and/or opinions on tax planning or reporting matters, including research, discussions, preparation of memoranda, and attendance at meetings relating to such matters, as mutually determined to be necessary.

Matters involving tax authorities

We will provide advice and/or assistance with respect to matters involving the Internal Revenue Service (“IRS”) or other tax authorities on an as-needed or as-requested basis.

Preparation of REIT Shareholders Dividend Cards
Preparation & Review of Federal and State Returns