Category: Tax Policy

Treasury Signals Revisions for Proposed Section 892 Rules After Industry Feedback

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The U.S. Department of the Treasury is revising its proposed Section 892 regulations after the investment and real estate industries raised concerns that aspects of the framework could raise their cost of capital by deterring passive investment by foreign governments, including sovereign wealth funds.

State of Play

  • A Treasury Department spokesperson told Bloomberg Law the agency is “revising the proposal to address key issues and ensure it supports stable, long-term capital flows,” citing feedback from the investment and real estate industry, including The Real Estate Roundtable (RER). (Bloomberg Law, Feb. 20)
  • The proposed Section 892 regulations (REG-101952-24) address two critical questions that can trigger U.S. tax liability: when a foreign government has effective control of an entity engaged in commercial activities, and when an acquisition of debt by a foreign government is considered to be commercial activity.
  • Treasury tax policy officials also indicated the proposed regulations—if finalized—will not be applied retroactively to existing transactions and structures. (Tax Notes, Feb. 23)

RER Advocacy

  • Earlier this month, RER submitted a comment letter to Treasury Secretary Scott Bessent on the Section 892 final and proposed rules, urging clear grandfathering rules and changes to prevent disruptions to sovereign investment in U.S. real estate. (Letter, Feb. 12)
  • The letter recommended targeted fixes, including clarifying that customary minority protections do not create effective control; confirming that withholding agents may rely on foreign government self-certifications; and adding safe harbors (including for certain distressed-debt modifications).
  • RER’s recommendations would ensure U.S. real estate owners and developers can continue to mobilize capital from foreign government sources while preserving Section 892’s fundamental distinction between tax-exempt investment activities and taxable commercial activities. (Roundtable Weekly, Feb. 13)

RER’s Tax Policy Advisory Committee (TPAC) Advocacy

  • The letter was developed by TPAC’s Section 892 Working Group, which includes representatives from a diverse group of foreign investors, U.S. real estate sponsors, and outside advisors.The principal drafter was TPAC member and Skadden partner Nickolas Gianou.

RER will continue engaging Treasury to ensure the final Section 892 regulations do not discourage sovereign capital that supports U.S. real estate investment and jobs.

First Circuit Hears Denham Oral Argument as SECA Limited Partner Fight Continues

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The legal dispute over the tax code’s limited partner exception from self-employment (SECA) taxes remains very much alive, with the issue now in various stages of litigation before three federal appellate courts. The IRS is asserting that a limited partner must be a passive investor.

Denham Oral Arguments

  • On Feb. 5, the First Circuit heard oral argument in Denham Capital Management LP, et al. v. Commissioner (No. 25-1349), while a related appeal in Soroban Capital Partners LP v. Commissioner is pending in the Second Circuit. The Fifth Circuit also recently issued a significant decision in Sirius Solutions, L.L.L.P. v. Commissioner (No. 24-60240). (Roundtable Weekly, Jan. 30)
  • The First Circuit heard oral arguments in Denham before Chief Judge David Barron, Judge Kermit Lipez, and Judge Lara Montecalvo Rikelman. Most of the argument focused on jurisdictional issues, which could allow the court to resolve the case without reaching the merits.
  • On the merits, the panel posed tough questions to Denham and the IRS. The discussion focused on the meaning of a limited partner in 1977 when the exception was enacted, prior case law, relevant dictionary definitions, the Revised Uniform Limited Partnership Act, and the provision’s legislative history.
  • In the course of the argument, Denham emphasized state law developments leading up to the 1977 amendments and, notably, cited The Real Estate Roundtable’s (RER) amicus brief in support of its position. (RER Amicus Brief, Aug. 15; Roundtable Weekly, Sept. 12, 2025)

Why It Matters

  • Income-producing real estate is predominantly owned and operated through partnerships, and the IRS’s litigation campaign creates risk for long-standing structures relied on by real estate and other pass-through businesses.
  • A circuit split among the First, Second, and Fifth Circuits could accelerate Supreme Court review of the issue.

RER Advocacy

  • RER is actively engaged across the circuits to oppose the IRS’s restrictive “passive investor” approach:
  • First Circuit (Denham): RER filed an amicus brief in August 2025 supporting the taxpayer’s challenge to the Tax Court’s judge-made “passive investor” test and explaining the long-standing reliance of real estate partnerships on state-law limited partner status.
  • Second Circuit (Soroban): RER filed an amicus brief in December 2025 urging reversal of the Tax Court’s Soroban approach and warning that a new federal “passivity” overlay would inject uncertainty and increase tax burdens for partnership-based businesses. (Roundtable Weekly, Dec. 19, 2025)
  • Fifth Circuit (Sirius): RER filed an amicus brief in 2024, and the Fifth Circuit’s Jan. 16, 2026 decision rejected the Tax Court’s passivity-focused framework in favor of a status-based analysis tied to limited liability.  (Roundtable Weekly, Jan. 30)

What’s Next

  • The First Circuit’s decision in Denham could turn on jurisdictional challenges, but the merits questions at argument underscored that the government’s “passive investor” theory remains contested and unstable across the courts.

RER will continue pressing its position through amicus advocacy to protect the flexibility inherent in partnership tax rules and preserve the long-standing tax exemption for limited partners.

Roundtable Urges Treasury to Modify Proposed Regulations on Sovereign Investment in U.S. Real Estate

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The Real Estate Roundtable (RER) submitted a comment letter to Treasury Secretary Scott Bessent on Treasury’s recently issued Section 892 regulations and related proposed rules that could materially affect sovereign investment in U.S. real estate. (Letter, Feb. 12)

Why It Matters

  • Foreign investment, including investment by sovereign wealth funds, foreign pension funds, and other government entities, is a critical source of financing for capital-intensive U.S. real estate projects.
  • Since 2011, foreign governmental investors have invested over $100 billion in U.S. commercial real estate.
  • “This patient and long-duration foreign capital drives ambitious and transformative investments that create new housing supply, lower housing costs, and spur job growth and economic opportunity in American cities,” wrote Roundtable President and CEO Jeffrey DeBoer.
  • Section 892 generally exempts from U.S. tax certain dividend and interest income—and gains on sales of securities—earned by foreign governments, unless the income is treated as commercial activity income or income from a controlled commercial entity. The provision traces back to 1917.
  • On Dec. 15, Treasury released final Section 892 regulations and issued new proposed regulations addressing two key questions: (1) when a foreign government has effective control of an entity engaged in commercial activities, and (2) when an acquisition of debt is considered commercial activity.
  • These issues have important consequences for existing and future sovereign investment in U.S. real estate.

RER Recommendations

  • The RER letter commends Treasury for its general approach and for clarifying specific issues. At the same time, RER expressed concerns regarding aspects of the proposed regulations that could disrupt inbound real estate investment and raise the cost of capital for U.S. real estate projects.
  • For example, the proposed rules can be read to restrict foreign governmental investors’ ability to secure certain investor protections, such as veto rights over major investment and financing decisions. Such restrictions could deter and discourage foreign governments from investing in the United States.
  • The letter highlights these concerns while offering specific solutions that Treasury could incorporate in its final rulemaking. These include:
  • Clarifying that customary minority investor veto rights do not create effective control;
  • Grandfathering existing investments;
  • Confirming U.S. withholding agents can rely on self-certifications from foreign governments;
  • Clarifying that certain modifications of distressed debt are not commercial activity; and
  • Establishing debt-related safe harbors for specific situations.
  • In short, RER’s recommendations would ensure U.S. real estate owners and developers can continue to mobilize capital from foreign government sources while preserving Section 892’s fundamental distinction between tax-exempt investment activities and taxable commercial activities.

RER’s Tax Policy Advisory Committee (TPAC) Advocacy

  • The letter was developed by TPAC’s Section 892 Working Group, which includes representatives from a diverse group of foreign investors, U.S. real estate sponsors, and outside advisors. The principal drafter was TPAC member and Skadden partner Nickolas Gianou.

The current Administration and Treasury leadership have emphasized the importance of passive foreign investment to U.S. job creation and growth. Treasury has not yet indicated when it anticipates finalizing the new Section 892 proposed regulations.

Treasury Considering Extension of Bonus Depreciation to Certain Existing Real Estate Investments

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The U.S. Treasury Department is reviewing real estate industry concerns that many firms may be locked out of the One Big Beautiful Bill (OB3) Act’s restored 100 percent bonus depreciation because of prior elections made to opt out of the Section 163(j) business interest limitation. (Bloomberg, Feb. 3)

State of Play

  • The restoration of 100 percent expensing for capital expenditures, including tenant and nonresidential property improvements, is among the most significant provisions in the OB3 Act.
  • Treasury tax policy advisor Dan Penrith acknowledged the concern at the American Bar Association Tax Section’s midyear meeting in San Diego. Penrith stated that the issue is “on our radar, it’s something that we’re thinking about,” signaling potential openness to targeted administrative relief. (Bloomberg, Feb. 3)
  • The Real Estate Roundtable (RER) has urged Treasury guidance to allow “real property trades or businesses (RPTOBs)” that previously elected out of Section 163(j) to withdraw or amend that election—so they can fully benefit from the OB3 Act’s restored bonus depreciation for eligible property improvements. (Roundtable Weekly, Oct. 17)

Why It Matters

  • The RPTOB election historically enabled full interest deductibility, but required the alternative depreciation system, making taxpayers ineligible for bonus depreciation.
  • Without additional guidance, many taxpayers may not qualify for bonus depreciation on property improvements, despite Congress’s intent to spur investment through 100 percent expensing.
  • There is precedent for allowing flexibility. During the pandemic, IRS Revenue Procedure 2020-22 provided an opportunity for certain taxpayers to withdraw a prior Section 163(j)(7)(B) election in response to CARES Act changes. (Revenue Procedure 2020-22)
  • As RER’s SVP & Counsel Ryan McCormick told Bloomberg Tax: “We’re seeking similar flexibility,” adding that it’s “really important for the future.” (Bloomberg, Feb. 3)

Roundtable Advocacy

  • In an Oct. 17, 2025, letter, RER wrote to Treasury urging guidance to ensure the OB3 Act’s restored 100 percent bonus depreciation provision supports real estate investment, job creation, and economic growth.
  • The letter emphasized that clear implementing rules will help bonus depreciation “facilitate the modernization and repurposing of real estate assets,” including underutilized offices, shopping centers, hotels, and mixed-use properties. (Roundtable Weekly, Oct. 17)

RER will continue engaging Treasury as it considers next steps to ensure the OB3 Act’s bonus depreciation provisions deliver on their intended investment and growth impact.

Fifth Circuit Reverses Tax Court, Sides with Taxpayer and Roundtable in Limited Partnership Tax Dispute

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The U.S. Court of Appeals for the Fifth Circuit issued a 2-1 decision in Sirius Solutions, L.L.L.P. v. Commissioner (No. 24-60240) on Jan. 16, restricting the federal government’s effort to extend self-employment taxes to a broad range of limited partners in limited partnerships. The Real Estate Roundtable (RER) submitted an amicus brief in the case, and the Court’s ruling closely aligns with the RER’s position.

Court Ruling

  • Since 1977, the tax code has exempted limited partners from self-employment taxes. In recent years, the IRS has asserted a new and more restrictive test to determine whether a limited partner qualifies for the exclusion.
  • The Fifth Circuit held that the Section 1402(a)(13) “limited partner” exception from self-employment (SECA) tax applies to a partner in a state-law limited partnership who has limited liability. (TaxNotes, Jan. 27)
  • The ruling vacates and remands the Tax Court decision that followed Soroban Capital Partners LP v. Commissioner (No. 25-2079), and applied a “functional analysis” of partner roles and activities to determine whether the SECA exclusion applies. (Sullivan Cromwell, Jan. 27)
  • The Fifth Circuit rejected that approach and held that “limited partner” in Section 1402(a)(13) is a status-based, state-law concept tied to limited liability, not an activity test.
  • The decision is the first appellate ruling to reach the issue and reverse the Tax Court’s restrictive interpretation. (Reuters, Jan. 21)
  • This ruling has set a precedent for future SECA tax cases, with significant consequences for real estate and other industries that use limited partnerships for business purposes.

Roundtable Advocacy

  • In August 2024, RER submitted an amicus brief to the Fifth Circuit. The brief argued that the IRS’s interpretation was flawed and inconsistent with decades of state law recognizing that limited partners can provide services while retaining limited partner status. (Roundtable Weekly, Sept. 6, 2024)
  • The brief emphasized that pre-1977 state court decisions and the IRS’s own 1994 proposed regulations contradict the government’s position that limited partners must be passive to avoid SECA taxes.
  • RER argued the Tax Court’s “passive investor” test is found nowhere in the statute and reflects a misunderstanding of partnership law that real estate and other businesses have relied on for decades.
  • RER has continued this advocacy across the circuits. In Dec. 2025, RER filed an amicus brief with the Second Circuit in Soroban, challenging the IRS’s restrictive interpretation of the “limited partner exception” under Section 1402(a)(13). (Roundtable Weekly, Dec. 19, 2025)
  • This successful outcome in the Sirius case supports RER’s position and could reduce momentum for formal tax guidance that would broaden the reach of SECA taxes.

What’s Next

  • Related appeals are pending in the First Circuit (Denham) and Second Circuit (Soroban). (TaxNotes, Jan. 27)
  • Divergent outcomes could create a circuit split and increase the odds of Supreme Court review. (Skadden Arps, Jan. 27)
  • The First Circuit is scheduled to hear oral arguments in Denham on Feb. 5. (TaxNotes, Jan. 27)

RER remains committed to protecting entrepreneurs’ ability to flexibly organize in partnerships and other pass-through entities that promote capital formation, risk-taking, and economic growth, and it will remain engaged as the SECA dispute moves forward.

OECD Carves Out U.S. Companies from Global Minimum Tax, Reducing Risk of Retaliatory Taxes on Foreign Real Estate Investors

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After months of negotiations, global tax talks produced an agreement at the Organization for Economic Co-operation and Development (OECD) that exempts U.S.-headquartered companies from Pillar Two’s global minimum tax and reduces the risk of retaliatory taxes that could have affected foreign investment in commercial real estate. (ABCNews, Jan. 6)

State of Play

  • Nearly 150 jurisdictions agreed to new Pillar Two guidance, including a long-sought “side-by-side” safe harbor that shields U.S. multinationals from key global minimum tax rules. U.S. companies will remain subject only to existing U.S. global minimum taxes. (Reuters, Jan. 6)
  • The Trump administration renegotiated the framework in June after congressional Republicans removed a proposed retaliatory tax—Section 899—from the One Big Beautiful Bill Act (OB3 Act).
  • The agreement formally recognizes U.S. tax sovereignty over the worldwide operations of American companies, while preserving other countries’ authority to tax business activity within their borders. (OECD Press Release, Jan. 5)
  • Senate Finance Chairman Mike Crapo and House Ways and Means Chairman Jason Smith praised the outcome but warned that Congress remains prepared to revive retaliatory tax measures if countries delay or fail to implement the agreement. (Sen. Crapo and Rep. Smith Press Release, Jan. 5)
  • They emphasized that Republicans rolled back those measures earlier this year only after the G7 publicly committed to respecting U.S. tax sovereignty—and said that warning “remains today” as implementation begins.
  • Treasury Secretary Scott Bessent called the agreement “a historic victory” that protects American workers and businesses from extraterritorial taxation. (Press Release, Jan. 5)

Why It Matters

  • During negotiations for the OB3 Act, RER and other industry groups warned that Section 899 would deter foreign investment, weaken capital formation, increase borrowing costs, and dampen property values. (Roundtable Weekly, Sept. 12)
  • Section 899 would have generated significant uncertainty for foreign real estate investors, with applicable tax rates potentially shifting year to year or across administrations.
  • The provision would have extended to a wide range of passive investors—including sovereign wealth funds, pension funds, high-net-worth individuals, and insurance companies—with the economic burden often falling on U.S. borrowers under typical loan covenants that shift tax-law risk to domestic parties.

RER’s Tax Policy Advisory Committee (TPAC) will review implications for U.S. real estate investment and global capital flows at the State of the Industry Meeting on Jan. 22, 2026, in Washington, D.C.

Roundtable Urges Second Circuit Court of Appeals to Preserve Employment Tax Exemption for Limited Partners

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The Real Estate Roundtable (RER) filed an amicus brief this week with the Second Circuit Court of Appeals in Soroban Capital Partners LP v. Commissioner, a case that challenges the IRS’s restrictive interpretation of the “limited partner exception” from self-employment (SECA) taxes under section 1402(a)(13) of the tax code. (Amicus Brief, Dec. 15)

Why It Matters

  • Income-producing real estate—rental housing, neighborhood shopping centers, office buildings, etc.—is predominantly owned and operated in partnership form. In 2022, there were over 2.2 million real estate partnerships in the United States, with nearly 9.6 million partners.
  • The Self-Employment Contributions Act (SECA) imposes Social Security and Medicare taxes on net earnings from self-employment. The SECA tax rate on earnings above $250,000 is 3.8%. While the tax applies to a broad range of trade or business income, Congress expressly exempted limited partners from SECA in the Social Security Amendments of 1977.
  • Legislative proposals and proposed regulations have unsuccessfully attempted to extend the 3.8% SECA tax or the 3.8% net investment income tax to limited partners.
  • The IRS has undertaken an aggressive effort to redefine what it means to be a limited partner by challenging taxpayers and litigating the issue in several cases before the Tax Court.

Roundtable View

  • Real estate partnerships have relied for decades on longstanding tax law as it relates to limited partners and the SECA exception.
  • In Soroban and related cases, the Tax Court has imposed a judge-made test and concluded contrary to decades of established state law that a limited partner must be a ‘passive investor,’ notes the RER amicus brief.
  • The Tax Court’s 2023 Soroban ruling wrongly introduced a federal “passivity” requirement that is unmoored from statute, legislative history, and Treasury’s own prior interpretations. However, limited partners have routinely provided business services to their partnerships without losing their limited liability status. (Roundtable Weekly, Sept. 12)
  • “A shift in the federal tax definition of a limited partner could alter underlying partnership economics, increase tax burdens, and create significant uncertainty for real estate and other pass-through businesses,” said RER President and CEO Jeffrey DeBoer. “Such changes need to go through Congress and withstand legislative scrutiny.”

Background

  • RER’s amicus brief was drafted by litigation counsel at Sullivan & Cromwell LLP, in consultation with RER’s Tax Policy Advisory Committee (TPAC). RER also filed an amicus brief in August
    with the First Circuit Court of Appeals in a related case, Denham Capital Management LP v. Commissioner. (Roundtable Weekly, Sept. 12)

Next Steps

The decision in any of the pending cases could have nationwide implications for how partnerships are treated under SECA. A ruling against the Tax Court’s passive investor test would reinforce state law’s central role in defining “limited partner” status.

Roundtable Urges IRS to Issue Transition Guidance for Opportunity Zones

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The Real Estate Roundtable (RER) submitted a comment letter this week, urging the Treasury Department and IRS to issue expedited guidance to ensure Opportunity Zone (OZ) investment continues uninterrupted in 2026 as the program transitions from Opportunity Zones 1.0 to the permanent Opportunity Zones 2.0 framework enacted in the One Big Beautiful Bill (OB3) Act. (Letter, Dec. 19)

Roundtable Advocacy

  • In a letter to IRS Chief Counsel (Acting) Kenneth Kies, RER called on the agency to issue a Revenue Procedure confirming that investments in existing Tax Cuts and Jobs Act (TCJA) qualified opportunity funds (“QOFs”) and qualified opportunity zone businesses (“QOZBs”) will continue to qualify for OZ benefits after zone designations lapse, provided the investments are consistent with the QOZB’s working capital plan.
  • RER warned that, absent clear transition rules, investors in 2026 will face uncertainty over whether to proceed with TCJA OZ projects or wait for new zone designations expected to take effect in 2027—risking a slowdown in capital deployment to distressed communities.
  • The OB3 Act made OZs permanent and expanded key incentives, but also raised questions about compliance testing, QOF asset requirements, and treatment of projects that span the transition period between expiring and newly designated zones.

Why It Matters

IRS building in Washington, DC
  • RER emphasized that OZs have mobilized more than $120 billion in private capital nationwide, supporting affordable and workforce housing, retail, mixed-use developments, and small-business growth in low-income communities.
  • Without timely IRS action, uncertainty could delay projects already underway, disrupt financing, and undermine the long-term policy goals Congress reinforced by making the program permanent.
  • RER urged the IRS to adopt a clear “safe harbor” allowing certain TCJA OZ projects to be treated as “grandfathered” for compliance purposes if their working capital plans contemplated development before zone designations expired and investments remain consistent with those plans.

Prompt administrative guidance is essential to prevent a policy gap in 2026 and keep capital, jobs, and housing investment flowing to the communities OZs were designed to serve. OZs will be discussed at the next in-person TPAC meeting at RER’s State of the Industry Meeting scheduled for Jan. 21-22, 2026.

Roundtable Commends Treasury for Proposed Repeal of FIRPTA “Look-Through” Rule, Urges Quick Adoption of Final Regulations

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The Real Estate Roundtable (RER) submitted a comment letter this week urging the Treasury Department and IRS to finalize proposed regulations (REG-109742-25) that would repeal the Foreign Investment in Real Property Tax Act (FIRPTA) “look-through” rule for domestically controlled real estate investment trusts (REITs). (Letter, Dec. 5)

RER Advocacy

  • In October, Treasury and IRS issued a Notice of Proposed Rulemaking to repeal the FIRPTA “look-through” rule, a major policy shift advocated by RER, which has opposed the rule since it was first proposed in 2022. (Roundtable Weekly, Oct. 24)
  • In 2024, in an act of broad regulatory overreach, Treasury finalized a new look-through rule to determine whether an entity qualifies as domestically controlled for FIRPTA purposes. The practical effect was to subject a significant share of previously tax-exempt foreign investment in U.S. real estate to U.S. capital gains tax. The rule was finalized with only modest transition relief.
  • In March, RER submitted a letter to the new administration outlining concerns with the regulation and urging its withdrawal on the grounds that the look-through rule reversed decades of well-settled tax law, severely misconstrued the statute, and contradicted congressional intent. (Roundtable Weekly, March 21)
  • Treasury’s proposed rule would restore prior law by treating domestic C corporations as non-look-through entities, removing a regulatory barrier that has discouraged foreign investment in U.S. real estate and infrastructure.
  • This week’s letter highlighted the importance of foreign capital to U.S. construction, development, and housing production. In recent years, foreign investors have committed more than $40 billion to U.S. multifamily housing, financing new development, supporting construction jobs, and helping expand housing supply nationwide. (Letter, Dec. 5)

House Ways & Means Hearing – International Tax

  • The House Ways and Means Subcommittee on Tax held a hearing on Wednesday, “Promoting Global Competitiveness for American Workers and Businesses,” focused on how international tax policy affects U.S. competitiveness, investment, job creation, and economic growth. (Watch Hearing)
  • Former Ways and Means Chairman Kevin Brady testified that post One Big Beautiful Bill Act Treasury guidance can provide critical certainty and stability, adding that Treasury appears eager, as in 2017, to implement Congress’s intent in writing the law. (Brady Testimony)
  • Members also discussed the Organization of Economic Co-Operation and Development (OECD) global minimum tax framework and the unresolved “side-by-side” agreement intended to shield U.S. companies from Pillar Two taxes.
  • House Ways and Means Chairman Jason Smith (R-MO) renewed his warning that Congress is prepared to reconsider retaliatory measures, including Section 899, if other nations fail to honor commitments to exempt the U.S. from the OECD global minimum tax framework.
  • Chairman Smith (R-MO) said, “The time for action is now for those G7 countries. We expect to see the technical work that has been done in these negotiations move forward this week.” (PoliticoPro, Dec. 4)

RER and other industry groups have warned that reviving Section 899 could negatively impact U.S. commercial real estate by deterring foreign investment, weakening capital formation, increasing borrowing costs, and dampening property values.

Treasury Proposes Repeal of FIRPTA Look-Through Rule for Domestically Controlled REITs

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IRS building in Washington, DC

The Treasury Department and the Internal Revenue Service (IRS) on Monday released a new Notice of Proposed Rulemaking that would repeal the FIRPTA “look-through” rule for domestically controlled real estate investment trusts (REITs)—a significant policy shift strongly supported by The Real Estate Roundtable (RER).

Proposed Change

  • Under the proposed regulation, the domestic corporation look-through rule would be removed, treating all domestic C corporations as non-look-through persons when determining whether a REIT is domestically controlled, and thus exempt from FIRPTA. (National Law Review, Oct. 23)
  • Once finalized, taxpayers could elect to apply the new rule retroactively to transactions occurring on or after April 25, 2024, when the prior regulations were finalized. (Thomas Reuters, Oct. 21)

RER Advocacy

  • RER was a vocal critic of the look-through rule when it was first proposed in 2022, and urged its removal from the regulations.
  • The rule was finalized last year with only modest transition relief. In March, RER submitted a letter to Treasury outlining concerns with the regulation and again calling for its repeal. (Roundtable Weekly, March 21)
  • Those issues were also raised and discussed with Treasury at RER’s Tax Policy Advisory Committee (TPAC) meeting this summer.
  • Backed by detailed data on foreign capital flows provided by CBRE, RER’s March submission emphasized the chilling impact that the regulations were having on foreign investment into U.S. real estate. TPAC member David Polster (Skadden) and his colleague Nick Gianou drafted RER’s legal and technical arguments with significant input from the RER’s FIRPTA Working Group.

Treasury Acknowledges Industry Concerns

  • In its release, Treasury cited the practical difficulty of tracing upstream ownership without reliable data and acknowledged the legal uncertainty, operational complexity, and potentially negative effect on investment in U.S. real estate generated by the 2024 regulations.
  • The preamble also notes that stakeholders argued the look-through rule conflicted with congressional intent, as Section 897(h)(4)(B) does not include explicit corporate look-through provisions.

Roundtable on the Road

  • RER SVP and Counsel Ryan McCormick discussed the recent FIRPTA developments and other real estate and pass-through tax policy issues this week at NYU’s Institute on Federal Taxation in New York City.
  • His presentation highlighted key provisions of the One Big Beautiful Bill Act,  potential future legislation, implementation priorities, and major tax litigation affecting partnerships and real estate.

RER will continue to engage with Treasury on areas where further guidance or regulatory changes are needed.