Law Commons^™

From One Pocket To The Other: The Abuse Of Real Estate Investment Trusts Deductions, Jennifer Stonecipher

Missouri Law Review

Many large, multi-state retailers and banks have been acting as their own landlord by paying rent to themselves. Sophisticated corporate tax strategists have employed a method of avoiding state taxes by using a real estate investment trust (REIT) to "own" its real estate. The retailer or bank then pays rent to the REIT, which then turns the money over to a holding company. The rent money ends up back in the hands of the corporate parent, without being subject to state income tax along the way. Although this tax loophole has been closed by the federal government, the strategy is …