IRS Offers Guidance on Using Form 8927 for RIC, REIT Determinations

Rev. Proc. 2009-28, 2009-20 I.R.B. 1011: Procedures provided for regulated investment companies (RICs) and real estate investment trusts (REITs) to use Form 8927 for filing self-determination statements under §860(e)(4) for purposes of deficiency dividend procedures.

Discussion: A RIC or REIT meeting the §860(e) requirements for a “determination” that results in an adjustment for the tax year is allowed an additional dividends-paid deduction for deficiency dividends paid after year-end.

The American Jobs Creation Act of 2004 (AJCA), P.L. 108-357, expanded the definition of determination by adding §860(e)(4), which allows RICs and REITs to make self-determinations by a statement by the taxpayer attached to the tax return. The IRS pointed out, however, that the AJCA provided no legislative guidance on the date of determination for self-determinations.

The IRS stated that, if a RIC or REIT properly completes and timely files Form 8927, then the form will be treated as the statement contemplated by §860(e)(4) and, thus, qualify as a “determination” for purposes of §860(e).

Following the timely mailing/timely filing rules of §7502, the IRS stated that the date of determination will be: (1) the postmark date if Form 8927 is sent via U.S. mail or an IRS-designated private delivery service; or (2) the date received if Form 8927 is filed by other means. Because a Form 8927 is a determination only if actually received, the IRS advised taxpayers to request a return receipt or other comparable evidence of actual receipt by the IRS to establish that the form was delivered.

The IRS cautioned that a deficiency distribution will only satisfy §860(f)(1) if it is made on or after the date of the determination and on or before the date that is 90 days after the date of the determination, regardless of the method of establishing the determination.

Rev. Proc. 2009-28 applies to RICs and REITs that seek to make a determination under §860(e)(4) and is effective July 1, 2009.