IRS Approves REIT Election After A Section 355 Spinoff

In a soon-to-be-released private letter ruling, the IRS approved Windstream Holding Inc.'s plan to distribute a corporate subsidiary in a tax-free spinoff whereby the spun-off corporation would elect to become a real estate investment trust (REIT) as defined under Section 856.

As part of the transaction, Windstream spun off certain assets, including its fiber and copper networks and other real estate, to a subsidiary corporation. After the spinoff, the subsidiary leased its assets to Windstream through a long-term triple-net exclusive lease. In addition, the subsidiary elected to become a REIT, enabling Windstream to move certain corporate assets into a single-taxed entity in a tax-free transaction.