rp-21-53.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

Part III
Administrative, Procedural, and Miscellaneous

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability.
(Also: Part I, §§ 301, 305, 852, 857; 1.305-1, 1.305-2)
Rev. Proc. 2021-53
SECTION 1. PURPOSE
This revenue procedure provides temporary guidance regarding the treatment of
certain stock distributions by publicly offered real estate investment trusts (REITs) and
publicly offered regulated investment companies (RICs) under the Internal Revenue
Code (Code). Specifically, in recognition of the need for liquidity as a result of the
impacts of the Coronavirus Disease 2019 (COVID-19) pandemic, this revenue
procedure, like Rev. Proc. 2020-19, 2020-22 I.R.B. 871, modifies the safe harbor
provided in Rev. Proc. 2017-45, 2017-35 I.R.B. 216, by temporarily reducing the
minimum required aggregate amount of cash that distributee shareholders may receive
to not less than 10 percent of the total distribution in order for § 301 of the Code, by

2
reason of § 305(b) of the Code, to apply to such distribution. This temporary
modification is effective solely with respect to distributions declared by a publicly offered
REIT or publicly offered RIC on or after November 1, 2021, and on or before June 30,
2022.
SECTION 2. BACKGROUND
.01 Rev. Proc. 2017-45 provides a safe harbor for Publicly Offered REITs and
Publicly Offered RICs that make a distribution to their shareholders with respect to their
stock to ensure that such distributions of stock pursuant to a distribution in which each
shareholder may elect to receive up to all of the shareholder’s distribution in cash or
stock of equivalent value are treated as distributions of property to which § 301 applies
by reason of § 305(b). See generally Rev. Proc. 2017-45, section 3.12 (defining
Publicly Offered REIT), section 3.13 (defining Publicly Offered RIC), and section 5
(enumerating safe harbor requirements). Rev. Proc. 2017-45 allows a Publicly Offered
REIT or Publicly Offered RIC to eliminate C corporation earnings and profits in order to
satisfy the REIT or RIC distribution requirements while maintaining sufficient liquidity. If
each condition set forth in sections 5.01 through 5.07 of Rev. Proc. 2017-45 is met,
(1) the Internal Revenue Service will treat the stock distribution as a distribution of
property under § 301 by reason of § 305(b), and (2) the value of the stock received by
any shareholder in lieu of cash will be considered to be equal to the amount of cash
which could have been received instead.
.02 Section 5.03 of Rev. Proc. 2017-45 requires that the Cash Limitation Percentage
be at least 20 percent. Section 3.05 of Rev. Proc. 2017-45 defines the Cash Limitation

3
Percentage as the percentage obtained by dividing (1) the maximum aggregate amount
of cash to be distributed to all shareholders as limited by the Publicly Offered REIT’s or
Publicly Offered RIC’s declaration of the distribution, by (2) the amount of cash that
would be distributed if each shareholder elected to receive solely cash under their
respective Stock-or-Cash Election. Section 3.06 of Rev. Proc. 2017-45 generally
defines a Cash-or-Stock Election as an election each shareholder may make to receive
up to all of the shareholder’s entire distribution subject to the election either (1) in cash,
or (2) in stock of the distributing corporation of equivalent value as determined under
section 5.07 of Rev. Proc. 2017-45.
.03 To enable Publicly Offered REITs and Publicly Offered RICs to conserve capital
and thereby enhance their liquidity, Rev. Proc. 2020-19 temporarily allowed such REITs
and RICs to further limit the amount of cash available to be distributed to their
shareholders by reducing the Cash Limitation Percentage to 10 percent. Rev. Proc.
2020-19 applied to distributions declared on or after April 1, 2020, and on or before
December 31, 2020.
.04 For the same reasons, this revenue procedure temporarily allows Publicly
Offered REITs and Publicly Offered RICs to limit the amount of cash available to be
distributed to their shareholders by reducing the Cash Limitation Percentage to 10
percent.
SECTION 3. TEMPORARY REDUCTION OF CASH LIMITATION PERCENTAGE
With respect to distributions declared by a Publicly Offered REIT or a Publicly
Offered RIC on or after November 1, 2021, and on or before June 30, 2022, section

4
5.03 of Rev. Proc. 2017-45 is modified by striking “The Cash Limitation Percentage is
not less than 20 percent” and inserting “The Cash Limitation Percentage is not less than
10 percent”.
SECTION 4. EFFECT ON OTHER DOCUMENTS
This revenue procedure modifies Rev. Proc. 2017-45 solely with respect to
distributions declared by a Publicly Offered REIT or Publicly Offered RIC on or after
November 1, 2021, and on or before June 30, 2022.
SECTION 5. DRAFTING INFORMATION
The principal author of this revenue procedure is Justin O. Kellar of the Office of
Associate Chief Counsel (Corporate). For further information regarding this revenue
procedure, contact Justin O. Kellar on (202) 317-6847 (not a toll-free call).